Amazon.com, Inc. (AMZN)’s Entry Into Art Sales Will Hurt Sothebys (BID)’s Margins

Page 1 of 2

Since 1995, Amazon.com, Inc. (NASDAQ:AMZN) has been synonymous with online shopping. The leading e-tailer has taken on rivals in several areas and dominated. As online shopping grew, Amazon.com, Inc. (NASDAQ:AMZN) also diversified into other areas and continues to have success. The company’s latest entry into fine art should have one publicly traded company worried.

Amazon.com, Inc. (NASDAQ:AMZN)

The Art Newspaper has reported that Amazon.com, Inc. (NASDAQ:AMZN) is once again entering the fine art market. Back in 2009, Amazon.com, Inc. (NASDAQ:AMZN) teamed up with auction giant Sothebys (NYSE:BID) in a joint venture aimed at capturing additional high end sales in the art community. That venture turned into a short event as it was eventually closed. Amazon.com, Inc. (NASDAQ:AMZN) will now take its one time partner head on with a new offering.

Amazon.com, Inc. (NASDAQ:AMZN) plans on launching an art retail site that will initially cater to small time artists and art dealers around the United States. Rumors have Amazon charging no monthly fee and instead taking a small percentage (5% to 15%) of final sale prices. This is a smaller rate than Sothebys (NYSE:BID) currently receives for many of its auctions. Amazon’s new venture will most likely be similar to its Amazon Wines business launched last fall.

In 2012, Sothebys (NYSE:BID) saw its New York and London showrooms represent 77% of total auction sales. Despite growing international sales and a small online presence, Sothebys (NYSE:BID) continues to rely on live art sales. In 2012, jewelry and books made up only 10% and 2% of auction sales respectively. The rest of auction sales came from the art industry.

Revenue declined 8% in 2012 and it has already fallen in the 2013 year as well. In fiscal 2012, revenue dropped to $768.5 million. The decline came from a 10% drop in net auction sales. Earnings per share declined to $1.57 as net income fell due to smaller margins. In the most recent first quarter, Sothebys (NYSE:BID) saw revenue decline 3%. The company’s auction commission margin declined to 18.1% from 15.0% in the previous year. Net income also declined to a loss of $0.33 per share versus a loss of $0.16 in the prior year. This decline in revenue and earnings came despite a 23% increase in net auction sales.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Bloodiest UFC Fights Ever Fought

Most Expensive Rum Brands in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!