Business

Six months into launch, ArtAndOnly is proving that $100,000 art can flourish online.

Swiss gallery owner and seasoned art dealer, Frédéric de Senarclens, launched ArtAndOnly in late February 2016 on the basis of a simple premise. The question he sought to answer was fairly straightforward. In a world still exploring the limits of selling luxury goods online, and where today’s new direct-to-consumer brands hover in the (comparatively) modest $150 – 500 range, could high-priced contemporary art, in upwards of a $50,000 or more, not only sell online, but thrive there too?

For brands operating in traditional, old-world sectors, art included, this is a common question when contemplating e-commerce. But time after time, the results are usually encouraging. As early as 2009, Jeff Kuo, to take one early example, founder of San Francisco-based watchmaker, Xetum, had a hunch, that entry-level mechanical watches, priced at $1,000 and above, could find an audience online. There were those who scoffed at the idea, saying it was unlikely to work. But he was correct, as it turns out, and Mr. de Senarclens is on a similar quest. “A lot of reports are talking about an art market that is basically between $1,000 and $15,000,” he explains. “Since the beginning, I’ve always thought there is a real market for works that are between $10,000 to $1,000,000. That’s where we’re trying to position ourselves. That’s where I think the future is.”

The sub-$10,000 range is the bracket its two closest competitors, Paddle8 and Auctionata, occupy. But despite dealing in similar artists and in similar genres, theirs is in fact a different model to ArtAndOnly’s.

The auction house vs. the gallery.

In the online art world — as within the art world proper — there are two ways for firms to sell works: auctions and fixed-price private sales. On the auction side loom venerable old giants like Christie’s, Sotheby’s, and Phillips. Works at these houses are consigned, catalogued, and then sold, at the slam of the gavel, to the highest bidder. Private galleries, on the other hand — the David Zwirners and Gagosian Galleries of the world — specialize in selling individual works through private sales. Auction houses tend to have much more inventory, and their revenue expectations, due to the nature of auctions, can fluctuate greatly. But they’re also able to sell more volume, whereas a gallery might have a firm revenue forecast, but it may take much longer to sell the art, especially if their top collectors, the lifeblood of a gallery, happen to not be interested in the collections on offer.

Paddle8 and Auctionata are online auction houses. ArtAndOnly, based in Geneva, is an online gallery, and Mr. de Senarclens, crucially, is the first to commit to the model online.

It largest sale to date was €125,000 (around $137,000), but the most encouraging revelation is that most of its sales have been in works priced between $50,000 and $80,000.

The impetus.

The initial idea for the firm began taking shape in 2013. Mr. de Senarclens was running Art Plural Gallery in Singapore, which was the largest contemporary gallery by square footage (12,000) in the country at the time. He noticed that nearly a quarter of his sales were happening online, which sparked a Eureka moment: Could he bring the gallery model to the internet, thereby opening his gallery to more collectors around the world, and offering artists a better opportunity to sell globally rather than just locally?

He toyed with the idea of setting up an online branch of the existing Singapore gallery, but ultimately decided against it. Rather than having a tepid go of it, he wanted to commit fully to running a online-only operation. “Today there are a lot of auction houses and galleries that are doing the online aspect on the side. It was important to be totally online in order to be credible with the audience,” he says. And while Paddle8 and Auctionata were leading the online art auction space, there were no fully-online art galleries in existence. Seeing his opening, he wondered whether he could replicate this full-service experience over e-commerce. Would this high-touch, and personal approach work in a digital setting?

Positive results.

Certainly, the signs at this early stage, now over six months in, are promising. As we at Lean Luxe fondly emphasize, the US continues to be a growth market for modern luxury enterprises, and for ArtAndOnly, this is especially true. By far, the vast majority of its sales have been done in the US, de Senarclens tells us. The overall maturity of the US-based collector and their comfort with buying online both help to explain ArtAndOnly’s popularity there. “The US is way more advanced in buying online,” says Mr. de Senarclens. “People know the process, they’re confident about buying online. But this will come in Europe, as well.” Given ArtAndOnly’s pricing bracket, clients, of course, skew older. There are few collectors in their 20s here. A typical customer is usually a 40-60 year old American who knows what he wants, has money to burn, and is as comfortable with making purchases online, as he is savvy about contemporary art.

As Mr. de Senarclens explains it, collectors today don’t necessarily need to see works in person to buy them. “Today, collectors could spend up to half a million dollars without seeing the work,” he says. “You send them a good image, you send them all the information they need” — each piece at ArtAndOnly is carefully audited for authenticity — “and they are in a position to make up their mind and to decide.” As long as they know the artist, and as long as they know the dealer behind the gallery or the space is credible, then they usually have no problem pulling the trigger on high-priced pieces. “As long as you give him the reassurance that what you’re selling is good, then he will be happy to buy,” he says.

In fact, Mr. de Senarclens explains, it’s easier for him to sell works approaching $100,000, than it is to sell a piece at $5,000.

Huge potential.

In these few short months revenues have already reached the million dollar revenue mark, though Mr. de Senarclens is reluctant to disclose specific figures. It largest sale to date was €125,000 (around $137,000), but the most encouraging revelation is that most of its sales have been in works priced between $50,000 and $80,000. In fact, Mr. de Senarclens explains, it’s easier for him to sell works approaching $100,000, than it is to sell a piece at $5,000.

The potential here is immense. Whereas brick-and-mortar galleries typically have their top 10-15 clients who are loyal and comprise the bulk of sales, ArtAndOnly collectors are global, and there are potentially hundreds of thousands of them now, instead of just a few hundred. But while these global collectors may be looking for specific pieces, they’re not necessarily attached to a single gallery, and may not have loyalty to ArtAndOnly. In a way, that commodifies the art. Though that’s not necessarily a bad thing, there are pros and cons to this.

On the one hand, the firm loses that truly personal, high-touch calling card that’s a cornerstone of the brick-and-mortar gallery experience. On the other hand, ArtAndOnly opens up the potential to sell to more people, and can be more adventurous in the pieces they buy since they no longer have to consign works according to whether or not their handful of top clients might buy them.

It’s a scale play, in other words. ArtandOnly is trying to do the gallery model on a much bigger stage. “What I’m fascinated to see, is that when you run a normal brick-and-mortar gallery, you wake up in the morning, you go to the gallery, you open the door, and you eventually have 10, 20 people in one day,” says Mr. de Senarclens. “What is fantastic [about being online] is that you have hundreds of people coming to your gallery at the same time. There is no limit to how many people can come to your site. The more people visit, the more sales you make. It’s a virtual spiral. You’re not limited in space, and the processes are automated.”

The challenges.

While not yet profitable, the firm is on its way to reaching that mark soon. A big challenge, in that regard, is the time and energy needed for promotion. “You need to invest a lot of energy and money into promoting a platform like this,” explains Mr. de Senarclens. “You will be surprised by the numbers of hours it takes to promote something like this. It doesn’t come for free.”

This is particularly poignant in the wake of the Paddle8 and Auctionata merger in May 2016. According to a source with basic knowledge of the deal, Paddle8 may have been weeks away from insolvency. The burn rate, due to heavy marketing and promotion costs, was apparently too great and the income wasn’t enough to offset it. If this is true, CEO Alexander Gilkes did a good job keeping the organization afloat. Mr. de Senarclens, perhaps learning from this example, is cautious here. “We’re miles away from being as big as they are. But I think that’s one of my strengths. We’re not overspending, we’re trying to be cautious about this investment.”

Another challenge deals with the natural limitations of the gallery model, and ArtAndOnly’s rigorous auditing process. “You can’t have a thousand works in a week. You basically have a limited number of works that you can have for sale,” Mr. de Senarclens says. “On one hand, you want to have as many pieces as possible on your site. But at the same time you want to make sure that each work has been properly audited and carefully scrutinized. That’s the challenge.”

Going forward.

With momentum on the upswing and business heading in a positive direction, the focus for Mr. de Senarclens, beyond maintaining growth, is in thinking about potential investors for a round of financing in the future. “Now that we understand the business model and how the system works, I think it’s the right time to open the capital of the company,” he says. But like other smart modern luxury founders, he’ll be looking for investors who can offer more than just a paycheck. “I don’t think I’m prepared to have anyone coming in,” he explains. “I don’t think money is everything — I need a partner who brings more than just that.”

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  • Jon Vick

    Great read and good luck ArtandOnly. We’re building a product in an old-world sector, luxury interiors, at The Art of Bespoke and worth mentioning 1st Dibs who have proven the high price point ecommerce model.