Art Market Cooling, But Online Sales Booming

The art market is changing, and social media has become the primary way consumers discover art, according to a study commissioned by Invaluable. The survey found that nearly a quarter (22.7%) of art buyers find new works of art via social media, which edged out museums (20%) and galleries (15.9%) as buyers’ primary source of discovery. Millennials are leading this change, with 44.3% of young millennials (ages 18–24) and 33.8% of older millennials (ages 25–34) saying they discover art on social media. Millennials are also increasingly buying art online, viewing the purchasing of art as both a long-term investment and a unique experience.

While the art market’s shift to e-commerce has experienced some friction, social media has made entry into the market more seamless. As seems to be the case in all areas of growth in retail, millennials are the key influencers. However, it takes more than just the product to win them over. In addition to viewing art as a good investment, most of the millennial art buyers surveyed (92%) cited “some kind of feeling” as a motivating factor to buy art. And how do sellers effectively communicate a feeling to millennials? Through social media.

Instagram, in particular, has been key in the art market’s movement to e-commerce. “Instagram has emerged as a more democratic platform for art, offering unparalleled access to those whose pockets are not as deep as their enthusiasm for art. It also allows serious collectors and critics to discover and evaluate art without bias. In a sense, the platform strips away reputation and fanfare, instead forcing artists to connect with people in a visually engaging and innovative way,” explains Simon Davies on Tech.Co. Instagram provides a way for art-hungry millennials to get an art education and make that emotional connection with individual artists. For these younger, more digitally savvy consumers, “purchasing art online is an easy threshold to cross,” says Davies. Some of this might have to do with the lower price tag that typically accompanies online art purchases, most of which are under $10,000. Furthermore, lower price points make the online market more resilient in a global art market that appears to be cooling in some sense.

The art market grew to record highs in 2014 before cooling in 2015—except for online sales, which increased greatly last year. This suggests that the art market may not be cooling, exactly, but instead shifting to a new sales model, e-commerce. Online art sales in 2015 reached $3.27 billion, increasing by 24% year over year and representing 5.1% of the art market, according to the Hiscox Online Art Trade Report. If the online art market continues to grow at that rate, it will reach $9.58 billion by 2020. In addition, consumers are furthering the trend by increasingly turning to mobile to view and purchase art. The Hiscox report also shows that 40% of visitor traffic and 24% of bids came via mobile devices, and 32% of buyers used a tablet or mobile device to make their purchase.

One company effectively capitalizing on the growth in the online art market is UGallery, an online, curated art gallery that is pioneering the e-commerce art space. Founded in 2006, UGallery was an early player in the space, and it has benefited greatly from the growth of e-commerce as whole. The site features a selection of emerging artists, and includes a short biography for each. The goal is to democratize the art space by bringing consumers and artists into direct contact. Driven by a focus on the millennial consumer, UGallery also offers a wedding registry. Increasing numbers of millennial couples, seeking a unique experience, have sought to purchase a one-of-a-kind piece of art that is representative of them as a couple. UGallery decided to streamline the process by creating a registry where friends and family can contribute to the price of an artwork. UGallery wants the shopping experience to be as close to the brick-and-mortar experience as possible. The company recognizes that the connection between the consumer and the artist is key to increasing customer engagement—especially for millennials, whose purchasing decisions are highly influenced by emotional connections.

Another player in the market, Saatchi Art, is the world’s leading online gallery. The art seller curates original artwork from around the world and offers a unique curation service to shoppers. Buyers have the option to take a short “Art Advisory” quiz on the Saatchi Art website, after which a curator will contact them to help them find their perfect piece. This service makes shopping with Saatchi Art an experience rather than just a transaction, something consumers are increasingly looking for in retail. Saatchi Art also has a mobile app, which helps foster the growing m-commerce trend, and a blog, to provide engaging content for art lovers. Saatchi, of course, has a strong following on social media, boasting over 724,000 followers across Instagram, Twitter TWTR +1.03%, Facebook FB -0.11% and Pinterest.

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Even Christie’s is moving online. The 250-year-old auction house launched its own mobile app in 2010 and now runs about 80 online auctions per year. Given its renown, the company’s brand plays strongly into its online success. “People know when they buy from Christie’s that they can feel fully comfortable with the purchase, online or off,” explains John Auerbach, International Managing Director of Digital and eCommerce at Christie’s, to The Memo. In fact, the Christie’s team finds that online auctions are more effective for niche, art-focused—and typically underperforming—categories such as Japanese prints, Picasso ceramics and Chinese export porcelain. The move online has opened up the market for Christie’s, and new customers make up 80% of its online buyers, who tend to skew younger than its other buyers.

Overall, the online art market seems to be in line with several retail trends: consumers spending on experiences, retailers targeting millennials and millennials embracing social media. Purchasing a piece of art seems to satisfy many consumers’ preference to spend more on experiences than on material goods. Over half of millennials would buy art online, while only 19% of Baby Boomers would. As the millennial population continues to age and younger millennials enter the job market, we believe the online art market will only grow.

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May 14, 2016