How do you balance the need to continue to invest in your business with a pricing structure that retains the critical mass of customers you have attracted to your services?
That’s a challenge facing every established firm – including online auction marketplace thesaleroom.com, which has decided to increase its commission fee to auctioneers, starting next month.
The site is owned and operated by Auction Technology Group (which is also the publisher of this newspaper). Its chief operating officer, Richard Lewis, explains the company’s thinking.
thesaleroom.com recently announced it is updating its pricing. What changes have you made?
We’re making one change. From November 1, when an item is sold to an internet bidder the commission we charge to auctioneers will be 4.95% excluding VAT. Auctioneers typically pass this on to the buyer – some pass on less than our commission fee, a few might charge more (as more than a dozen already do today).
Many US auction marketplaces have been charging a little bit more than this for some time. In other industries, marketplaces often charge considerably more.
Why have you made this change, and why now?
We have kept our rate the same for 12 years. When we launched live bidding in 2006, the prevailing rate was 5% but we decided to charge 3% and have done so ever since.
Providing a great service at an increasingly large scale inevitably incurs rising costs. For example, live auctions on thesaleroom.com now feature upgraded high-definition audio and video which is available on all browsers and devices including iPhones and iPads. This service has been welcomed by auctioneers and bidders alike; it is materially more expensive for us to provide than the previous version.
In numbers
thesaleroom.com The home of art & antiques auctions
■ More than 500 auctioneers
■ More than 4 million lots a year
■ Live bidding on more than 7,000 auctions each year
■ More than 1m unique users (Sept 2018)
Our company employs 140 people, nearly all of whom facilitate and support our online marketplace services. The very best tech talent is expensive to hire.
Critically for bidders and auctioneers, we neither outsource nor move offshore key functions such as Customer Service. We’re proud to be a UK business; London is and will remain our home.
We have added a suite of new features on the website for bidders and will be adding many more in the months ahead. We have also been making major investments in our infrastructure, our security and in marketing to support all the auctions on our platform and will continue to do so.
Our goal is to continue to serve auctioneers. The biggest value we bring is a quality, ever-growing bidder base. That is where the majority of our investment is focused.
Can you give us an example?
In 2017 alone, we attracted 733,000 registrations from bidders new to auctioneers. The bidders came from 130 countries.
We achieved this by investing heavily in online advertising on Facebook, Instagram and the myriad of sites in the Google display network. We also run a series of auto-triggered emails and targeted email campaigns.
Bidders coming to thesaleroom.com from these campaigns are finding the experience is becoming as seamless as possible thanks to the work our developers have done.
What are some of the new features for bidders?
Many auctions now feature pre-auction competitive bidding where you can place your maximum bid in advance and let us execute the bid on your behalf.
We let you know whether your max bid will put you in the lead on thesaleroom.com and you’ll be alerted if you’re not the highest bidder on thesaleroom.com. We’ve seen significant take-up of this service among bidders since it was launched.
In addition, it’s now quicker and easier than ever to find the lots you want with improved categorisation, faster site-loading speeds and new filters allowing you to search for lots within a specific distance of your postcode.
Email notifications are free – we’ve scrapped all the charges there. Auction Alerts used to cost £5.95 a month for 10; now they are free. We also provide Auction Reminders, Watch List alerts and Catalogue Alerts to make sure bidders don’t miss out on any item they’re keen on.
Is thesaleroom.com just about new bidders?
It’s about every bidder, every buyer and every auctioneer.
As our service has grown, we have recognised that we have an increased responsibility to auctioneers, buyers and sellers.
For instance, we scan lots on our website throughout the week to check for potentially non-CITES compliant items. We work with a panel of hand-picked experts where we need extra input to review an item. This is a complex area of compliance for auctioneers and their feedback tells us that they appreciate our efforts to help ensure that nothing slips through.
We also have invested heavily both in a bidder security team and bespoke technology to protect auctioneers and buyers alike against fraudulent bidders. Defaulting payments on thesaleroom.com are now less than 1%.
Our security tech and processes were recently audited by an external expert who told us how impressed he was by our systems.
This commitment is unmatched in our industry – unless you know of another auction marketplace that does all that?
What is thesaleroom.com’s market position?
Our role is to work with auctioneers to grow the overall market and to attract bidders who love to discover and acquire wonderful objects.
We work in partnership with the auction industry and buyers. We have no intention of disintermediating auctioneers. Our expertise resides in a flexible tech platform tailored for auctioneers and bidders, combined with strong online bidder acquisition and engagement.
Auctioneers have a wealth of experience and knowledge that we neither possess nor have any intention of trying to replicate.
Over the past two years we have been offering auctioneers the opportunity to list as many auctions as they want for a single subscription as opposed to paying to list each sale separately. This has enabled auctioneers who used to run only their specialist sales on thesaleroom.com to list all their sales – from fine art to general sales – cost-effectively.
This initiative has brought many more items onto the website and offered bidders an even wider choice of lots.
So it remains all about connecting people to lots?
We do much more than that.
How?
Among other things, I’d say:
We provide convenience to bidders. You can bid wherever and whenever you want from any device, thanks to the services and features I’ve mentioned.
We support auctioneers by identifying and preventing fraudulent bidders.
And we support bidders with our local Customer Support team who reply personally to more than 10,000 queries a month.
Was an alternative to the change in commission considered?
The alternative would be to stop investing and stop innovating. That’s not feasible for any technology business. In particular, the expectations of online bidders are steadily rising.
There was some resistance from auctioneers, collectors and dealers when live bidding was launched 12 years ago. It took persistence and considerable investment to make the service work on a large scale. Now it’s a fundamental part of every art and antiques auction.
Our investment in running and marketing thesaleroom.com has contributed to transforming the auction landscape. A small regional auction house can now have a global profile, often selling to 25 or more countries in a single sale.
How have auctioneers reacted to the forthcoming change?
We have already met or spoken with 150 auctioneers. Some have told us they were surprised we hadn’t done it sooner; some were disappointed but the majority have said they understood the reasons.
And on social media?
There’s been some unfortunate misinformation about the change posted online as well as some understandable concerns expressed. We’re continuing to discuss our plans and the value we bring with auctioneers.
Why did you not consult the industry over the change?
Nobody is going to say they want a change in commission. It was a difficult decision to take in the first place – we have held out for 12 years.
We have been informing auctioneers over the past few weeks and listening to their feedback. And now we’re informing the buying community ahead of the change.
It’s worth noting that we will be providing a bidder rebate. For high-spending buyers (£20,000 every six months) there’ll be a material discount. See thesaleroom.com for more details.
And our commitment to partnering with the industry remains.
For example…?
We worked directly with the Advertising Standards Authority to agree an interpretation of their guidelines on all forms of auction advertising that the industry has followed. This meant every auctioneer did not have to contact the same authority separately.
Through Antiques Trade Gazette and co-operation with industry trade associations such as SoFAA, our company has continually kept the trade up to date on key developments such as CITES, GDPR and the UK ivory ban legislation so that everyone in our industry can remain compliant with changing regulation. Feedback tells us how much these efforts are valued by the trade as a whole.
ATG also sponsors and partners with events promoting dealers such as Rare Books London and Asian Art in London.
And we are again this year a sponsor of the NAVA Propertymark Autumn Forum where we continue to promote and support its Novice Auctioneer competition. ATG will be there next week to see all this year’s finalists in action and I’ll be taking delegates’ questions in a session on October 25.
I’m also happy to receive feedback: rlewis@auctiontechnologygroup.com
