Cross-Selling in the Online Art and Luxury Sector
If the online art & luxury trade provided more customer value through cross-selling, it could add up to $12.5 Billion to the sector
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If the online art & luxury trade provided more customer value through cross-selling, it could add up to $12.5 Billion to the sector
When you book a flight, you are normally given the option to hire a car, book a hotel room and buy some insurance, right?
This is cross-selling.
This Deloitte report points out that “cross-selling programs can increase customer revenue by 25% to 50%“.
Cross-selling allows customers to decide whether the related products are of value, and provides the convenience of purchasing additional items within the same transaction as well as opening up partner discounts.
In other words: Faster, Cheaper, Better.
However, as this Harvard Business Review [HBR] article points out, there can be a ‘down side’ to cross-selling, wherein some customers actually end up increasing the costs incurred by the supplier over and above the increased sales, making the whole exercise of cross-selling unprofitable and unsustainable.
Examples include customers who hog service desk agents or present unreasonably high returns of merchandise.
Cross-selling however can be turned into ‘smart-selling’ using predictive models to determine which customers are likely to cross-buy certain products, and tailoring the sales process to them.
The report concedes that cross-selling does work. Of the 36 firms surveyed in the above HBR article, ‘more than 90% ran cross-selling campaigns, and all found an increased average per-customer profit’.
The important caveat here is to target profitable customers, based on preferences and past behaviour.
The lesson is simple: Know Thy Customer.
Firstly, why online?
The online segment is the fastest growing (thanks to its ease of use and convenience), and because the future belongs to the tech-savvy millennial and Generation-Z demographics.
Looking at the art & antiques segment first, we see the following upward trends (source: Art Basel / UBS Art Market Report 2019):-
The luxury personal goods sector has similar upward trends and projections and, let’s face it, sometimes we are looking at the same customer base:-
ArtRatio has also conducted in-house research on platforms which sell art, antiques and luxury items online, including galleries, dealers, auction houses and 3rd party retailers.
The exercise looked at price point, cross-selling and customer service components, or “value add-ons”.
Out of a group of 90+ platforms, the services offered included art advisory, art curation, art insurance, custom framing and logistical services from affiliated partners.
However, very little evidence of cross-selling was found.
While protecting an investment or passion piece is referred to as a matter of utmost importance, nowhere did we find evidence of cross-sold products or services for conservation or tailored display solutions as part of the customer buying experience.
This is just one example of how cross-selling could benefit the overall health of the industry, offering technological advancements and innovative solutions while generating new and widening revenue streams.
So, how much money is the art & luxury market missing out on?
The table below shows the raw data (sources are referenced at the end of this article):-
If the online art & luxury market had the same share (15%) as online mainstream retail, it could add up to USD 12.5 Billion to the sector.
So, what does the art and luxury sector need to do to reach the same level of online penetration as the mainstream retail market?
We think one important factor would be to adopt tried-and-tested commercial best practices which we already find in mainstream retail, such as cross-selling, up-selling and smart-selling.
In other words, this $12.5 Billion hole is the Opportunity Cost of not adopting the mainstream model where such practices are key to providing customer value.
ArtRatio has developed a strategy to cross-sell smart display products through partnerships with select online art and luxury brands.
This initiative will enable customers to cross-buy the ideal display format (e.g. table, case, frame or plinth) suitable for the object, allowing them to exhibit items, measure their visitor popularity and protect their condition (and hence market value).
This gives a triple-win for the item, the customer and the retailer.
In doing so, we hope to contribute to a movement which grows the online art & luxury market, providing value to customers and incentives to the supply chain.
If this article has piqued your interest and you want to know more about how your online strategy could intertwine with our’s, please register your interest on the form below. We would welcome the chance to start a dialogue with you.
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