13/01/2019 Alexander Clement
The fine art auction industry is one that has, in all fairness, not been the quickest off the blocks when it comes to adopting new technologies. That shouldn’t come as a surprise and is by no means a criticism. It is a very traditional business, steeped in two centuries of practices that have remained true and steady throughout. One of the things I have come to appreciate more fully in my current role is just how complex a seemingly simple business model has become. In essence an auction house takes and object from person A and sells it to person B, transferring the proceeds from B to A while taking a percentage commission from both. But the process by which the object, the lot, is made available to a buying audience along with the many different ways in which that audience might choose to bid on it as well as countless ways and combinations of payment and settlement, even without factoring in the influence of new technology, it has become a dense forest of activity which is practically impossible to explain adequately in simple terms.
Starting my career as an auctioneer with Phillips in 1998, I was lucky enough to witness the seismic shift that occurred with the adoption (in some cases reluctant) of the world wide web. Email was a thing, by then, but this was facilitated through a green-screen terminal and did not allow the attachment of anything, just a straightforward text message. The first iteration of the Phillips website was essentially a landing page with no functionality and no user interaction at all. We had one PC in the whole building that was able to access the internet and this was hooked up via a 10m ADSL cable down a corridor to the nearest socket. Back then, condition reports were carried out largely over the phone or by photographing objects with a conventional roll film camera and using a 1hr processing shop to get the pictures printed before sending them in the post with a hand-written report.
Times changed and those changes were largely forced on the industry by the demands of customers. Buyers wanted condition reports by email with images attached (and they wanted them yesterday) while sellers wanted their lots to be visible online. Even live bidding was something driven as much by the customers as it was a desire by the industry to move with the times. Many firms resisted it while those that took it on in the early days often had to in order to secure a significant single-owner collection.
Today it is hard to imagine a world without the internet and, furthermore, becoming just as hard to visualise being unable to access it wherever we are through a myriad mobile and static devices. This means that the auction industry has to be able to cater to that ‘always on, always visible’ culture the wider world has developed. That’s not an easy task when the principles of the business are so traditional and while those working at senior levels with decades of experience are sometimes struggling to keep up with the pace of change.
Part of the process is actually quite simple; just looking around at other areas of our lives and how they have been transformed by technology. Few of us are unable to buy goods online, book a room or a flight, watch a video, set up a social media account and find friends to communicate with. Applying the same principles, the same needs and demands we make every day of the internet, and transferring those to our customers is the first step to understanding how digital transformation is not only necessary but hugely beneficial to our industry.
When we see where we need to go, the next step is to find a trusted and experienced adviser to help make the changes needed. Sometimes the skills necessary may already be on the payroll and that can be a massive advantage when it comes to cutting through the jargon and marketing to find the right combination of software and hardware to really make a difference.
Digital transformation will inevitably require investment and that is something that often brings on a cold sweat in the boardroom. But if you can focus on the ROI, see the benefits that will flow through from that transformation, the cost will become practically inconsequential. For auctioneers, the most significant benefits to digital transformation are the efficiency of time and manpower (speeding up and simplifying processes so that more time can be spent on business getting) and accessing data (understanding all the numbers and using them to inform strategy). In my next post, I shall be looking more closely at the second of these and how auctioneers can leverage data to help build market share.