New Online Auction Platform Looks to Challenge LiveAuctioneers

New Online Auction Platform Looks to Challenge LiveAuctioneers
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The worldwide art and collectibles auction trade has become worldwide over the past decade because of greater wealth that has been accumulated by entrepreneurs around the globe and because of the ability of buyers in far-flung locations to participate in sales through online bidding. Christie's, Sotheby's and Heritage Auctions all have created their own in-house online bidding platforms, but most every other auctioneer relies on an outside company, the largest being the Manhattan-based LiveAuctioneers.

With all the good of a globalized art market has come some problems (a higher incidence of successful bidders refusing to pay, particularly in countries with new wealth, such as China and Russia) and criticism of LiveAuctioneers for its unwillingness to pursue slow- and nonpayers. "When the hammer goes down on a sale, LiveAuctioneers demands its three percent commission immediately, and we have to pay them," said Leslie Hindman, who runs an auction house in Chicago, Illinois. "If the person who bid doesn't pay, LiveAuctioneers won't do anything. They won't follow up with that person. They don't give us the names of underbidders, so that we can try to sell the lot to someone else, and we have to petition to get back our three percent, which they are slow to return."

She also noted that LiveAuctioneers' vetting process for online bidders is unsatisfactory - "we turn down 20-30 percent of those who register with LiveAuctioneers, refusing to let those people bid at our auctions" - and that the online platform has "no mechanism for checking if Mr. Wong is the same Mr. Wong who failed to pay another time."

Hindman is not alone in her frustration. As a result, she and five other regional auction houses - Rago in Lambertville, New Jersey, Brunk in Asheville, North Carolina, Cowan's in Cincinnati, Ohio, Pook & Pook in Downingtown, Pennsylvania and Skinner in Marlborough, Massachusetts - joined forces to start their own online bidding platform, BidSquare. Launched on August 18th, 2014, BidSquare aims to solve these problems, as the fees that participating auction houses pay BidSquare will be lower than those charged by LiveAuctioneers ($1,000 per auction or, for smaller auction houses, $650 plus one-and-a-half percent of the sale); auctioneers are to be provided more information on underbidders, and "the auctioneers will be able to communicate what we know about people registering for sales, such as those who haven't paid in the past," Hindman said.

"The six auction houses put our heads together to think about what auction houses want and what bidders want," she said. Among those interests is a free searchable database for prospective buyers, and auctioneers will be permitted to advertise their sales on the site.

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