TEFAF Report Finds 60% of Dealers Profit from Online Sales Activities
A new survey of nearly 700 art dealers found a clear majority maintain profitable e-commerce businesses, but a full fifth say they still have no plans to go online.
The findings of the TEFAF Art Market Report: Online Focus, released Thursday, highlight the tension between the promise of reaching a vast global customer base and the challenge of maintaining the relationship-driven sales approach that has dominated the art market for centuries.
Nearly two-thirds of dealers, 64%, said they sell art and antiques online. TEFAF’s report did not specify how dealers broke down along the art versus antiques sectors.
Auction houses have been quicker to move into the online space, the report found, with approximately 8% of art auction sales happening online globally, compared with 4% of art dealers’ $26 billion in global sales.
“You can see the auction houses moving into this space and see intermediaries moving into the dealer space, but for the high-end dealers there was no movement at all, so why is this the case?” said Rachel Pownall, TEFAF chair in art markets at Maastricht University and author of the report.
This marks the first time that TEFAF, the prestigious 29-year old art fair known for its strict vetting policy, released a supplementary report, focusing on the online art market, to its annual analysis of the state and size of the art market as a whole. The online survey responses from 673 dealers (out of over 8,000 contacted) showed that just under 60% reported their e-commerce business was profitable in 2016, 20% reported breaking even, and 20% said their online activities run at a loss.
E-commerce is defined for the purpose of the report as “the role that the digital landscape actively plays in the art world,” and includes both transactions carried out online and non-transactional functions such as marketing through social media channels, according to Michael Plummer, managing director of TEFAF New York. It was unclear from the report how individual dealers defined how these wide-ranging activities contributed to a net profit or loss for their businesses.
Pownall noted the similarities in the ways dealers leverage art fairs and their online presence. Both serve as places for exposure and finding new buyers, but not necessarily points of transaction.
“A lot of the online presence is just to create awareness before the selling takes place,” said Pownall. “Like art fairs—you may not buy through the art fairs just like you may not buy online…so dealers are just seeing this as a large opportunity to expand their audience, a means of reaching a greater number of people.”
But the TEFAF report also found that 20% of dealers surveyed do not have an online sales presence, and currently have no intention of developing one.
“There are a certain number of hindrances that prevent the dealers” from going online, Pownall said, citing concerns such as privacy and providing data to third-party platforms, the loss of physical and social contact with clients, or that building an online presence wouldn’t generate sufficient revenue to merit the investment in time and effort.
The report did, however, highlight one inexorable trend that should encourage galleries to engage online: demographics. Younger buyers who have grown up tethered to devices are more likely to be comfortable buying art (alongside everything else) online. TEFAF found that, among Americans aged 25–34, 57% are comfortable buying art online.
Similarly, the Hiscox Online Art Trade Report, released in April, found that half of the 758 art buyers it surveyed said they planned to buy more art and collectibles online in the next year, a share that rose to 59% for those under 35.
While auction sales fell in 2016 from the prior year, both Sotheby’s and Christie’s reported significant increases in online sales. Christie’s online-only sales have reached $217 million, and Sotheby’s online sales increased 20% over the previous year to $155 million, according to Thursday’s report.
Anna Louie Sussman