On July 14th the front page of the New York Times ran a major article concerning the new relationship being created by Sotheby’s with the original internet auction giant eBay.  With all the fanfare of the Sotheby’s PR machinery, breaking the news of this questionable combination was orchestrated to quiet their critics and leapfrog their “competition.”  Well Christie’s, their duopoly partner/competitor, is probably not too concerned given that this new partnership is full of many hurdles and issues that perhaps may yet come back to haunt them.

It’s interesting how the New York Times article puts such a spin on the synergies and possibilities of eBay’s worldwide market gaining access to Sotheby’s “imprimatur of authenticity.”  There is a big problem however, they both operate in directly opposite manners, with one (guess who) charging and exorbitant buyer’s premium and the other just a listing fee.  It appears that eBay will be getting a listing fee from Sotheby’s, but will the buyer’s premium now be the generally accepted method for the eBay masses, and can we now rate Sotheby’s as a Power Seller?  Of course the details of the arrangement remain confidential according the article, probably because they have to reconcile that gap and many others.

Another interesting comment made by eBay was that they perceive Sotheby’s as an “anchor tenant” in their virtual shopping mall, but since when does Saks Fifth Avenue have a marquee place in the same location as a Kmart?  Ebay tried to go upscale with Butterfield & Butterfield and failed not because it was bad idea but because they could not make the migration to an upscale market. Same was the case when Sotheby’s made prior deals with eBay and Amazon.  When they attempted to create their own marketplace and approached my firm to be part of it, I told David Redden, then running that operation, that it would never succeed.  We somehow forget that secret reserves, and an outrageous 25% buyer’s premium on items sold under $100,000 (naturally identical for both of the duopoly participants) has severely impacted the market for these items and the jury is out as to how much lower on the food chain this practice will be tolerated.

Unfortunately for Sotheby’s, this gesture to the mass market will only dilute their cache and give Christie’s a better marketing position.  According to the article, Christie’s will be expanding its online presence by going it alone, using consultants from other high end retailers to bolster their image, not dilute it.  However, both of their sights are on the younger online shopper who now does not want or need to visit a gallery or showroom.  Also, this younger generation might not tolerate the deceptions and frauds perpetrated by their business methods. Explaining these practices to a generation that craves the openness and disclosure that the internet offers could have the opposite effect.  It has turned me off of being a participant in their rigged practices and might just do the same to the middle/mass market; so let their present affluent customer base enjoy being hoodwinked.

http://www.nytimes.com/2014/07/14/arts/design/with-ebay-partnership-sothebys-extends-potential-reach-by-145-million.html

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