Sothebys.com: Giving the Van Gogh Away

This is a case report on auction house Sotheby’s launch of its online platform, Sothebys.com, based on Harvard Business School’s case, Sothebys.com. You can purchase the original case from HBS here. Download a pdf of this case report here.

ABSTRACT

The current revenue model of Sotheby’s online auction sites does not adequately monetize the value the platforms offer both buyers and sellers. The situation is such that the average lot sold on Sothebys.com is losing money for the firm. To rectify this, Sotheby’s must charge their Associate members for access to the platform, change the premium schedule of online sales to match that of live auctions, and make it a strategic initiative to push lower priced items from the live auctions to online sales to improve the company’s overall profitability.

Profit and Loss Cases

Adapted from Marc Cosentino’s Case In Point, 8^th edition (p. 37-40):

The Profit and Loss case has several variations, but all of them deal with the central framework:

E (P = R – C) M

where E represents the economic situation and M describes the market and/or industry. Within the parentheses, we have Profit = Revenues – Costs.

Harley Davidson

Summary of practice case from CIP with my comments and additions in blue:

“Our client is Harley-Davidson. Their stock fell from $54 to $49 a share on news of declining profits. What’s going on and how can we turn this around?”