Sramana: How do you manage the courier service? Is it your own service or do you use a commercial service? Where are you having the paintings shipped to?
Alexander Zacke: We pick up the merchandise as soon as we obtain an auction contract. We then catalogue the item and run it through our in-house services. We take photos, authenticate the pieces, write descriptions, and link our work with research found in international art databases. We catalogue the piece scientifically and then list it in our online shop or put it up for auction.
When we do send a piece to an auction, it goes to an auction team. Contemporary team, the old masters team, or the Chinese masters team are a few examples. We have one live auction topic every week and it always changes. It may be contemporary art one week and wine the following week. Sometimes we have two auctions a week.
We acquire most of our merchandise from within the European Union, primarily in Germany and Switzerland. We do not accept consignments outside of the European Union unless they are extremely important pieces of art. It is customary to have logistic operations close to the seller. If we were to do consignments in the United States, we would have to run logistic operations there. That is a major operation and we are building that in New York City, but until that is open we won’t accept consignments from the United States.
When we sell merchandise from auctions, we find buyers from over 100 countries. We ship globally to any country in the world. We have specialized logistic services depending on the categories of art. We have different shipping companies that we use for wine as opposed to jewelry. Right now 10% of our buyers are from China and the other 10% are from the United States. We have never had bidders from fewer than 25 countries in an auction and have had as many as 85 countries represented in bidding.
Sramana: What is your competition? Do Christie’s and Sotheby’s have online auctions that compete against you?
Alexander Zacke: There are no other online players that provide the same services as Sotheby’s and Christie’s. Our competitors are traditional auction houses. All of the auction houses are online to some extent. Some allow online bidding. At the end of the day, they all print catalogues that they send to their clients and they all exhibit the items they have on sale. We don’t do any of that because we are 100% online. In the end, online buyers want to deal with online companies.
Sramana: What kind of volume do you do?
Alexander Zacke: We started having weekly auctions in May of last year. It took us a year to launch the valuation network. We have acquired roughly $50 million of merchandise and we have grown sales in the last 6 months from $0 to $16 million. Our current revenue run rate is $30 million and the net revenue run rate is $10 million.