Sotheby’s exclusive: What is the future of auctions?
Josh Pullan, managing director of the Global Luxury Division at Sotheby’s, is taking a centuries-old auction house down a path that is fundamentally altering the way it does business
When a 277-year-old-auction house decides that it wants to be something more, revealing an existentially different model, several questions are thrown into a vortex, especially: ‘What’, ‘How’ and ‘Why now’. Josh Pullan, managing director of the Global Luxury Division at Sotheby’s, has the answers. In December, the American auction house introduced an online platform called Buy Now, that sidesteps its typical bidding process, and instead offers items for instant purchase.
“We offer over 5,000 items that are available for instant purchase. The reason that we wanted to create this platform was to meet the needs of our clients 24x7, as opposed to episodic auctions which is an event-based business,” says Pullan. The platform, which went live in the US at the end of last year, began shipping to 75 countries in the first quarter of 2021.
But at an auction house that can command hundreds of millions of dollars in a year through its tried-and-tested model, introducing a polar opposite business such as Buy Now requires strong justification. As Pullan explains, 70 per cent of the buyers on the platform are new clients to Sotheby’s, allowing its digital net – Pullan was previously the head of e-commerce for Sotheby’s – to play a dual role of attracting new revenue and fresh audiences.
Notably, to compete in the online space, Sotheby’s isn’t dropping its prices. “Our average item is around $10,000 on the platform. I spent 10 years building and developing our digital business out of New York. We’ve seen a 600 per cent increase in our online sales by value in the luxury [division] last year.”
That luxury division at Sotheby’s was created in September 2020 and incorporates jewellery, watches, wine and spirits, 20th-century design, handbags and accessories, sneakers, books and manuscripts, as well as autos. “Last year, the luxury division did around $650m worth of sales. The biggest category in the entire division was the jewellery business – we had sales in excess of $310m. And our watches business was the second largest, [followed by] wine, design and books. But jewellery takes up the lion’s share of the revenue.”
Thirty-five per cent of the buyers within this jewellery category were new to Sotheby’s, an increase of 32 per cent from the year prior. It would come as little surprise that 90 per cent of the jewellery lots sold in 2020 went to online buys, double that of the previous year. The Cartier Tutti Frutti bracelet sold for over $1.3m in May last year, becoming the most expensive jewellery piece ever sold in an online auction at the time, but was followed by other star pieces including a 102.39-carat D Colour Flawless Oval Diamond that sold for $15.7m in Hong Kong in October and a 14.83-carat Fancy Vivid Purple-Pink Internally Flawless diamond that went for $26.6m in Geneva the following month. Digital adoption played a pivotal role in Sotheby’s jewellery business last year, with over 47 online sales realising $69.2m – double the number of sales and almost eight times the value for 2019. The highest bid placed on its app was $3.8m for a 12.38-carat pear-shaped pink diamond ring.
Apart from jewellery, watches were the next biggest performer for the luxury division. Global auction sales of watches at Sotheby’s reached $97.5m in 2020. Over 140 online sales netted $47.4m year-to-date – almost eight times the number of sales and five times the value over 2019’s watch sales. Covid-19 notwithstanding, demand for preowned luxury watches remained robust. In 2020, Sotheby’s first online sales ever dedicated to pocket watches gathered $9.1m. But one of the year’s biggest horological offerings in the auction world was the Rolex Cosmograph Daytona Ref 16516, which sold in July for $3.3m.
Jewellery and watches aside though, the category that created the biggest buzz, at Sotheby’s and beyond, was the newly introduced sneakers and streetwear offering. It’s an experimental and edgy route for an auction house that’s built a reputation for itself over the likes of a $558,000 1945 RomaneeConti French Burgundy or a $104.1m Pablo Picasso Garçon à la pipe or even a $3.9m Kashmir sapphire to then introduce Notorious B.I.G’s jewel plastic crown and Kanye West’s sneakers into its auction portfolio. In September last year, Sotheby’s held its firstever hip hop themed auction in New York and raised $2m from the sale, around 20 per cent higher than Sotheby’s itself estimated.
While the auction house will intermittently focus on streetwear and pop culture, Pullan’s team cannot underestimate the importance of sneakers. “The sneaker business has really exploded, and the resale market is at an all-time high. In 2019, the resale market was about $6bn globally. It’s estimated that it could reach about $30bn by 2030. What I think is driving this category is that it resembles many other traditional collecting categories like jewellery, watches or fine art, because ultimately, sneakers have an element of design, craftsmanship and quality. At Sotheby’s, we offer two types of sneakers, the game-worn sneakers worn by some of the NBA’s greatest players, and then there are the models which people are chasing because they’re red
“In 2019, the [sneaker] resale market was about $6bn globally. It’s estimated that it could reach about $30bn by 2030”
hot.” An example of the latter category, and one that pushed the conversation around the potential for sneakers as true mainstream collectables, was when Sotheby’s auctioned Kanye West’s Nike Air Yeezy 1 Prototypes for a staggering $1.8m – making it the most expensive pair of sneakers ever publicly sold, and the first to command over a million dollars in a public sale. “Oftentimes, they’re anchored in a particular moment in time, so like the Kanye Yeezys that we sold in Hong Kong for $1.8m is super important because of its provenance stemming from the fact that he wore them at the 50th anniversary Grammys. It was the pair of sneakers that launched the Yeezy brand. These are the grail objects that people chase, because they have that great story and they have the perfect provenance behind them,” explains Pullan as to why the Kanye kicks securing the million-plus price wasn’t just down to hype.
While Sotheby’s online platforms have increased participation from clients in several countries around the world, one of the regions that is still of primary importance is the Middle East. “There’s an increased focus on pre-owned luxury in the Middle East. And when we look at the number of participants from the region in luxury, we’ve seen an increase of approximately 30 per cent between 2018 and 2020. As recently as 2019, we appointed our leading watch specialist, Frédéric Watrelot, and also a jewellery specialist, Sophie Stevens, to look after the region and both of them are in Dubai.”
While the Middle East has potential, the market that is already on top for Sotheby’s is Asia. Around 50 per cent of the clients last year in its jewellery category were from that region. “For luxury, Asia is an absolutely critical market. We’ve seen great growth there in the last 12 months. Our big presence in the region is in Hong Kong. We have a WeChat programme in China, and it’s a great way of reaching an audience, with live content in the local language, [and connect] also culturally.”
What Sotheby’s has excelled in over the last couple of auction seasons, and what Pullan has pushed more determinedly since he took over the luxury division, is brand collaborations. It has previously collaborated with the likes of Hublot, IWC and Vacheron Constantin, but more recently with Chopard. Earlier this year, Chopard’s co-president and artistic director, Caroline Scheufele, presented the latest addition to her Precious Lace collection – a Paraiba Tourmaline Necklace – as a piece that is exclusively available via a private sale at Sotheby’s.
Another example of Sotheby’s strategically partnering with brands was ahead of its Geneva Luxury Week sale in April, where it collaborated with Swiss major watch and jewellery retailer Bucherer both on the physical display of its merchandise ahead of the auction, and also on product categories. “We had displayed some of the property from our auction in their flagship stores in [Geneva’s] Rue Du Rhone. They also offered a number of their watches as part of that Geneva Watch Auction that came from their certified preowned programme, which is a guarantee that the watch is not just authentic, but that it’s been serviced, that it comes with a twoyear service warranty and that the parts are from an authorised dealer.”
Having a physical space for its auction items to be present is as much a priority focus for Pullan as diversifying and expanding its product inventory. To that end, Sotheby’s opened what it called The Emporium in the lobby of its New York City headquarters in May, which is considered a physical extension of the Buy Now platform and offers its collection for outright purchase. “The Emporium is focused on how do we capture the traffic that’s coming into our New York headquarters, and help make them aware of our Buy Now business and the marketplace. This is a window into our digital marketplace, using our physical footprint to bring people into it. It is our first omnichannel retail store,” explains Pullan.
The Emporium invites one leading guest curator to determine which items from its Buy Now marketplace are on display in the venue. Over May and June, it invited Gucci Westman to curate her selection of items which included a $95,000 David Webb gold, platinum and diamond necklace, a $30,000 stainless steel Rolex Submariner, and even a Porsche 356 as its centrepiece. Apart from The Emporium, Sotheby’s other global physical display spaces include the East Hampton gallery, another one in Palm Beach and also a London New Bond Street gallery that is dedicated to direct purchases.
While Buy Now has opened up a new business model for Sotheby’s, its traditional bidding practice doesn’t seem to be cannibalised in the process. In fact, at Sotheby’s Geneva Luxury Week auction in May, a series of six sales dedicated to jewellery, watches, handbags and sneakers notched up $70.2m, 14 per cent over the last auction season. Interestingly, 30 per cent of the bidders were new to Sotheby’s and more importantly, 50 per cent of the bidders overall were under the age of 40 (also, 85 per cent of bidders in the sneaker sale in Geneva were under 40). “Half of the bidders we had overall were under the age of 40, but yet the average item value was $200,000. We are focused not only on cross-category sales, but how do we make Sotheby’s more relevant and approachable for new audiences. We’re focused on that affluent, younger generation, using digital tools to engage the broadest possible audience.”
The ‘What’, ‘How’ and ‘Why Now’ of Sotheby’s new strategy for its luxury business is clear. It leaves Pullan in a commanding position to determine: ‘What next’.
“For luxury, Asia is an absolutely critical market. We’ve seen great growth there in the last 12 months”