Artspace: What Really Happened?
Artspace became one of the models for specialty auction websites. After some extensive international research on the internet and local market research through questionnaires, Chen and Nathalie decided it was best to establish a specialty site that would not only coordinate the entire transaction between buyer and seller once a price had been decided upon, but also offer a variety of value added services.
An extensive service chain
The main reason that Chen and Nathalie chose to focus on an extensive service chain, rather than offer an online marketplace only, was trust. They sent out a questionnaire to 30 artists and 100 art buyers, and the results highlighted this issue as a challenge. Trading partners in such markets typically have limited information about product quality and counter-party reliability at the time of the transaction.
There are ways to deal with the issue of trust, and these are used in generalist sites such as eBay and TradeMe. On those sites, there is an extensive feedback mechanism where buyers and sellers rate each other on a range of factors such as honesty and communication. Chen and Nathalie felt that these practices were probably not suited to the kinds of buyers and sellers they were dealing with.
Chen and Nathalie realised that Artspace was going to remain much smaller than these large generalist sites. This opened the door to a number of ways to make a profit, with every transaction going through Artspace.
They decided to charge the sellers rather than the buyers, at a rate of 15% of the value of the piece of art, for providing standard item descriptions, a nice presentation of the artist and their work on the Artspace website, a return policy guaranteeing genuineness, and handling order fulfilment and payment. This charge does not include the cost of transport for the painting, however. That must be stated by the artist for each of the paintings listed on the site.
Promoting the business
The website built by Chris was an excellent example of modern design, with a strong focus on user-friendliness, and clear and attractive presentation of the paintings. Virtual gallery exhibitions were added for the most prominent artists at an additional price.
Chen, Nathalie, and Chris got expert help to make sure that their website remained highly visible in the main search engines. A worthwhile investment was their advertisements on the main internet search engines, where the link to Artspace was made visible as soon as the user searched for 'art' and 'New Zealand'. They also invested in advertisements in decoration magazines and upmarket leisure magazines, but sparsely, as these were very costly.
Nathalie went out of her way to keep in touch with quite a few news editors of newspapers and magazines, to stress the innovativeness of the Artspace initiative. This led to several of articles about the company, which delighted the Artspace team as they brought additional - and free - publicity.
