The digitalization of the Art Market
The Art Market is becoming increasingly global, and this has a lot to do with the fact that it is becoming increasingly digital. It is an immense opportunity for galleries, auction houses and the Art Market players as a whole to reach a much wider audience.
Looking back, we see that the Market has been digitizing itself in similar ways to other e-commerce segments such as clothing or consumer electronics. A lot of platforms began by referencing products, in our case artworks, before bringing proper e-commerce (i.e. online transactions) on-board, and as in the past, certain frictions initially limited the size of the Market. (A lot of us remember the days prior to the wide adoption of PayPal where inputting our credit card details online felt like playing Russian roulette with our bank account. A feeling definitely hindering the growth of online sales.
We, today, see the same thing happening in the Art Market. Various websites such as 1stdibs started their business by listing various products online before integrating the online sales brick — which allowed them, along with other parameters, to become one of the leading online platform on the Market.
Over the past 2 years, we saw, at Convelio, tens of such companies — with various degrees of achievement. If I had to summarize the success of the leading online galleries, design platforms or auction houses, I would say that it comes down to 2 sets of factors: internal — everything which is linked to the actual market expertise and in-house art knowledge — and external — such as the providers you wish to integrate to bring more convenience to your clients.
The main internal factor of success for a gallery or auction house with an online presence is the quality of its product assortment. Buyers expect to see a range of artwork which is qualitative — and that means being able to prove the provenance, authenticity as well as provide an accurate condition report, and this is no easy task. It seems obvious if you take a bird’s eye view, but what is not very apparent is the amount of work necessary to build a powerful and trustable sourcing network.
The external factors are a set of decisions aiming at providing an experience as frictionless as possible to the end client. In recent years, a lot of iterations have been done on providing an experience which is easy to buyers. In other e-commerce segments, we’ve seen the fast rise of personalization with solutions such as "Dynamic Yield" who got bought by McDonald’s a few weeks ago, or the incredible efficiency of the Amazon logistics.
Shipping: the payment friction of our time
Speaking of fulfilment in the Art Market, we learned from the 2018 Art Trade Report by Hiscox that it comes as one of the top 3 biggest challenges in growing the online Art Market. 37% of art buyers name the complications around artworks shipping as their main obstruction to buying art online, and 77% of them mentioned that guaranteed return would boost their confidence in buying art online. Art players are increasingly conscious of the issue and 48% of the online platforms put fixing fulfilment uncertainties on their roadmap, up from 19% the previous year.
The issue surrounding shipping is becoming increasingly critical. The millennials, second in size only to the baby boomers when it comes to buying art and who grew up during the rise of mobile technology and Amazon Prime, are using online channels as their main channel to buy art. While 93% of millennial HNW collectors reported having bought artwork online, according to the Art Basel 2019 Art Market, one in four indicated that they would prefer to purchase art online rather than in person, according to the TEFAF Art Market Report.
Taking a high-level view, what do we learn from this data?
The art market is going online partly leveraging on its already existing strengths: good sourcing network, strong provenance and authenticity policies, but will end up seeing its growth plateauing if it is unable to implement the right tools to fulfil its orders at a decent cost and with more convenience, without compromising quality.
A question you may ask yourself is why nobody ever thought of offering a better shipping experience to clients buying fine-art?
My opinion is that it has a lot to do with the great comfort in which incumbent fine-art shippers have been over the past decades. They stopped innovating and challenging their own approach because they secretly know they don’t have to. They have been sitting on good margins for many years and their household names open the doors of the big art institutions without much effort. The complexity of logistics, which is made even more complex by a lack of transparency and an opaque pricing structure, creates a strong barrier to entry. All of this, however, creates a lot of opportunities for those who are ready to dig deep and really understand what is going wrong and what needs to be optimized — what you need is drive and purpose.
How did we start Convelio?
Clément and I started Convelio out of deep frustration. We entered the fine-art industry from technology companies and we were amazed by the lack of solutions to ship artworks simply and at decent rates. Our irritation grew into resentment upon realizing that the lack of adapted shipping solutions were preventing us from selling: in the Amazon age, who is ready to pay 50% of the price of an artwork to have it shipped? Not to mention that you can only get a shipping quote after waiting at least 48 hours. That gave us drive!
We started contacting galleries and auction houses to understand if our frustration was justified, and it appeared it was. We also learnt in the process that a lot of art players were equally frustrated in having to deal with different partners based on the pick-up and delivery locations. During our interviews with them we became convinced that a new fine-art service needed to be developed, and the structure of the solution became really clear: art players need to be able to have instant quotes at competitive rate for all the main routes through only one platform — and that platform has to be integrated with e-commerce websites. Hence, the start of Convelio.
We started by developing an algorithm able to price any shipments from anywhere in Europe to all the main European and International destinations. The process was a bit cumbersome at first: our clients needed to send us an email with various information (pick-up and delivery locations, dimensions and commercial value for insurance) but we made it a matter of principle to answer within 5 minutes to any enquiry — nights included (we really didn’t get much sleep in the first months). We did not want our clients to miss on sales because they couldn’t get a price to their clients: that gave us a purpose!
We grew fast, even faster than we ever imagined. Within 9 months, we had over 200 clients of which some big industry names. Why? Because we could quote fast, and because we re-assembled the whole value-chain ourselves, not going through the expensive intermediaries the incumbents use but on the contrary by internalizing as many processes as we could (something we are still doing) so that we could automate as much as possible to generate savings and pass it on to our clients, without compromising quality.
But it was not enough. We needed to bring in more technology into all these processes and enlarge the scope of geographies covered. Thus, we took the decision to raise money and started assembling an A-team (that we couldn’t be any prouder of) to code our algorithm onto a platform (www.convelio.com), manage & optimize our shipments and spread the word to the market that fine-art shipping started its mutation.
There is still a lot to be done, a lot to be improved and even a lot left to challenge. We just started our journey towards building the logistics backbone of the Art World.