Demand from overseas markets drives soaring online art sales
The market for online art sales has been growing in line with strong demand from overseas markets and increasing access to internet-based retail outlets, according to a newly updated report, Online Art Sales in the US: Market Research Report from industry research firm IBISWorld.
According to IBISWorld industry analyst Farrell McKenna, “Brick-and-mortar art dealers experienced growth in line with the economy during the past five years, but online-based art sales have been robust.”
IBISWorld said one factor contributing to the strength of the online art market is the nature of its customer base. The goods sold though the largest auction houses, including Sotheby’s and Christie’s, are targeted toward high-end consumers. Therefore, demand for these goods tends to remain constant regardless of the economic climate.
Also, the trade-weighted index, which measures the value of the US dollar relative to foreign currencies, has driven art sales to newly industrialized countries. Consumers in those regions have found themselves with greater levels of disposable income in recent years, providing a financial basis upon which to invest in soft commodities, such as original works of art.
Lastly, IBISWorld said online art dealers operate within the larger industrial realm of e-commerce (IBISWorld report 45411a), which has exhibited double-digit growth during the five years to 2015. “Like a rising tide raising all ships, worldwide consumer demand for online shopping has benefited online art dealers,” it said in a release.
IBISWorld analysis reveals that the market for online art sales exhibits a medium level of concentration. The top four firms collectively hold a substantial percentage of the overall market for online art sales, with Christie’s International accounting for the vast majority of that sum.
The major companies in this industry are established auction houses that made a foray into the world of e-commerce during the past decade. These firms are the exception to the industry’s norm of small-scale, niche, owner-operated businesses.
IBISWorld said that as the industry remains in a phase of strong growth, concentration will likely decrease somewhat as the entry of new businesses dilutes the market share of the current major companies.
The report predicts that the online art sales industry will continue to benefit from an affluent and global customer base through the five years to 2020. Revenue is forecast to grow significantly, but the double-digit gains exhibited during the previous period will eventually moderate into more stable growth.
“Customers abroad will continue to provide a substantial share of revenue, but foreign competitors will begin challenging domestic sales as the value of the dollar strengthens considerably,” said McKenna.
Other factors supporting growth include continued advances in technological innovation and expanding access to art-focused e-tailers.