Hiscox Online Art Trade Report 2018

Online art sales trends

• Online art market sales up despite slowing global art market

  Online art market sales reached an estimated $3.75 billion in 2016, up 15% from 2015. This gives the online art market an 8.4% share of the overall art market, up from 7.4% in 2015.

• Bricks-and-clicks are gaining ground

  Whilst the traditional auction houses were slow in adapting to the opportunities of the online art market, 2016 marked a significant shift in their online sales strategy, with Sotheby’s, Christie’s and Heritage Auctions generating combined online sales of $720 million in 2016 – accounting for 19% of the online art market. Online-only auctions saw a particularly strong increase at Christie’s, with an 84% jump in sales. One of the biggest online players, Heritage Auctions, reported that 41% of its auction sales are now conducted online, with $348.5 million in online sales reported in 2016 (up 1.3% from 2015).

• Hesitant art buyers remain unconvinced about buying art online

  The conversion of online art buyers remains static for the third consecutive year, signalling that the online art market could be struggling to convert sufficient numbers of hesitant art buyers. However, the good news is that existing online art buyers have been acquiring even more art in the last 12 months. The number of online art buyers that have bought more than a single artwork in the last 12 months has increased to 65% in 2017, up from 63% in 2016.

• Obstacles to future growth

  Online art sales growth can only accelerate by increasing the conversion rate of hesitant, non-online buyers by actively addressing their key concerns. These concerns are currently focused around the lack of physical inspection and worries about the work’s condition, authenticity, and the seller’s reputation.

• Third-party sales channels are gaining in popularity

  In 2013, 15% of galleries surveyed said they would generate online sales by partnering with an existing art e-commerce platform. In 2016, 26% of galleries surveyed said they planned to partner up with a third-party e-commerce platform in the near future, and this year 27% said this was their future e-commerce strategy. In 2017, 49% of galleries that sell art online say they are doing so through third-party online platforms.

• Online art sales are dominated by pieces priced below $5,000

  Despite individual examples and anecdotal evidence that works are increasingly being bought online at higher price points, the future battleground for the online art market is likely to remain in the lower price range. According to the latest survey, 79% of online art buyers spend less than $5,000 per piece when buying art online, up from 78% in 2016 and 67% in 2015.

Online art platform trends

• Bricks-and-clicks account for four of the top ten companies listed in The Hiscox Online Art Sales Platform Ranking

  Christie’s came out on top ahead of Sotheby’s, Artsy, 1stdibs and Artnet. Four of the top 10 ranking online art platforms were traditional art businesses, which now have an online/digital platform for bidding on, and buying, art. This suggests that the offline art world is catching up with its online-only rivals.

• The balance of power could be shifting back to the traditional art market

  The recent failure of the high-profile online auction house Auctionata (announced in January 2017), questions the ability of new online-only players to grow fast enough and become profitable in an increasingly congested market place. On the other hand, the growth in online-only auction sales from traditional auction houses, such as Christie’s, shows sales growth of 84% in 2016, which suggests that the power balance might be shifting back to the incumbent art market players.

• Business models are converging towards a one-stop shop

  Increasing competition is already forcing online art platforms to embrace new strategies to expand their business and diversify their income streams. Among the auction aggregators, Invaluable has ventured into the gallery and dealer space by allowing visitors to buy directly from galleries through fixed-price offers. Artsy, a platform predominantly targeting galleries, has held several online auctions in partnership with Phillips and Heritage during the last 12 months. These trends suggest we could see more consolidation in the industry over the coming years.

• Online auctions will become a key battlefield in 2017

  It is evident from the survey that most online art platforms see the auction space as the key battlefield in the next 12 months, as virtually every online art platform starts to offer an online auction service.

• The majority of online art platforms expect to see more industry consolidation

  Among the online art platforms surveyed, 71% said they expected more consolidation to happen. 48% of companies surveyed felt that ‘horizontal mergers’ (companies operating in the same space such as Paddle8 and Auctionata) will be the most common, while 53% believe ‘vertical mergers’ are more likely, i.e. companies operating in different parts of the value chain.

Addressing the concerns of the hesitant art buyer

• Lack of physical inspection remains the key challenge for hesitant art buyers

  Buying art and collectibles online sight-unseen presents several challenges for the buyer. Many worry that the artwork will look different than it appeared in the digital image, or that the condition of the work might be different from what was stated or anticipated. This hurdle has remained the biggest challenge among hesitant art buyers in the last three years, cited by 80% and 77% respectively.

• More information needed

  79% of survey respondents said they wanted more background information about the artist and the object, up from 76% in 2016.

• Buyer education is key

  52% of online art buyers state that content is important to their platform choice (up from 42% in 2016). This suggests that buyers are looking for more than just buying artwork. In fact, they are attributing significant value to the educational experience.

• Price transparency will become the norm rather than the exception

  Although the art market is still notoriously opaque when it comes to revealing prices, 88% of online art buyers find price transparency (that is, the clear labelling of prices and the possibility to check past and comparable prices) an essential ingredient when buying art online. 67% of hesitant art buyers said they would like access to an independent valuation report (up from 51% in 2015, and down from 68% in 2016).

• Human interaction is still very important

  73% said they would like to have the opportunity to talk to an expert before making a decision to buy art online (up from 69% in 2016).

• Customer reviews and feedback

  65% of hesitant art buyers surveyed said that customer reviews and feedback from previous clients would be an important ingredient in the art buying process (up from 64% in 2016). Although customer reviews are not common in the art world, the growing use of social media suggests that client feedback (such as likes and followers) as well as comments and reviews could play an increasingly important role in driving the emotional consideration for proceeding with the online art buying process.

• Return guarantees

  The large majority (80%) of hesitant online art buyers said that the terms of the return guarantee were important in their decision to buy art online sight-unseen. In fact, 71% said that having the option to insure the artwork at time of purchase would make them feel more confident buying online and 64% said that more information and choice about the shipping options would help in the acquisition process.

Social media

• Instagram overtakes Facebook as the preferred social media channel for the art world

  Instagram has emerged as the most important social media channel in the art world, with 57% of art buyers surveyed saying this is the most frequent social media platform used (up from 48% in 2016 and 34% in 2015). In contrast, 49% said that Facebook was their preferred social media platform, down from 54% in 2016.

• Social media is becoming an increasingly important tool for galleries and dealers

  91% of the galleries surveyed said they actively use social media to promote their gallery and their art/artists. Whilst Facebook and Twitter were the two dominant channels in 2016, Instagram is now clearly the social media channel of choice, with 57% of galleries saying they are finding Instagram the most effective in terms of raising awareness, compared to 42% who say Facebook.

• Auction houses embrace social media

  Sotheby’s has seen its Instagram following grow by 102% between March 2016 and March 2017, and currently has more than 430,000 followers. Christie’s has in excess of 267,000 followers (up 78% from March 2016) and Phillips has over 98,000 followers (up 83% over the same period). The use of Instagram among auction house experts is proving to be an effective communications tool, and potentially influences decisions among new and existing buyers.