The deal to "unite the global leader in online shopping with the iconic international art business and auctioneer" will see New York sales broadcast live on a new section of eBay's website from the autumn, with the expectation that the partnership will later include sales from Sotheby's other salerooms and online-only events at more accessible price points.
Both companies will be keen to avoid any repeat of past mistakes. Sotheby's began their online experiment in 1999, partnering first with Amazon and then with eBay in 2002. Both projects folded after a year with Sotheby's registering losses of more than $100m. For their part, eBay's attempts to improve their fleamarket image, beginning with the acquisition of California saleroom Butterfield & Butterfield - sold on to Bonhams when the experiment failed - and the launch of eBay Great Collections in 1999, have yet to bear fruit.
Their most recent venture, eBay Live Auctions, which integrated the content of the US online bidding platform Live Auctioneers with eBay's marketplace, ceased in 2009.
Announced on July 14, just months after the activist shareholder Daniel Loeb criticised Sotheby's for what he saw as their antiquated business practices, the new Sotheby's-eBay partnership is forged in the belief that earlier failures amounted to 'right idea, wrong time' - attempted before customer trust in e-commerce and the advent of the smartphone revolution.
Pool of Customers
A decade since their last collaboration, Sotheby's still see value in eBay's huge but varied worldwide audience of 145 million. "Even if we only reach point 1% of eBay users, that's huge for us," said Bruno Vinciguerra, Sotheby's chief operating officer, who is keen to expand beyond a current pool of 100,000 exclusive customers.
In their press release, Sotheby's and eBay provided data to suggest how two businesses from apparently opposite ends of the auction spectrum (both risk challenging their brand image with the deal) will complement one another. Both have enjoyed significant spikes in mobile traffic (tablets and smartphones now account for 25% of total Sotheby's website traffic), while Sotheby's say sales achieved via their live bidding technology increased by more than a third in 2013.
Significantly perhaps, both companies say they will now seek to grow their market share at the price points where they expect their collectors to converge in the future - particularly in the segments well suited to online trading such as jewellery, watches, prints, wine, photographs and 20th century design.
Each day on eBay, more than 3500 auctions close at prices over $5000, while in 2013 more than half of Sotheby's lots were sold within the $5000-100,000 range. It remains to be seen if, for Sotheby's, this amounts to an intention to compete once again in the middle market they have largely dropped since the advent of the 'fewer lots, higher values' policy a decade ago.
All Sotheby's New York catalogues (minus the flagship evening sales) will be accessible via a new 'experience' on the eBay site tailored for customers who are looking to discover premium art and collectables.
EBay describe Sotheby's as the "pre-eminent anchor tenant" on this new platform, providing both premium merchandise and its brand name, but there will be "other important partners" - including clients of Invaluable, the US-based provider of online live auctions who in May announced a partnership to bring live auctions of art and antiques back to the eBay platform.
Auctioneers will pay eBay a commission on each sale that takes place on eBay - although for now at least shoppers would pay Sotheby's directly for any purchases rather than use an online payment solution such as PayPal. That could, however, become an alternative payment method in the future.
Meanwhile, Christie's have announced further investment in their e-commerce. While Sotheby's plan is to work with eBay without making another heavy investment in technology, their rivals are taking a different path to capture more online business, announcing last week a $50m investment that will allow for more internet-only auctions and a website redesign. Last year Christie's, who held their first online-only auction in December 2011, conducted 60 online auctions generating 30% of their new buyers.
The recent TEFAF report found that online sales of art and antiques in 2013 represented only 5% of the art market (far below the average for luxury goods), but did expect online art and antiques sales to increase by about 25% a year for the next few years.
Sotheby's Online Partnerships - A Brief History
• June 1999: Sotheby's partner with Amazon.com (who invest $35m in the auction house) to sell art and antiques through a jointly operated auction site, www.Sothebys.Amazon.com. The intention is to create a separate marketplace from Sotheby's existing auctions with dealer partners.
• October 1999: six months after eBay acquire West Coast auction house Butterfield & Butterfield for $260m, eBay launch Great Collections, a site offering more expensive merchandise sourced from reputable auction houses and dealers.
• October 2000: Amazon and Sotheby's announce a 'friendly separation' and the dissolution of their jointly operated auction site, Sothebys.Amazon.com. The venture is plagued by customer service problems.
• January 2002: Sotheby's and eBay announce a partnership. Sotheby's hire almost 200 staff to support the project to hold online auctions at Sothebys.Ebay.com.
• August 2002: eBay announce the sale of Butterfield & Butterfield to London-based auction house Bonhams. Great Collections, now called eBay Premier, is shut down.
• February 2003: Sotheby's announce that they will no longer hold sales on Sothebys.Ebay.com, revealing a loss of approximately $100m on Internet operations across three years. The partnership with eBay is officially dissolved in May.
• January 2009: eBay Live Auctions, which integrated with eBay's marketplace, is closed. eBay had no way to authenticate or vet the antiques that were being sold.
• August 2013: Amazon launch a fine art store with 40,000 works of art from more than 150 galleries and dealers.
• July 2014: Sotheby's and eBay announce a second partnership.