(Bloomberg) -- Sotheby’s New York holds two general design sales a year. Those sales, which include furniture, antiques, rugs, mirrors, and other kinds of decoration, usually contain around 200 lots. At most, then, Sotheby’s will auction 400 lots annually—just enough to fill a single Park Avenue apartment.
Even if you add the auction house’s other design sales to the mix—single-owner sales, “English Furniture,” “Rugs and Carpets”—you’re still not looking at more than a couple thousand interior objects a year.
Which means there are many, many more consignors banging at their door. “We have a lot more material coming in to Sotheby’s than we can sell,” says John Auerbach, the general manager of Sotheby’s Art and Objects division in New York.
And so, when the company announced in February that it had acquired the online decorative arts consignment marketplace Viyet, the move made intuitive sense; now, instead of rejecting items outright, Sotheby’s could sell them, while avoiding the onerous costs of actually holding a live auction. “With many of the items in decorative arts, the value of moving these things around is the same, high-touch model that we use with a million dollar painting,” says Auerbach.
In other words, Sotheby’s was going through the same basic rigamarole (storage, handlers, insurance, auction specialists, marketing) to sell a $2,000 candlestick as it was a $2 million painting. With Sotheby’s Home, its new online marketplace launched last week, replacing Viyet, “it has a low-touch model that just makes more sense for everybody,” Auerbach says.
The Business Model
From the company’s perspective, the beauty of Sotheby’s Home is that the company never has to be physically responsible for the object. Consignors who contact Sotheby’s will either be visited by a Sotheby’s Home “curator,” who will inspect and appraise the object, or, for people who aren’t located near one of the 13 major markets that Sotheby’s Home services, detailed photos of the object will suffice.
If the piece passes muster, Sotheby’s Home will arrange for an object to be photographed, then put it up on the site. The object itself, though, will stay “with the consignor in their home or office or warehouse,” Auerbach says. When the object sells, Sotheby’s will help facilitate its transport. “It goes directly from the seller to the buyer,” Auerbach says. After six months if a piece doesn’t sell, the company simply removes it from the site. No muss, no fuss.
Consignors pay Sotheby’s Home a whopping 50 percent of the sale price for the service—and the Sotheby’s brand—so whoever is selling this lovely stack of Danish nesting tables for $1,280 is willing to trade half of its value in order to unload it. The silver lining (for the consignor at least) is that whoever buys it will have to pay for packing, shipping, and insurance.
The 50 percent consignment rate is standard for the industry, says Bruce Tilley, the owner of Decor NYC, a furniture and design consignment showroom in New York. “Before I opened this gallery seven years ago I checked around the country,” says Tilley. “In some cases, it’s even higher.”
But, Tilley continues, “I pay New York real estate instead of warehouse space,” he says of his significant overhead. “Everything is showcased in a gallery so that people can come and see it.”
Sotheby’s, in contrast, will net 50 percent of the profit with minimal overhead, zero liability, and no physical costs. (If you cosign more than 20 items, Sotheby’s will drop their fee to 40 percent.)
Given that light touch, Harriet Roughan, the owner of Estate Treasures of Greenwich, says that the 50 percent commission is high. “They’ve got the same business model as Chairish,” she says, referring to the consignment website that will post photos of consignors’ furniture without storing or handling it. “And Chairish only takes 20 percent. I have a brick and mortar store; I need 50 percent commission to cover my overhead.” (In fact, Chairish commissions decrease with higher sale prices; above $25,000, and the site only takes 9 percent.)
Competition
Sotheby’s Home’s is entering into a space currently dominated by 1stdibs, which has 1.5 million site registrants and sells about 15,000 unique items each month, according to a company release.
The key difference between Sotheby’s Homes and 1stdibs, though, is the that 1stdibs’ material is supplied exclusively by dealers and galleries; if you’re buying off that site, you’re not buying a piece out of someone’s house, you’re probably buying it out of their showroom.
That distinction cuts two ways: a respected antiques dealer is another level of verification and quality control that Sotheby’s Homes doesn’t have. Alternately, there’s potentially a higher markup for a work on 1stdibs given that it’s sold by a business instead of an individual. “I can’t speak to exactly what [1stdibs] is doing,” says Auerbach. “But we focus on individual consignors, and that is something I don’t believe exists at 1stdibs.”
But Wait, There’s Art, Too
Sotheby’s Home will also sell art—a dramatic departure from the majority of the online art sales (including Sotheby’s own), which tend to replicate the auction model. There are very few reputable sites that possess art that you can see online, click, and buy.
The majority of these online art auctions tend to focus on the so-called “Prints and Multiples” category, which is inevitably on the sub-$5,000 end of the price spectrum. By moving older, possibly more expensive art online, Sotheby’s is expanding their art-related business model in a potentially groundbreaking way.
But all artworks are not created equal, and Sotheby’s Home treats art very differently than Sotheby’s traditional auctions. The biggest discrepancy is that on Sotheby’s Home, the provenance of the artwork isn’t listed, which means buyers have no way of verifying its legitimacy, understanding where it’s been stored, or for how long.
The second departure is the general discourse around the art, which is dramatically more rudimentary at Sotheby’s Home. An unsigned, 19th century photograph of India on sale for $5,000, for instance, is classified as “Traditional,” while a c. 1970s photo is on sale for $750 and listed under “Vintage” category. A wire sculpture of an elephant, also categorized under Vintage and dated c. 1970s, is described as “Brutalist” without any explanation. Its price is $3,100.
“Art is a new category that we’re still realistically several weeks away from refreshing,” says Auerbach. “You’ll see a built-out arts section in the coming weeks and months.”
In the meantime, the majority of the objects on the site are below $50,000. “We’re starting to see [sales] in the range of $2,500 to $50,000,” Auerbach says, although he expects that range to shift as the site continues to roll out. “If the product is good, we’ve seen very little resistance … we’ve seen pretty broad interest across the spectrum.”
To contact the author of this story: James Tarmy in New York at jtarmy@bloomberg.net
To contact the editor responsible for this story: Justin Ocean at jocean1@bloomberg.net
©2018 Bloomberg L.P.
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