On Tuesday, Elliot Lee of the Art Antiques Design blog AAD posted on LinkedIn 'Antiques Are Green' group a link entitled '1st Dibs, Restraint of Trade?' written by co-blogger Lewis Baer of Newel LLC, fourth generation dealer in fine antiques and decorative art, who has moved into Mid-Century and digital with two showrooms in New York - and a long time 1stdibs vendor.
Last December David Rosenblatt, CEO of 1st Dibs, had just raised another round of $100m in venture capital and, in Surface magazine, said that he was not specifically planning a financial return. Three months on in this week's Antiques Trade Gazette he was quoted as saying the opposite, that he needed to see a return on his marketing investment.
So he decided to monitor messages and conversations between dealers and customers on dedicated phone numbers in order to make sure the 10% commission was charged if anything sold. The commission was in addition to a fixed monthly fee and the per item listing fee (which is returned to dealers if an item sells through the website).
Rosenblatt formerly served as CEO of DoubleClick - the leading provider of online marketing technology and services - from 2004 until 2008, where he helped contribute to the digital migration of the advertising industry. He sold the company to Google in 2008 for $3.2 billion. Following the acquisition, he stayed on as Google's President of Global Display Advertising through 2009.
When he took over in late 2011, 1stdibs averaged fewer than 1 million site visitors per month; now it welcomes more than 3 million. While U.S. buyers once generated 95 percent of all transactions, international shoppers now drive between 30 and 35 percent of transactions monthly.
Two architectural and decorative antique dealers, one in north America and one in Europe, told SalvoNEWS that in the early days they could make money from 1st Dibs but total sales have now reduced while fees have increased. Both dealers now seem to be in a position where fees charged are almost equal to their sales totals, so they consider 1st Dibs a marketing front end where potentially regular customers may result away from the 1st Dibs platform.
If 1st Dibs sales resulted in sales ten times the size away from the 1st Dibs platform then clearly the 1st Dibs fees are worth paying. This seems to indicate that if they do not result in extra sales away from 1st Dibs platform they are not worth paying. But both dealers said that 1st Dibs buyers seem only to buy via the 1st Dibs platform and do not start buying direct from the dealer subsequently - possibly because buying direct lacks the 1st Dibs assurance scheme, or possibly simply through inertia and familiarity with the 1st Dibs platform.
While both dealers were unhappy about increased fees, they were also continuing with 1st Dibs out of fear that leaving the platform might dent future sales, and both had a large turnover away from the 1st Dibs platform so wasting a small amount on 1st Dibs fees was irritating, but not hugely significant.
In July 2015 on the Entrepreneur website Jason Ankeny quoted Chicago retailer Antiques on Old Plank Road who joined the dealer network in 2006. Owner Richard Buxbaum credited 90 percent of his sales to 1stdibs and the store's own website. He said that as of May 2015, his store had completed more than 3,500 direct sales via 1stdibs, corresponding to at least $10 million in merchandise value. "1stdibs changed the whole industry," Buxbaum says. "I don't know how you can be in this business today without them."
Today there are three dateline sectors on 1st Dibs for architectural and decorative items - 21st century, 20th century and 19th century or earlier, with respectively 12k items average $6k and a max price $548k, 146k items average $3k and a max price of $2.7m, and 50k items average $4k and a max price of $18m.
Lewis Baer wrote:
The question becomes what does a dealer or group of dealers do to leverage the effects of 1stdibs new way of doing business. For all practical reason there is little or nothing they can do. History has a way of repeating itself, as when dealer organizations blinked at the introduction of the buyer's premium and watched as it metastasized. The auctioneers did fine, thank you, at the dealers' expense but all ships rise in a high tide, which is where the market for all the decorative art was going in the last quarter of the 20th Century . . .
. . . Their present model is too labor and advertising intensive and requires a real need for rising sales and profitability to sustain growth. Their new approach is an attempt to assert their competitive lock on how sales take place. Remember, they don't want to own the merchandise, they just want to skim a profit off the sale, which isn't on the face of it wrong. However, it's a different kind of profit and risk reward when you own the goods. Restraining trade through arbitrary methods of restricting access to buyers is a disconcerting development that goes beyond the conflict of interest created with the auctioneer's buyer's premium.
1st Dibs had $650m sales (presumably total sales including the dealers sales price and the fees) in 2013 and nearly $1bn in sales in 2014, and the company is apparently worth $300m now. If it continues to expand it might pose a threat to the bastions of Sotheby's and Christie's, but only for top end sales, and like them it will have to restrict the lower end of the market - which might end up damaging its bottom line.
Spanky on Design Addict's forum wrote:
A big part of their market is people with deep pockets who hire interior designers to do up their places and shop for stuff for them. Designers typically get a percentage of the budget for a project, so the higher the price, the bigger their cut.
1stDibs gives dealers a venue where they can reach this market and where the market can reach them without a lot of running around (online or locally) and maybe not finding what they want. Dealers have to go through a vetting process, too. I don't know what all that entails but I do know you can't just register on the site and start selling. Dealers have to maintain a certain volume of inventory, too, and 1stDibs' cut isn't exactly peanuts.
And one other thing---just because something is listed for $2,000 doesn't mean that's what it will sell for. Many times dealers will accept lower offers.
I used to get annoyed at them but once I understood what they're about I got over that---it's actually a pretty great resource when researching mystery pieces or figuring out what original upholstery, webbing, weaving, etc. should look like. They have the best photos and often there are shots of small but very significant details that just aren't visible in most other photos online.
The internet is wild (although not as wild as it used to be) and dealers are fickle (more fickle than ever). It's gonna be an interesting ride.
