Amazon, a global online retailer that has become the leading consumer destination on the internet (most popular online retailer and eighth most popular website in terms of frequency of visitors*) will celebrate its 20th anniversary next year. Over the past two decades, it has offered nearly every product imaginable, but apart from a small section for art-related materials called “Arts, Crafts and Sewing” it has largely stayed away from the art market.
Skate’s has long anticipated that Amazon would move into the art trade due to the potential of its quality platform. Indeed, among all current players in the online trade Amazon clearly stands out due to its global reach and broad international audience, the accessibility of its user-friendly interface, and its long experience in marketing various types of products. All of these qualities give Amazon an opportunity to conquer the art market.
In August 2013, Amazon did finally make the decision to diversify into the art trade by partnering with more than 150 galleries and dealers. The company’s initial presentation to the art world contains around 40,000 artworks by approximately 4,500 artists.
This move, which has generated both positive and negative feedback from art market professionals, will test the art market in a new way. For the past several years, various market players have attempted to present a viable platform to serve buyers interested in collecting online. Yet, there is little proof that the existing ventures have managed to succeed. The vast majority of companies involved are keeping revenue and profitability secret, but those publicly traded companies that are obliged to announce their performance results, such as artnet and Artprice, serve as a source of encouragement to others looking for new ways to explore the online trading model.
Amazon has yet to justify its decision from a financial perspective, and it will be some time before we see the results of an established company diving into what remains a very challenging market with still uncharted waters. In the meantime, Skate’s has added Amazon to its e-commerce ratings, which measure the technical and artistic merit of online art traders. Regardless of how Amazon ultimately performs in this sector, it is safe to say that competition is about to intensify.
Exhibit 1 below presents the top 10 businesses listed by their distribution power as measured by the number and frequency of users visiting their websites. Exhibit 2 presents a customized approach developed by Skate’s to alternatively grade art industry firms for their artistic merit in terms of providing online trading service and functionality. This rating is based on four principal qualities: vetting for art offered (no counterfeits, accurate authentication, and limited counterparty risk), ease of use, transaction and shipment capabilities and, finally, transaction costs.
Please click here to download the full report with data.
 See Skate’s Annual Report for 2011 – http://skatepress.com/files/Skates_Annual_Art_Investment_Report_2011_part_1.pdf