Kevin Ching joined Sotheby’s in 2006 as CEO of Sotheby’s Asia, responsible for developing the strategic expansion of the company in the region, particularly into mainland China. Under Mr. Ching’s strategic leadership, Sotheby’s Asia achieved over US$1 billion in total auctions and private sales revenue in 2011.

Previously a board executive director and group legal counsel of Dickson Concepts (International) Limited, Mr. Ching was in charge of legal and general business affairs in luxury fashion, watches, and jewelry. In addition, Mr. Ching was responsible for business development and operations of luxury retail in China, and was instrumental in the opening and development of Seibu department stores in China and Harvey Nichols in Hong Kong. Prior to joining Dickson Concepts (International) Limited, Mr. Ching was a partner in Johnson Stokes & Master, one of the largest law firms in Hong Kong, working as the chief representative of its Beijing Office.

Mr. Ching was educated in Hong Kong and England, and holds a master’s degree in law from London University. He studied English law, Soviet law, air and space law, as well as customary and modern Chinese law. He is qualified to practice law in Hong Kong, Singapore, England, and Wales, as well as in Victoria, Australia.

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Q: The value of the online art market in 2013 was estimated to be around US$1.57 billion, and is expected to rise to US$3.76 billion by 2018. What do you think are the driving forces behind this growth? What does it say to you about the importance of the online market?

A: In the broadest sense, the world we all live in is changing with dizzying speed. Technology continues to rapidly evolve, making the user experience easier and better. Online consumers of all goods, including artworks, are demonstrating a willingness to purchase items at all price points—including big-ticket items—online, and even on the go from their phones. Part of what is driving consumer confidence are features that make physical items understandable in a digital space—e.g., seeing how big a painting looks in situ on the wall. What we said when we announced our exciting partnership with eBay answers the second part of your question: Both companies recognize an opportunity to expand their global presence in the art and collectibles market. The art marketplace is vast, and there is great potential to grow our client base. eBay provides us with an ability to showcase New York auctions and the unique property Sotheby’s can source to an audience of 145 million eBay buyers.

Q Is it possible to get a sense of who and where these buyers are? If you could learn more about the demographics of these online buyers and how they make their decisions, what would you want to know?

A: The growth of online participation is coming from everywhere. It is not defined by one region or nation, or a single demographic, like age or income. A few facts illustrate the real explosive growth in the online involvement of our clients: Participation in BIDNow, our online bidding platform, more than doubled in the first half of 2014 compared to a year ago; 16% percent more lots were purchased using BIDNow in that period versus a year ago; the monthly pageviews of our website so far in 2014 doubled what they were in 2013—and they’re eight times what they were in 2012.

One of the things we would like to know from the growing world of potential collectors is, “How do we best engage with you?” Engagement is a foundation of our digital strategy. To engage with clients is to involve them in the art world, to welcome them into the world of Sotheby’s, to discover the services, experiences, or art and collectibles they are seeking.

Q: How would you describe the importance of an online auctions platform to your business? What percentage of your revenue is generated by online auctions versus traditional auctions? What do you think this ratio will be in five years?

A: It’s important today, and will be more important each day going forward. As I mentioned, the usage of our current online bidding platform has been growing dramatically. We think that the opportunity for online auctions/sales is meaningful, and we will continue to refine our user experience as the market grows. Without getting into specific numbers, it is fair to say revenue generated by online sales is much lower than traditional auctions. But it is growing and will continue to grow; certainly, we hope that is the case with our eBay partnership.

Q: Could you describe your client profile for online auctions? How is it different from your client base for the traditional auction business?

A: Our client profile is identical since our auction clients can buy in the room, on the phone, or online through BIDNow. We have not had online-only sales. Our clients can bid in different ways that suit their needs. Sotheby’s is famous for selling some of the rarest, most exquisite objects in the world—and those get a lot of headlines. But you may be surprised to know that more than half the lots we sold in 2013 fell within the US$5,000–100,000 range. Clearly, those clients fit the more traditional online profile. But the world is changing. In April, we sold James John Audubon’s The Birds of America for US$3.5 million—a new record for an online purchase at Sotheby’s.

Q What are the challenges facing this new business sector, and how do you foresee meeting and addressing those challenges?

A: We see two challenges in the space at the moment. The first is that there are a lot of people searching to define a business model, and, second, that the results are mixed. There is a reason that Sotheby’s has been around for 275 years: we constantly adapt, evolve, and innovate our businesses, and online auctions/sales is an area we have a good understanding of.

The second challenge is creating an exceptional online experience where clients can be confident of their purchases. This is challenging because artworks are necessarily unique, physical items and their value depends on being correctly described and authenticated. We are confident that our partnership with eBay successfully marries eBay’s expertise in the online experience and technology with our knowledge in authenticating and estimating artworks. Right now, our most imminent challenge is working with eBay to create our new site and ready it for a launch later this year or early next year.

On a macro level for the industry, there are issues of sourcing property, authentication, client vetting, technology expansion, compliance, usability, payment methods, and delivery—a host of issues as this expands.

Q: Are there any specific challenges with online auctions that you view as unique to the Chinese market?

A: Chinese customers nowadays are on par with the rest of the world in terms of acceptance and the level of sophistication relating to transacting online. Therefore, the challenges and, more importantly, the great potential of online auctions that apply to other international markets apply to China as well. With 618 million internet users and 271 million online shoppers in 2013,* China represents one of the greatest market opportunities for Sotheby’s. We will continue to make every effort to create an even more engaging online experience for our Chinese clients, which includes improving the functionality of our Wechat platform and further enhancing the Chinese contents on Sothebys.com, and, of course, launching our new and exciting partnership with eBay.

Q: Do you think local auction houses have a competitive advantage in this market? Why?

A: The beauty of the digital world is that it exposes property to a global community of collectors and buyers. We think that user experience, brand integrity, and exceptional property are the real competitive advantages. •