Your Business Online | Professional Jeweler



June 13, 2000
Power to the People
Old-line auction houses find moving online problematic

For a good example of how the Internet has shifted power to the consumer, consider the bumpy experience of traditional auction houses as they have tried to transition to an online format.

Their take-it or leave-it approach just doesn't work anymore.

One e-shopper who "left it" is Julia Jucker, who sells jewelry on eBay. She wanted to know the size of a ring listed on Sotheby's online auction site, but it wasn't listed anywhere on the site. When she called Sotheby's, she said they told her they didnt know and couldn't find out the information.

"I can't imagine brushing off a potential customer," Jucker told CNET.com. "This is expensive stuff. It runs in the thousands. Customer service should be a top priority. That kind of stuff can't sell itself."

Complaints such as Jucker's have become more common as traditional auction houses try to move online to compete with the more nimble and exceedingly consumer-sensitive online auction houses.

Some problems traditional auction houses face are technical. Sothebys.com had problems answering e-mail and shipping orders placed after it launched its co-branded site with Amazon.com in November. Butterfields, which merged with eBay in 1999, ran into trouble when the billing system affected its ability to track and ship orders. Both companies have since remedied these problems.

There's also evidence of a significant culture clash between bidders accustomed to the freewheeling dot-com world and traditional auction houses where bidding is quiet, secretive and behind closed doors. Unlike online auction sites, traditional auction houses have tended to ignore most customer concerns while focusing attention on sellers and a select few upper-crust bidders, according to Jupiter Communications Digital Commerce Analyst Mike May.

"Auctions are simply not a buyer-centric environment," May said. "The model needs tweaking if it's going to resonate with the would-be collectors who either don't have access to, or are intimidated by, the traditional channels."

In contrast, successful online auction houses have encouraged dialogue about their sites – inviting increased scrutiny that has yielded positive and negative feedback. On message boards and via e-mail, people have complained vociferously and sometimes gotten results. EBay, which recently made changes to its new automotive site after receiving complaints, is the leading auction site, with some 12.6 million registered users, up from 3.8 million a year ago. The site had more than $1 billion in gross sales in the first quarter of this year, up from $541 million during the same quarter last year.

The traditional houses are making money as well, despite the mounting criticism. Sothebys.com, which launched in January, had gross merchandise sales of $10 million during its first two months, but many collectors have complained about Sotheby's early offerings. Butterfields has faced complaints too, with 9% of their feedback messages negative and another 9% neutral – both much higher percentages than most power sellers would consider acceptable. Several also noted that while Butterfields accepted payment immediately, the company took weeks and sometimes months to ship the orders.

New Jersey art collector Ron Cavalier bought three Renoir etchings listed by Butterfields. The listings indicated two of the etchings were framed, but Cavalier said the company notified him after he won the bidding that they weren't. He tried to cancel his order, but Butterfields charged him for both and shipped them six to seven weeks later. "They don't respond to customers at all," Cavalier said.

Traditional auction houses are trying to remedy their lack of customer service. Butterfields has begun to respond personally to customers who have voiced complaints. In a later e-mail to Cavalier, Butterfields President Patrick Meade apologized for the situation, calling it "inexcusable." Meanwhile, Sotheby's is looking at creating a feedback system for customers to rate their buying experiences. The company this will answer complaints that merchandise received was not as described.

- by Mark E. Dixon