Viewing the Online Landscape with AuctionWatch.com's Jeff Smith

Jeff Smith.

Part One of our conversation last week examined the Internet's impact on the auction industry. Such effects as an increase in the buyer base for auctions, greater access to a wider range of items online, and a resulting upward trend in prices were noted.

By Lisa W. Romano

The Internet may have revolutionized the auction industry as a whole, but not all categories have been lifted by the e-commerce tide.

"You can see certain areas are doing better online than others." Jeff Smith, AuctionWatch.com's vice president of auction services, cites collectibles such as sports cards, dolls and vintage clothing as particularly hot commodities online. "The collectibles area drove [the industry's move online] and that's when the fine art area paid attention to it and saw the possibilities."

As former vice president and director of the furniture and decorative arts departments at Butterfield & Butterfield (now Butterfields, owned by eBay since April 1999) - where he oversaw all furniture and decorative arts auctions as well as Asian art, silver and rugs - Smith is well aware of the logistical considerations that determine what will sell online.

"Size is an issue," he points out. "Although there has been some success with highly specialized sales - such as Twentieth Century furniture - on the whole, because of shipping limitations, it is difficult if you are bidding on, say, a cabinet, to factor in shipping. That area needs some work. eBay has addressed that with their regional auctions that they began this year, with the understanding that it's close at hand and people can bid on that item and just go pick it up."

The shipping issue is far more complex when items are sold online than when they were offered in a brick-and-mortar auction house. Online objects are typically shipped from the previous owner's location rather than making a stop at the auction house.

"The big question now is 'How do you get the property to people once they buy it?'" Smith says. "That seems to be working itself out as auction houses forge partnerships with shipping companies and insurance companies. They've had to develop a whole network of partnerships to facilitate this."

Problems like this seem like small potatoes, however, considering the changes the major auction houses have had to make to their most fundamental business operations and strategies.

"Auction houses are traditionally very, very conservative institutions that are slow to change. They're an ancient profession. It would have taken an incredible visionary to envision that a Pez seller would have such an incredible impact in five years," says Smith.

All auction houses that have gone online have experienced the growing pains that come along with the rapid growth of being on the Internet, although each has dealt with the Internet invasion slightly differently, he notes.

Sotheby's and sothebys.com are two separate operations, he explains. "They're the same company but they have two different staffs. What they've done is moved away from their arcade auctions - stuff that never ended up in full color in the catalog but still had merit. They're putting that online."

The objective of this approach is to "maintain an online presence" and to "develop a much larger buying audience for Sotheby's," Smith says. Sellers can consign their items through Sotheby's 2,500 member/dealers, or directly on sothebys.com.

A different tactic has been taken by Smith's former employer. "There's online, then there's live online bidding," he explains. "Butterfields just set up so you can be at home and bid as if you're in the auction room."

Butterfields also has an exclusively online auction area, called Great Collections, on eBay. Its strategy is similar to Sothebys.com - you won't see a Picasso painting offered here.

Even more options are available at Christies, he says. "You can be there in person, you can bid online without being there live, or you can register to bid live online."

Potential buyers may be concerned about trying one of these new ways of bidding, and buying an item without having seen it in person, but Smith says they need not worry.

"Removing eBay from the formula - and amazon.com and Yahoo! - [and] moving into Sotheby's and [others like it], an object is pretty much guaranteed as described, as it's put up there. You have a much greater likelihood of receiving what you bid on. There is a vehicle on the site if something arrives and is not as described," he says. In other words, the traditional auction houses, in their move online, are still taking the same care in consigning items.

Smith adds: "The majority of bids that are placed in a traditional auction are placed in abstentia anyway. A huge percentage of successful buyers have not even attended the preview."

On a site that allows direct transactions between buyers and sellers, however, a buyer needs to do a little more homework, he says.

"It's important to educate yourself," Smith says. With the low fees at some two-party sites, the background checking is not done for the buyer.

It is at sites with this type of operation where fraud, in the form of selling fakes, can most easily occur, "whether it's intentional fraud or lack of knowledge on the part of the seller," Smith says. He notes that one of the most common areas for fraud is in porcelain.

"Everyone wants the Eighteenth Century [pieces], and they can be easily $50,000 to $75,000. There's lot of it around because they were produced over a number of decades," he explains. "There were a lot of factories in the Ninteenth Century that copied them, and still do. They even copy the dates on them. If it's on one of the sites that guarantees, it's not an issue. If it's not, you have to ask a lot of questions."

Potential buyers should ask where the seller got the piece, and get a detailed photo of the marks on the piece of porcelain.

"If someone can't answer those questions, they either don't know what they're selling or are not telling the truth," Smith says. "The really good copies [represent a very difficult area]. You just have to stay away from it unless you are absolutely sure."

Ironically, given its relative lack of success in online sales, furniture is another common area for fakery. "I see chairs that are no more than 40 years old being offered as 200-year-old Windsor chairs," Smith says. The difference is obvious to an expert, but a neophyte would be fooled.

Although the technology of buying online may make it easier to be fooled, new technologies also offer buyers opportunities to learn more about the items they have interest in.

Consider digital cameras, says Smith. Certain techniques, such as varying the levels of flash used, can reveal color variations and other characteristics of a piece, almost like an X-ray. The result? "You can sometimes see more through a digital image than with the naked eye," he explains.

And just as it's easy to buy online it's also easy to determine what an item is worth. AuctionWatch.com offers online appraisals for just $19.95 - using digital images. Because "there's a limitation to what you can do online," Smith says. If the site's experts determine that an item may be valuable, they will advise the owner to bring it to an appraiser who can inspect it in person.

This service has been extremely well received, he says.

"Most of the tens of thousands of clients we've had in online appraisals are clueless about where to go to find out what their item is worth. A lot of people are grateful to have a first step."

AuctionWatch.com also offers assistance in its content area, which contains articles (including an archive), site reviews of online auction venues, and columns on bidding tips and tactics. The writers are specialists in their areas, Smith says, and an in-house editorial staff does daily news articles. The site gets 4 million unique hits a month and has 500,000 registered users.

"You don't have to register to use the site," Smith adds.

From his vantage point, with all of his site's resources at his disposal, Smith says he foresees some less seismic, though still significant, changes on the online auction horizon.

"There will probably be a lot of partnerships in the future between mid-level auction houses to allow them to offer their items in a common area, at a cost savings, while maintaining their own identity."