Calling it one of the best ecommerce business models seen in a long time, Silicon Valley guru Sramana Mitra said Auctionata is succeeding where eBay could not: high-end online auctions. Mitra interviewed Auctionata CEO Alexander Zacke recently to find out how he set out to build a business that competes with Christie’s and Sotheby’s and did what some thought would be impossible: make collectors feel comfortable bidding millions of dollars for artwork sight unseen via the Internet.
Zacke, who co-founded the site with his wife, Susanne Zacke, head of marketing and sales, and Georg Untersalmberger, manager of HR and product development, tells Mitra how he worked with eBay in its early efforts in art auctions and live bidding. Zacke was the first European seller to reach $100,000 of sales in 1998, and he explained how his deep background in art helped him turn his early online experience into his own business whose model Mitra called “fabulously lucrative.”
Zacke told Mitra eBay had tried to work with live auctioneers and, “for some reason, their art attempts never worked.” EcommerceBytes readers may recall that eBay purchased auction house Butterfield & Butterfield in 1999 to expand its reach into the online sale of fine and decorative art and collectibles. All of the top fine-art auction houses at the time had trouble making the transition to the online world, including Butterfields, as eBay renamed the firm. In 2002, eBay sold Butterfields and entered into a deal with Sotheby’s to host its website.
While eBay failed at high end art auctions in the early 2000’s, the auction model continued to be vital to its success until it began deemphasizing the auction format in 2008. Ironically perhaps, Amazon has entered into the fine art business, though eschewing the auction format and working instead with prestigious galleries and dealers to bring artwork to Amazon shoppers in a fixed price format.
Julia Wilkinson has been covering Auctionata since her interview with Zacke in early 2012 as he was readying the launch of the site. He told Wilkinson at the time the most important aspect of Auctionata was its large expert network, with over 200 experts in all kinds of areas, including antiques. As she noted last year, Auctionata has since teamed up with Ruby Lane to offer auctions and opened new offices including London and Zurich.
Mitra has helped many startups from Silicon Valley and around the world and operates an incubator called One Million by One Million. She wrote of Auctionata, “I was excited to encounter a company recently that does realize the true potential of a context-specific, deeply personalized user experience that brings together content, community, commerce and vertical search.”
Not surprisingly, Mitra asked Zacke in the interview about Auctionata’s funding ($21 million from German venture funds between the seed and Series A funding) and metrics (bidding volume in the past 10 months was $115 million, and “for every dollar we have in sales, there are 10 times the amount of bids”). Auctionata has grown sales in the last 6 months from $0 to $16 million, Zacke told Mitra. “Our current revenue run rate is $30 million and the net revenue run rate is $10 million.”