How the Auction Industry Survived (and Thrived) Thanks to Digital Modernization

Entering 2020, the auction industry relied heavily on in-person relationship building. Collectors inspected high-end items for themselves at the auction house days before a sale. Then, they would show up to bid live on the auction floor. Auction houses benefited from turning their sales into full-blown events. This created an atmosphere that encouraged spirited bidding. Auction houses also took these opportunities to build rapport with frequent bidders.

Then, lockdowns began around the world. This disrupted every aspect of how auction houses traditionally do business. No longer could these companies host lavish events to mobilize bidders. They also could not give collectors the peace of mind to see items in person before placing a bid. For much of spring 2020, auction houses waited in limbo to see what the next step would be.

To many insiders’ surprise, the next move was to rapidly embrace digital technology. Most major auction houses rebounded in late 2020 and throughout 2021 to pre-pandemic levels, thanks in large part to this more robust digital infrastructure. “As the major auction houses moved their events online, they were largely met by enthusiastic bidders,” reported Auction Daily at the end of 2020.

Learn how auction houses made the swift transition towards digital modernization. Plus, discover key takeaways from the industry’s success that you can implement in your company.

Leveraging Pre-Existing Platforms

When the pandemic began, most auction houses did not have the time nor the resources to build new platforms from the ground up. The required digital infrastructure would be too much. Any functional bidding platform needs to allow collectors to preview items, bid in real-time, and complete payment. That’s why auction houses decided instead to build upon the platforms that already existed.

Bidsquare, LiveAuctioneers, and Invaluable have helped auction houses offer online bidding and cataloging for years. During the pandemic, they improved user experience with such additions as live streaming. This allowed collectors quarantining at home to feel like they were live on the floor of an auction house.

These platforms also had to react dynamically to changing consumer needs. By summer 2021, many Americans had received a full round of COVID-19 vaccinations and were ready to make a slow return to in-person events. In response, the platform Bidsquare launched an “Auctions Near Me” feature. This helped bridge the gap between online bidding and a return to the auction floor.

Key Takeaways for Your Business: Digital modernization helps your company meet and exceed your customers’ expectations. This process does not need to be a full teardown, either. By building on legacy systems, your company can make quick improvements that reflect your customers’ needs. With this incremental approach, you can also change course quickly when new factors affecting customer needs arise. Learn more about digital modernization from our recent e-book.

Incremental Changes to Web Applications

Before the pandemic began, some auction houses had already invested in their own bidding platforms. That way, collectors could search full catalogs, place bids, and prepare shipping without ever having to navigate away from the auction house’s website. Companies in this position spent 2020 and 2021 upgrading their web applications to further cater to the needs of collectors. 

For example, Sotheby’s, one of the “Big Three” auction houses, offered more buy-now options on their website. The auction house realized that many people were shopping more frequently online during the pandemic. These collectors were looking to add items that would bring them comfort during a mentally overwhelming time. This meant collectors might not wait for Sotheby’s next big auction. Instead, they needed an on-demand way to buy from the auction house.

From Patek Phillippe watches to contemporary art, collectors can now purchase a wide range of items from Sotheby’s whenever and wherever they want. Many of these items fall below the seven and eight-figure prices of Sotheby’s top-tier lots. However, this digital marketplace offers the company a continuous revenue source between their large, well-orchestrated auctions. Also, since this service meets a core demand of their customers, this also boosts their brand loyalty to Sotheby’s.

Key Takeaways for Your Business: Digital modernization efforts should focus on clear business objectives. Setting small, incremental goals allows your company’s modernization effort to stay on track and offers time for frequent reflection.

Embracing Live Streams

As we mentioned, live streams played a key role in how auction houses and bidding platforms addressed collectors’ needs during the COVID-19 pandemic. This technology allowed auction houses to reach out to a global audience despite being largely stuck at home. Sotheby’s, for example, orchestrated live events with auctioneers based in New York, London, and Hong Kong at the same time. The inclusion of Hong Kong inspired lively bidding across the Asian continent. Auction houses now enjoy growing sales on the continent, thanks in part to these live streams. For example, the auction house Christie’s earned $1 billion in sales from Asian clients in the first half of 2021. 

Auction houses far smaller than Sotheby’s and Christie’s also benefited from live streams. Potter & Potter, a Chicago-based auction house focused on niche categories such as magic and gambling memorabilia, reported record sales in 2020. They were able to keep and expand their network of collectors with live streams. “Many bidders have reported tuning in (at least in the background) for an entire day, watching the auction on-and-off as a result of the live video stream on our website,” said the auction house’s president, Gabe Fajuri.

Key Takeaways for Your Business: Making meaningful, well-targeted improvements to your digital infrastructure expands the reach of your company. Even organizations with seemingly niche appeal have an opportunity to broaden their audience.

Conclusion

Before the pandemic, the prospect of digital modernization was intimidating to many auction houses. It was not how they did business, and they rarely strayed from tradition. However, when it became clear that changes were necessary to survive, the auction industry mobilized in record time. Many auction houses are reporting sales stronger than pre-pandemic figures. That’s because they leveraged pre-existing platforms, made incremental changes to their web applications, and embraced live streams.

But the auction industry is not the only one that benefits from digital modernization. Your company, too, can quickly build on its legacy systems to exceed customer expectations and boost its bottom line. That’s why we recently launched our Fast-Track Application Modernization service. This new program targets your most important modernization needs and brings measurable value to your company every 90 days.