How much would you be prepared to pay for a slice of two-year-old wedding cake? A couple of dollars, perhaps? But what if the cake in question was served to guests celebrating the April 2011 wedding of the Duke and Duchess of Cambridge. How much would it be worth then?
Try US$4,160: That's the amount the regal crumb sold for when it appeared at a Beverly Hills auction last year. The boxed fruitcake was among 650 slices given to guests at a Buckingham Palace reception for Prince William and Kate's wedding.
The major global auction houses — high profile names such as Christie's, Sotheby's and Bonhams — are making increasing use of the Internet to attract more buyers and bids, and better prices for sellers with the use of online auctions.
Some auctions are online-only; others combine a traditional salesroom auction with an online element. Collectors can sit at home in front of their laptops or mobile devices and bid for items being offered for sale on the other side of the world.
One of the world's largest auctioneers of fine art and antiques, Bonhams received a total of 58,000 online bids totalling almost £300 million in 2013. Of these, 18,500 were successful and represented total sales of £40 million; the remainder were under-bidders. Founded in 1793, Bonhams now receives a quarter of all bids this way, all within two years of launching its own customised online bidding system.
Matthew Girling, Bonhams CEO for Europe and the Middle East, says: “When we developed our online system, we always knew this was going to be the future, but we have been surprised that it has caught on so quickly.”
Major auction sales are still dominated by bidders in the room and on the telephone, but the use of online bidding has now taken its place alongside other, more traditional methods of participating in auctions.
“When we started this technological revolution at Bonhams, we expected it to appeal more to younger people who had grown up with technology and were comfortable with it,” Girling says. “But conversion to all forms of communications technology has so penetrated society that I can honestly say today all age groups are represented online.”
Girling adds that online bidding is also helping to make the art market a less closed world and a far more egalitarian place. “And that is good for business,” he adds. “People want access; they don't want stuffy tradition. They want to be able to bid from the golf course, or the swimming pool, or from their desk at home. Online bidding makes this possible.”
According to a study by Bermuda-based fine art insurer Hiscox, 55 percent of respondents in the 65-year-plus age group said they had bought art directly online and 82 percent said they had bought an artwork based on a digital image only.
In the case of online-only auctions, it's not unusual for serious collectors to spend the night perched in front of a screen playing brinkmanship with rivals bidding for the same item. It is not a game for the faint-hearted.
Tarisio, an online auction house for fine stringed instruments with offices in London and New York, has based its business on an online bidding system similar to eBay, with one notable exception: Bids are accepted after the scheduled close. “Bidding wars can go on for hours,” says founder Jason Price. “Our contract is with the seller and our duty is to get them as high a price as possible.”
In 2011, the web-based auctioneer sold the 293-year-old Stradivarius violin Lady Blunt for £9.8 million in aid of Japan's tsunami relief fund, more than four times the previous auction record for an instrument made by the violin-maker.
A 17th-century Stradivarius, stolen from Korean-born, London-based violinist Min-Jin Kym (while she was making a telephone call at London's Euston Station in 2010) was later found by British Transport Police and also sold by Tarisio for £1.4 million. The thieves were so ignorant of the violin's value that they had initially offered it to a stranger for just £100.
Auction items with a story to their name, or linked to a celebrity, invariably attract strong bidding interest. A Pan Am airline bag given to John Lennon when The Beatles flew to the US for the first time in 1964 sold online for £4,700 on auction in the UK.
“This is a typical bag which would have been given out on flights, but it just happens to have belonged to John Lennon and that's what makes it special,” Alan Pritchard, music and entertainment specialist at Special Auction Services in Berkshire, England, told BBC.
Another collection linked to a personality is the extensive wine collection of former Manchester United manager Sir Alex Ferguson. The collection included fine and rare wines featuring Domaine de la Romanée-Conti Burgundies and many first growth Bordeaux, ranging from 1986 to 2011 vintages. Sir Alex sold part of his wine collection at auction in Hong Kong in May this year for £2.3 million. The top lot, a Methuselah of Domaine de la Romanée-Conti Vintage 1997, sold for £94,815.
“The top 10 lots were bought by private Asian buyers,” says David Elswood, head of wine at Christie's. “Chinese buyers continue to dominate in this sale and show great enthusiasm, especially for the rarest wines of Burgundy, combined with some unique signed memorabilia from Sir Alex.”
Separate to the Hong Kong auction, another part of the ex-football club manager's wine collection was sold at an online-only auction in June this year.
As for art, Hiscox says global online sales totalled US$1.57 billion in 2013 — around 2.4 percent of the art market. The insurer says the online art market is expected to more than double in value to $3.76 billion between 2014 and 2019.
It goes on to say that while technology in recent years has disrupted businesses in the film, book and music industry, the “real challenge for the art world is how the traditional art market engages both with their existing client base and a potential new audience that increasingly wants the option to conduct their business online”.
Hiscox found in a survey that 64 percent of collectors bought art unseen through a website with little or no interaction with the seller. And 26 percent of them have spent £50,000 or more buying art online, a figure that includes buying based on digital photographs, and from online auctions and gallery websites.
Auction house Christie's held 49 online-only auctions in 2013, up from what Chief Executive Steven Murphy called a “taster season” of six in 2012. Online sales grew 20 percent to £13.2 million.
Christie's says China is a key piece to the company's global strategy. In 2013, Chinese buyers accounted for 22 percent of its overall sales.
Importantly for the company, 45 percent of the buyers in those 49 auctions had never bought from the auction house before — an indication that online auctions are attracting bidders who would never have considered attending an auction previously. Online registrations also came from more than 100 countries.
According to Christie's, online auctions benefit both buyers and sellers looking to acquire or sell items outside of the traditional auction calendar. It also has evidence that in an online setting, the market “is very comfortable spending large sums of money”.
Online, one of Christie's top lots to date has been an Apple 1 Computer (US$387,750) sold in 2013. Strong prices have also been obtained for works of art, including Richard Serra's I-95 ($197,000) and Untitled by John McCracken ($149,000).
Daniel Wade, head writer of online auction house Paul Fraser Collectibles, says the speed and ease of the Internet has brought new buyers into the sector. “A quick search and you can discover all the places where your chosen item is auctioning in the world over the coming weeks. This has revolutionised the buying and selling process, but it's a double-edged sword.”
He goes on: “Imagine you're selling a rare British teapot. Twenty years ago, only those attending the auction, or who had subscribed to the auctioneer's catalogue, would have been bidding. Now, with the Internet, your rare teapot has a global audience, which should set prices soaring as bidders compete against each other. But the Internet might also reveal your rare teapot is not as rare as you thought.”
“While this might not be such good news for sellers, the Internet age has empowered buyers, giving them the knowledge to make informed choices, bringing down some prices in the process,” Wade adds.
Christie's says with the expansion of its geographic and virtual footprint, the auction house has been able to attract many more buyers and consignors to its auctions. “More products make our clients happy and more buyers makes our consignors happy.”
Sotheby's, on the other hand, has been reluctant to commit to online-only sales after an ill-fated venture with eBay, which ended in 2003, although it has successfully allowed Internet bidding alongside its saleroom auctions.
So where is this all going? Brick-and-mortar auction house Phillips has even started to sell digital art, allowing people to bid for, among other things, a website, a YouTube video and digital files that can be displayed on a range of devices, including smartphones.
Most recently in October, eBay launched a live auction platform for art and collectibles as part of a partnership with Invaluable, which provides the technology for live online auctions hosted by traditional auction houses. The live auction market for art and collectibles, in eBay's opinion, is worth $8 billion — a market it can no longer continue to ignore.
Watch This Space
Coupled with a diminishing supply, the demand for fine watches is seeing dealers, watch firms and private clients vying for the best of the best
According to Christie's, the watch industry is a good example of how auction sales are changing in the online space. “There's a greater wealth of knowledge online than ever before and with the rise of social media, collectors can instantly share knowledge on different watch forums, blogs and on Instagram,” says a company spokesperson.
Prices for antique watches are growing exponentially because of an increased demand for only the finest and rarest models — led by Patek Philippe, renowned for its skilled craftsmanship, small production numbers and innovation, he adds. And as Christie's says on its website: “A George III table in South Kensington, an old master painting in Amsterdam, a Patek Philippe watch in New York...with live online auctions from Christie's, you may find yourself giving in to temptations you could never imagine.”
So you want to bid online? Here's How
Check out the websites of major auction houses for step-by-step details on how to bid online at a live auction. Once registered for an auction, you'll be able to see and hear the auctioneer in real time and receive clear prompts throughout the bidding process.