Auction houses relied heavily on digital platforms at the height of virus-led restrictions. The market’s response was promising. Homebound clients – now more receptive to online jewellery auctions – are increasingly buying more expensive lots. Digital events also resonate more with younger, tech-savvy collectors. The allure of live auctions, however, is far from waning, with auction houses looking at incorporating a digital component into their physical sales from here on out.

Going digital

Bonhams saw steady demand for coloured gemstones of exceptional quality at its auctions in 2020, with buyers continuously seeking sizeable no-oil emeralds, Kashmir sapphires and Burmese rubies.

When the coronavirus outbreak hit Hong Kong early this year however, the company had to up the ante.

Bonhams launched the “Luxury Online” series in May, where jewellery, watches and other luxury categories were offered together for a one-stop shopping experience. More than 40 per cent of the buyers were new to Bonhams while about a third were under 40 years old.

The results were extremely encouraging, according to Leslie Roskind, head of Bonhams' jewellery department in Hong Kong.

“The main takeaway is that collectors are more accepting of buying jewellery online – either placing online bids at our closed-door live sales or participating in online sales. This is not a new trend, but the situation this year has certainly accelerated it,” noted Roskind.

Online auctions are also an effective way to engage with Bonhams’ existing clients while the shelter-in-place policy is enforced, and to attract new customers, especially the younger, digitally savvy collector.

The auction house is likewise implementing a 24-hour digital consignment hub, “Sell with Bonhams,” where clients can have an item valued remotely by a specialist; as well as an extended digital private sale platform, which allows consumers to buy and sell anonymously outside of the auction route.

Sotheby’s meanwhile expanded its digital infrastructure early this year due to pandemic-led travel restrictions. As of August, it had held 23 online jewellery auctions globally, totaling US$31 million – a seven-fold increase from last year, according to Wenhao Yu, deputy chairman at Sotheby’s Asia’s jewellery department.

Customers are becoming more comfortable with bidding electronically at digital auctions, even for big-ticket items, stated Yu.

In April 2020, Sotheby’s sold Cartier’s Tutti Frutti bracelet for US$1.3 million – a record price for any jewellery sold online. Most recently in October, the auction house saw the highest-value bid ever placed on a jewellery online – HK$85 million (around US$10.97 million) for a 102.39-carat D-colour flawless oval diamond. The diamond was eventually sold to a phone bidder for a final price of HK$121.56 million (around US$15.7 million). These results reflect the resilience and strength of the jewellery sector amid adversity, revealed Yu.

Despite a wave of caution permeating the jewellery and gemstone trade, Christie’s also experienced robust bidding activity at its 2020 auctions. Christie’s International Head of Jewellery Rahul Kadakia said there was a surge in online auctions to sustain the market’s buying momentum alongside a rise in lots offered with a wider range of estimates to cater to global buyers.

“Clients are more willing to buy pricier lots online, demonstrated by the record-breaking 28.86-carat D-colour diamond, which sold for a record US$2.1 million at our online sale in June,” disclosed Kadakia. “A total of 31 bids were placed over the course of two weeks, with clients bidding from Asia to the US – not one of them had seen the stone. This emphasises the importance of Christie’s digital platform.”

Lessons and emerging trends

UK-based auction house Fellows saw the Covid-19 crisis as an opportunity to enhance its online initiatives. At the height of the pandemic, the auction house started hosting virtual viewings and valuations via Zoom, according to Nicola Whittaker, business development manager at Fellows.

Founded in Birmingham in 1876, Fellows is a family-run firm of auctioneers and valuers. It holds more than 100 auctions a year, with specialist watch and jewellery sales becoming increasingly popular.

Whittaker said since buyers could not physically view jewellery lots, the company provided them with in-depth product descriptions, accurate condition reports and high-res product images. Fellows also made its free postage and packaging service more efficient. In the majority of cases, bidders who win items on a Thursday and pay for those on Thursday night or Friday Morning will receive the goods on Saturday. Fellows likewise implemented a booking system on its website in preparation for a resumption in physical viewings to control the number of customers and ensure their safety.

With the pandemic altering companies’ business strategies, Whittaker said the majority of its auctions are now timed and online only as opposed to holding a number of live auctions per month pre-pandemic.

Its flagship auctions – Fine Jewellery and The Luxury Watch Sale – are still held live on alternating months.

“Our customers have enjoyed the new timed format as we have seen record registrations and the same demand, if not more,” explained Whittaker. “Our overall business strategy is to prioritise user experience – whether this is the customer’s bidding journey or the vendor’s interactions with our team when selling in one of our auctions.”

Online auctions also indicate evolving customer preferences in light of the coronavirus crisis.

Charlene Lau, head of Phillips Hong Kong’s jewellery department, said buyers’ appetite for fine gems and jewellery was even stronger this year since they are motivated to invest in high-value items.

“Buyers are looking to purchase jewels, diamonds and gemstones as a store of wealth and as a hedge against possible future inflation,” Lau noted. “Also, they have become very sentimental during the pandemic, buying jewels for themselves and their loved ones as a reward during these difficult times.”

Phillips tripled the number of its online sales compared to last year to adapt to changes in a Covid-19 world. It also incorporated new features in its digital events, including images of every item worn by models and 360-degree videos.

For instance, Phillips hosted two cross-category online sales this year, which were curated with a lifestyle concept and included contemporary art, watches and jewellery. The response was overwhelming, and each sale saw nearly 56 per cent of buyers new to Phillips, revealed Lau.

She also cited an increase in online participation and the value threshold for online transactions. Phillips has been holding digital jewellery auctions since 2018 but it recorded a 76 per cent upswing in traffic to the jewellery section of its website during the first half of 2020 compared with the second half of 2019. At a July auction in Hong Kong, its jewellery department recorded a 163 per cent year-on-year rise in online participation.

Digital future

Jewellery connoisseurs and traders may have become more open to digital auctions but the excitement of live auctions will always hold meaning for industry stakeholders, according to Lau.

Roskind of Bonhams agreed as she acknowledged the increasingly important role that digitalisation is playing in the auction business. The crisis has fast-tracked this digital revolution, giving auction houses an opportunity to tap into new market segments, particularly younger customers. In turn, buyers are given an alternative avenue to participate in auctions.

“There is no doubt that online selling is here to stay,” remarked Roskind. “The digital route is particularly appealing to a younger client base since it provides them with a quick and easy access to auction platforms on a regular basis.”

Auction houses are expected to further strengthen their digital infrastructure, with hybrid events such as in-person auctions interspersed with online sales becoming a more permanent fixture in jewellery auctions moving forward. The online business is a key area of growth for Sotheby’s, according to Yu. As such, Sotheby’s will continue to roll out additional online events to complement its live auctions.

Expanding the company’s online strategies is likewise aimed at introducing jewellery auctions to a wider generation of collectors. New customers find it easier to navigate the auction world through digital channels, plus there are no geographical limitations.

With travel restrictions still in place, the jewellery auction business is poised for more innovation and development, and technology is expected to play a more critical role, noted Yu.

Christie’s Kadakia reiterated these sentiments, adding that online sales are a complimentary and supplementary channel for auction houses to attract new buyers.

“Our sales events, whether live or online, will coexist and there will eventually be no price threshold for lots sold on either platform,” he continued.

The jewellery sector is expected to see a strong resurgence in 2021, with buyers opting for unique jewellery pieces with a story, noted Yu, adding that market adjustments in 2020 laid a more solid foundation for the year ahead.

Roskind of Bonhams is likewise optimistic about the future of the fine jewellery and gemstone business, with consumer demand and market sentiment remaining sturdy into 2021.

For Whittaker of Fellows, continuous improvement and innovation is crucial to sustaining growth.

“While not being an e-commerce website, we’ve had to compete with others, so we adapted parts of our business to make it more efficient,” she stated. “We can’t see ourselves returning to the pre-2020 way of doing things. We have made changes to improve our business in a post-pandemic world.”

Lau of Phillips also maintained an upbeat outlook on the back of soaring consumer demand, especially for high-value items. Stronger interest in the middle market is also seen to grow as buyers become increasingly accustomed to a virus-stricken environment.

“The finest and rarest diamonds, gemstones and jewellery retain a high degree of independence vis-a-vis external environmental conditions. Historically, things bounce back strongly after a headwind, and we’re expecting it to be the case in a post-pandemic era,” explained Lau.