Selling online versus live
From the Briefcase: Research produced by America's Best Business Schools
"One thing they can do is set a price estimate, the way they do in live auctions, which signals to the community the probable value of the painting," he says. The top auction houses, he notes, have built a fairly reliable reputation about valuing goods honestly, and this could help reduce pricing uncertainty in online bidders' minds. Online, Sotheby's skipped this step because it outsourced the management of the auction to eBay, which has a hands-off policy about valuation.
By taking control of the online process, providing detailed documentation for every item up for auction, and establishing price estimates, Sotheby's and other auction houses could create an online environment much more comparable to a live one. That way, says McMillan, they could benefit from lower transaction costs with little reduction in bid prices.
While Sotheby's may not be sold on the idea, other auction houses may want to consider selling on the Internet successfully as a way to break the current duopoly that Sotheby's and Christie's enjoy on the auction scene. Online auctioneers and sellers in general may see in McMillan's research a broader lesson: The more high-quality information you can provide online about a product's look, feel, touch, taste, and smell, the more people will be willing to pay top dollar. —Marguerite Rigoglioso
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