With Sotheby's online business haemorrhaging massive amounts of capital, the auction house has been developing new ways of cutting costs. The latest effort includes fielding out exhibitions and cataloguing of entire estates and collections to regional auction houses, which are authorised to sell property on sothebys.com. "In order to sell a high percentage of online lots, exhibition space is critical," says Lark Mason, Sotheby's senior vice president and director of online auctions, who previously headed Chinese furniture, “and this is what regional houses can offer”. He has already achieved results comparable to New York prices in areas outside the metropolis.
Typically, regional houses cannot get New York prices, and the consigners of middling and smaller collections not near New York are also benefiting from the arrangement.
Among the auction houses working with sotheby’s.com are Sloan's, the Bethesda, Maryland auction house and Ken Farmer Auctions in Radford, Virginia, along with just over a dozen others. Mr Mason expects to increase this to 50 firms in the US as well as some in Latin America and Europe shortly.
“Each participant will do four sales from $200,000-1 million each," adds Mr Mason, which means this network could ultimately become the third largest auction business in the world. The regional house or dealer makes the commission they charge, so a $500,000 sale will net them $100,000 and Sotheby's reaps the buyer's premium. Sotheby's handles all international publicity. The heftiest price garnered so far is for a Frederick, Lord Leighton painting from an Indiana estate, which had been referred by Ken Farmer and achieved $500,000, a record for a work of art sold online.
“Handling sothebys.com material allows us to raise our visibility,” says Deborah Seidel, president of Sloans.
The new method of doing business saves the heavy costs of transporting material to New York for cataloguing. "By offering a competitive rate, a regional house will pick up the costs rolled into one commission rate," says Mr Mason.
As another cost-cutting exercise, sothebys.com is shutting down its UK offices and the entire global network will be serviced from New York. “We're refocusing our efforts and developing an auction model for Europe,” says Mr Mason. He believes the European market is looking for targeted access to American buyers, so this move could be beneficial. “It allows us to serve the middle market and makes sense financially,” says Mr Mason.