The Art of Clicks-and Bricks

Galleries today are facing a critical decision; include new technologies and accept a new business model including electronic commerce or retain their traditional business model and risk becoming outdated and surpassed by new innovative opponents. Information technology and a new generation of buyers give galleries the opportunity to increase their sales channels with the use of Internet. Currently, galleries are experiencing financial difficulties due to the harsh economic climate. Research on the effects of the crisis on the art market indicate that the changing environment does not leave contemporary art galleries unaffected: the Dutch gallery branch experienced a fall of 15 percent in the total industry turnover in 2009. Theory asserts however that galleries persist to manage their enterprise as if they remain unaffected by new external threats and opportunities. Yet the results of this study indicate quite the opposite: almost all respondents undertake one or more e-commerce activities and thus complement their traditional business models with e-commerce creating a multi-channelled clicks-and-bricks business model. 91.5 percent of all respondents undertakes activities focused on gaining online presence, 20.3 percent of all respondents undertake activities focused on online marketing and 5.1 percent of all respondents undertake e-commerce activities focused on eretailing. Results show that extent of the adoption of e-commerce is not influenced by firm characteristics size, age or geographical location. This could mean that few firms consider e-commerce to be greatly beneficial. Results also reveal that the influence of e-commerce on annual average turnover; average sales price and average annual sales rate is very limited. For Dutch galleries, high scores on the use of e-commerce do not lead to higher revenues or sales rates. For the use of e-commerce to hold economic benefits for galleries - without it leading to an increase of total turnover, increasing the use of e-commerce should then lead to cost reductions. However, correlation analysis on the influence of the use of e-commerce on the costs structure of a gallery reveals that promotion and marketing costs; expenses on exhibitions and art fairs; labour costs and fixed costs remain unaffected from systematic variation of the use of e-commerce. These results reveal that an increase of the use of e-commerce creates no additional economic value for Dutch galleries, total costs as well as total revenues remain unaffected as a result of a systematic variation in the use of e-commerce. Economic value is not the only value that can be created in a business: value creation may also include organizational value, social value and cultural value. Results show that most gallery owners/ managers perceive e-commerce to allow a gallery to operate more efficient, effective and competitive in their business processes. Ecommerce use also simplifies and speeds up communications as well as increasing client relations. As a result, the organizational value of a gallery is perceived to benefit from the use of e-commerce. At this present, the adoption of e-commerce into the business model of a Dutch gallery may not directly lead to a significant increase in economic value. It can also be discussed whether the perceived organizational benefits are realized benefits as well. Yet, the economic climate, the risk of becoming outdated and surpassed by new, more innovative opponents and the risk of loosing their role as an agent for artists to disintermediation as a result from the Internet pressurizes galleries to innovate and adopt e-commerce in large numbers.