How has digitalisation changed the way collectors accumulate and trade their objects of desire?
Digital platforms, online auctions, blockchain technology and AI are transforming the way luxury items are presented, bought, sold, authenticated and resold.
Skim through just about any luxury retail site or marketplace these days and more often than not, an artificial intelligence-powered chatbot will pop up, poised to respond to any query. Unbox your newly purchased designer handbag, and you’re likely to find a small white card imploring you to scan a QR code to find out more about the item’s origin story.
If you’re after an elusive big-ticket item on the secondary market – say, a Patek Philippe high complication watch, a diamond-encrusted Hermes Birkin bag, or a particular vintage of a Domaine de la Romanee-Conti Grand Cru – all you have to do is scan the web for an upcoming auction, watch the livestream when it happens, and join the bidding war on your mobile phone.
Digitalisation has made the process of acquiring investments of passion that much easier. Digital platforms, online auctions and blockchain technology are reshaping how luxury items are being bought, sold, and authenticated. AI is enabling the experience to be more personalised and curated – which is exactly the sort of white-gloved service that luxury customers expect.
It’s curious to think that all this has only happened in the last decade or so. Historically, the luxury market in general has been averse towards digitalisation of any sort, deferring to high-touch, in-person encounters and bricks-and-mortar setups. Luxury fashion houses, high-end watchmakers and high jewellery labels, for example, only overcame their hesitancy towards e-commerce around the mid-2010s. Goyard still famously refuses to retail its products online.
On the secondary market, while general e-commerce platforms like eBay enabled online collectibles trading from the late 1990s, dedicated platforms for luxury and niche collectibles are an even more recent phenomenon, emerging in the late 2010s. But they have gained significant traction since then, as consumer behaviour and luxury brand attitudes towards e-commerce evolved.
Major auction houses like Christie’s, Sotheby’s and Phillips – the “Big Three” – adopted online bidding channels as online commerce and mobile technologies improved. Smaller auction sites followed suit to meet growing consumer demand for more digital experiences.
DIGITAL HIGH ROLLERS
Today, consumers and collectors think nothing of splurging big bucks online: In March 2023, a Patek Philippe Sky Moon Tourbillon fetched US$5.8 million (S$7.9 million) at a Christie’s sale in Hong Kong, a world record. A few months later, and halfway across the world, The Handbags Online: The New York Edit sales, also led by Christie’s, totalled US$4.1 million, becoming another record-breaker.
“Digital innovation is a core part of Christie’s business,” said Francis Belin, president of Christie’s Asia. “We offer online bidding in our live auctions through Christie’s Live and our WeChat mini program, as well as through curated online sales which present art and luxury across a range of price points.”
The COVID-19 pandemic is partly responsible for the mindset shift among buyers and collectors. With live auction activity curtailed during lockdowns, and Hong Kong subject to some of the most stringent restrictions in the world, the only recourse was to transact online.
“Many of today’s buyers of art and collectible luxury are tech-savvy and very comfortable transacting online… even at top price points – in our live autumn auctions in Hong Kong last year, 40 per cent of the lots sold were bought by online bidders,” added Belin.
Not surprisingly, younger buyers – many of them coming into generational wealth – who are digitally savvy have contributed to the uptick in online sales. Belin says that the region’s digitally fluent generation are a powerful presence in Christie’s sales globally. In 2023, the Asia-Pacific region accounted for 66 per cent of the millennial buyer spend, with more than half of this coming from mainland China.
It’s a similar story at Sotheby’s. As George Lacey, head of wine for Sotheby’s Asia explained: “For wine and spirits sales in Asia, which were previously supported by a more traditional and established client demographic, since 2019 we have seen a 20 per cent increase in the number of buyers and bidders who are under 40, and bids submitted online during the livestream now account for more than 30 per cent of the bids placed in our sales.”
The next generation of ultra-high-net-worth-individuals (UHNWI) have been rapid and willing in their adoption of digital auction platforms, Lacey added. Not only are they enthusiastic in participation in online auctions, but they have also been supportive of newer, digital-only initiatives like Sotheby’s Sealed, a private auction platform introduced in 2023.
A world-first, Sotheby’s Sealed combines the thrill of a live auction with the discretion of a private sale. Lasting between two to seven days, the sale lots span across categories from supercars and fine art to rare gemstones and mechanical watches. Unlike an online or traditional auction, a Sotheby’s Sealed sale does not come with a buyer’s premium and the final sale price remains confidential.
It is not known if a diamond-studded Hermes Himalaya Kelly 28 broke the world record for a handbag during a Sotheby’s Sealed sale in Hong Kong last July. However, a precedent had been set: In 2021, a Himalaya Retourne Kelly sold for a record-busting US$510,000 at a Christie’s Hong Kong auction.
BEHIND THE SCENES
While online marketplaces and auctions continue to excite consumers and collectors, working quietly behind the scenes of many of today’s luxury transactions are underlying technologies like blockchain and AI.
In 2021, luxury powerhouses LVMH, Prada and Cartier formed the Aura Blockchain Consortium as a means of developing a secure authentication system across their brands. In the art world, online art brokerage platform Artsy has used AI and machine learning to connect art galleries with collectors and buyers.
For luxury brands, blockchain technology serves as a safe way to authenticate and trace luxury products by allowing the creation of permanent, publicly verifiable records of those products. Transactions and ownership changes can be tracked publicly, but the identity of owners, buyers and sellers are kept private. Since the information can be publicly verified, it can also reduce the risk of fraud. Collectors can easily trace their items, verify the provenance, and ensure the integrity of future transactions.
Verisart is one blockchain company that offers certification and authentication services. Robert Norton, CEO and co-founder, explained: “Traditional certificates of authenticity are usually printed paper certificates that can be replicated and lost. Verisart leverages blockchain technology to create [digital certificates] that are time-stamped on the blockchain. Companies, creators and collectors of luxury items can generate records for their physical items that include images, descriptions and additional details.”
The California-based company has worked with the likes of Johnny Depp to produce non-fungible tokens (NFTs) for exclusive art prints that the actor/musician/artist created. To access the print, buyers must first own the corresponding NFT, which is tracked on the blockchain.
Other artists that Verisart has partnered with include Ai Wei Wei and Shepard Fairey of Obey Giant fame. For the former, a total of 3,000 works were made available for sale, each accompanied by a unique Verisart certificate which was issued to collectors via email immediately after purchase. For the latter, Verisart attached QR stickers behind the print, allowing collectors to scan the code and request a certificate for their purchased artwork.
HAVE PASSPORT, WILL TRAVEL
Over at blockchain-based platform Arianee, which works with luxury watch brands like Breitling, IWC and Panerai, CEO and co-founder Pierre-Nicolas Hurstel has been on a mission to go above and beyond authentication and provenance tracking. He tells CNA Luxury that he wants to “build a direct, perpetual link between brands and the owners of their products”.
The French company’s main service is its digital product passports, which, like actual passports, provide a dynamic record of a product’s whereabouts – its lifecycle. Important events, such as repairs or maintenance, are time-stamped in the passport’s History of Events feature. This acts as a layer of authenticity in resale and can help facilitate price estimation.
“One of our most complete implementations has been done with Breitling, which has had more than 500,000 digital product passports minted today,” said Hurstel, explaining that the collaboration began in March 2020. “All Breitling timepieces come with digital product passports powered by Arianee’s blockchain technology, providing digital security, proof of ownership, while giving access to exclusive services.
“These digital product passports are connected to Breitling's digital warranty program, allowing consumers to initiate and track repairs, extend warranty periods, and subscribe to insurance in the case of theft or loss,” he added.
Consumers can also decide how much data they want to share – whatever data is shared is fed back to the brands in a feedback loop so that the brands receive insights into customer behaviour and preferences. This helps them adopt more circular business models.
MORE CURATED OFFERINGS
AI plays a critical role in the case of art brokerage platform Artsy, from allowing buyers to discover new artists and artworks to ensuring the safety of its marketplace by identifying and preventing fraud.
Samuel Rozenberg, Artsy’s chief product and technology officer, explained: “Artsy’s app combines AI and curation by our in-house art market experts to ensure that collectors always have access to the most relevant artists and artworks for them. This marriage between expertise and automation is vital.”
Most recently, the platform has focused on deepening its understanding of collectors’ demands. Data collected on collectors’ preferences is shared with Artsy’s gallery partners so that they can better manage their online collections and decide which artworks to make available. The idea is to streamline the availability of artworks, and, by doing so, speed up the decision-making process. For some, the fewer, more specific choices there are, the faster they add to cart.
In future, AI models trained on incisive content and market data have the potential to offer further guidance to collectors and to help them make informed decisions. “At Artsy we are particularly passionate about how AI can enhance products that make art more approachable and easier to navigate for everyone,” said Rozenberg.
Meanwhile, service providers like Arianee’s Hurstel envisions a universe of possibilities. While customer accounts are currently focused on managing orders and returns, he believes that these will evolve into comprehensive engagement hubs – “Digital closets brimming with services, personalised content, and contextual offerings”. Digital product passports will also enable “fresh insights and segmentation capabilities”.
LET’S GET… PHYSICAL?
As much as the luxury passion investment world becomes more digital, there is also more emphasis being placed on physical encounters and that personal touch. This is particularly true for auction houses.
“As it has become so easy to participate in the sales from a distance, the challenge is making sure that the live auction format retains its allure, an attractive spectacle, and an event to which clients want to make the effort to attend in person,” offered Sotheby’s Asia’s Lacey. “Creating in-person events around the live auctions… allow us to connect with our clients emotionally.”
Over at Christie’s Asia, Belin explained: “While we see tremendous engagement across our digital platforms, the in-person experience of Christie’s also remains fundamental, from viewing our objects and exhibitions, meeting our specialists, to bidding in the room and feeling the atmosphere of a live auction – we therefore present a hybrid model which gives collectors and audiences the best of both worlds.”