A Retail Strategy for the Prosperity of the Art Market within Online Distribution Channel

Abstract

Purpose: Online distribution channel alludes to the many different digital channels utilized in marketing and distributing goods and services to end users. The present research aims to explore and provide various retail strategy for the success of the art market within online distribution channel. Research design, data and methodology: The current author has conducted and investigate the qualitative textual methodology to take a look at carefully the current and prior literature dataset to achieve the purpose of the present research so that the present author could obtain total 27 relevant prior studies. Results: According to the comprehensive literature investigation, this research has found that there are six kinds of retail strategy for the prosperity of the art market within online distribution channel as follows: (1) Blockchain Technology, (2) Artificial Intelligence (AI), (3) Virtual Reality (VR), (4) Online Market Places, (5) Social Media, and (6) Regulations. Conclusions: The results of this analysis of the relevant literature show that the art market industry needs to adjust to keep up with the quickly shifting landscape of the digital world. In addition, although these technologies can be helpful in addressing difficulties linked to authenticity and transparency, they cannot eliminate the hazards of fraud and misrepresentation.

1. Introduction

Online distribution channel alludes to the many different digital platforms and channels utilized in marketing and distributing goods and services to end users. Websites, social media platforms, and online auction houses are all examples of online distribution channels that can be found within the framework of the art market. Because they enable artists, collectors, and buyers to connect from any location in the world, online distribution channels have become an increasingly essential component of the art market in recent years (Ampountolas et al., 2019)

The capacity of online distribution channels to democratize the industry is the primary reason for the significance of online distribution channels in the art market. The art market used to have a reputation for being exclusive and elitist in the past, and entry was restricted to only those who could afford to attend exhibition spaces and auction houses (Wiengarten et al., 2020). On the other hand, because of the proliferation of online distribution platforms, the art market is now open to a significantly larger demographic. New possibilities for emerging artists to showcase their work and connect with prospective buyers have become available due to the proliferation of online distribution channels (Wiengarten et al., 2020).

The online distribution channels of the art market allow buyers and collectors to peruse a vast selection of artwork produced by various artists and galleries in different parts of the globe. They can purchase artwork straight from the gallery or the artist when using the platform. Because of this, it is now much more straightforward for art buyers and specialists to learn about up-and-coming artists and make purchases of artwork without physically going to galleries or auction houses.

Since the beginning of this decade, there has been an upward tendency in the art market toward distribution channels that are conducted online. Online art purchases increased by 12% in 2019, according to a report compiled by Art Basel and UBS. These sales now account for 9% of the overall art market. This pattern is anticipated to continue, exceptionally, as younger generations are more proficient in technology approach the art market.

The challenges that the industry encounters in the digital realm highlight the significance of comprehending and researching a strategy for the prosperity of the art market within online distribution channels. This is because of the importance of the art market. The trustworthiness problem constitutes one of the most significant obstacles (Jatmiko et al., 2022). Because it can be challenging to verify the genuineness of artworks purchased online (Chen, 2021), legitimate concerns have been raised about the possibility of scams and the distribution of fake items (Chen, 2021). The absence of regulation is another obstacle that must be overcome in the internet art market. Because of this, it is more challenging for buyers and sellers to negotiate the market, which can sometimes lead to unethical behavior.

The resolution of these issues should be the primary focus of any plan devised to ensure the health and growth of the art market within online distribution platforms. This can include developing improved authentication procedures using technologies such as blockchain and AI, providing additional information about the artists and the pieces being sold, and promoting the value of art as an investment option. In addition, the internet art market needs to be regulated to guarantee its customers' safety and protect themselves from fraud.

The market for art that is distributed through various online channels is a business that is not only significant but also growing. It can potentially democratize the art market, making it more accessible to a larger population (Chen, 2021). This could be a very positive development. Democratization of the creative production sector, However, some challenges must be conquered. To ensure the endeavor is successful, it is essential to devise a strategy for the Prosperity of the Art Market within the Online Distribution Channel.-

Figure 1: Research Model of the Present Research

2. Literature Review

The growth of the online distribution channel has been one of the most significant factors contributing to the enormous shifts that have taken place in the art market over the past several years. This transformation has presented art market practitioners with opportunities and obstacles, particularly those wanting to broaden their customer base and boost sales. The purpose of this literature review is to investigate the many different approaches that have been taken to ensure the success of the art market within the context of online distribution platforms.

2.1. Distribution Channel

In marketing, a distribution channel is a predetermined path that a company's goods follow as they make their way from the manufacturer to the end user. A proper distribution channel is a prerequisite for marketing in a marketplace that is dynamic and active (Krishen et al., 2021; Hiromoto, 2019). This is because it assists in satisfying both the ever-increasing demands of customers and the goals that a firm has set for itself in the market. While designing a proper distribution channel, a company must consider the transportation and logistical issues in the market in which it operates (Rosenberg & Sternv, 1971). Makers of goods and service providers can use various distribution channels to reach their target audience (Rosenberg & Sternv, 1971). It is up to the management of a firm to determine which distribution method will yield the best results, given the specifics of that company's operations.

2.2. Importance of a Distribution Channel

An effective distribution channel is necessary when achieving a company's marketing goals. The organization receives the much-required link between the company's production sector and its customers through the utilization of a distribution channel (Zikmund & Babin, 2015). In addition, a reliable distribution channel guarantees that the products are precisely tailored to the market most suitable for them. The end users of a company's wares are the ones who must find them usable and satisfactory. In this instance, the sports apparel company will be able to fulfill its targeted sales goal by ensuring that its items reach their intended consumers through an appropriate distribution channel (Luo et al., 2022).

In addition, an efficient distribution channel acts as a conduit for feedback information such as vital market intelligence data, customer comments, and services for sales forecasting. Proper feedback from the market is essential for the firm to meet the customers' expectations and make well-informed decisions (Luo et al., 2022). These decisions could include anything from setting prices at a level acceptable to customers to determine how the company would ensure the quality of its products. In addition, using the appropriate distribution channel is beneficial for stock holding and the retailing of products (Qiao & Su, 2021). A distribution channel may also offer salesmanship, mainly when introducing new products. In addition, having an efficient distribution channel will help an organization increase its distributional efficiency by reducing the distance between its producers and customers (Shi et al., 2013).

2.3. Online Distribution Channel

The worldwide online art market comprises buyers and sellers who conduct business over the internet in purchasing and selling works of art, antiques, digital artworks, and collectibles typically associated with the field of arts and culture (Jia & Li, 2020). Before the coronavirus (COVID-19) pandemic in 2020, online transactions accounted for around one-tenth of the total value of the worldwide art market. Nevertheless, due to the measures implemented during the health crisis, digital sales increased dramatically in 2020 (Moon et al., 2021). The upward trend continued into 2021, propelled by increased demand for crypto art and non-fungible tokens (NFTs). In that year, sales on the internet art and antiques market reached their all-time high of 13.3 billion United States dollars, which accounted for approximately a fifth of the total value of the art market.

Since the introduction of technology and the internet, the art industry has gone through a series of shifts with time. The proliferation of the online art market can be attributed to the fact that the internet has made it possible for buyers and vendors to conduct business despite their locations in different parts of the world. According to the report that Art Basel and UBS compiled on the global art market for 2020, the value of the online art market increased by 4% in 2019 to achieve a total of $12.4 billion. Despite this growth, the internet art market must overcome several obstacles, including issues of authenticity, investment, and regulation.

Scholars have discussed digitization's real-world implications in the music and art industries. For instance, research by Laura Robinson and David (2002) demonstrates that digitally adopting music streaming service providers has significantly altered people's general exposure to and interaction with the arts and music.

On the one hand, according to their research on the connection between the music industry and digitalization, music fans today have greater access to a wider variety of musical styles than ever before, thanks to the proliferation of digital music storage and playback. The traditional music industry is also under attack from digitalization. But, interestingly, research shows that even as digitalization stimulates technological advancements, offline market worries about making money are still "colonizing" the online world.

Adorno (2020)’s study before the advent of digitalization, observed that popular art, as opposed to "serious art," is a reasonably typical illustration of popular culture in a capitalist world and that this form of highly standardized music serves the mass public taste. From Adorno's perspective, even though there appears to be a lot of variety in today's music industry and digitalization has brought a lot of options to the market, there is little room for "serious music," and customers' freedom and diversity of choices only show a cyber-version of "pseu do-individuation," which is enhanced by mass market products and services tailored to the tastes of the general public.

Customers are kept in line by having their thinking "standardized" in the form of song hits. Pseudo-individuation, on the other hand, keeps them in line by fooling them into thinking the information they are taking in is not tailored specifically to them or has already been digested. It's important to note that the fine art market and the online art market function somewhat differently than the music industry. Since under copyright protection, music products and services can be freely traded or transferred notwithstanding their high reproducibility. This indicates that the general public had access to them long before the controversy erupted. Artworks are typically one-of-a-kind, which implies that the idea of consuming art is foreign to many people. Some researchers have looked into the potential of social media to promote the arts and their consumption and how this can affect the link between the arts and the general public's tastes. Using various forms of social media in the fine art industry offers new opportunities for "dissemination and participation," supporting the idea that the advent of this new medium has altered the art market. "Friendship and closeness can be magnified and commodified through social media," one theory puts it.

Steinberg (2021) suggested that social media has allowed well-known galleries and small and medium-sized ones to reach a wider audience and potentially convert more of them into buyers of fine art than ever before. This is because the direct line of communication between the gallery and the customer helps to break down barriers between the two. It is further demonstrated that collectors and art lovers now have a superior grasp of every facet of the art market due to digitalization's explosion of information. They may have access to significantly more data concerning artists, prices, and art market tendencies. As a result of this "democratization of information," consumers may be more interested in the arts when targeted through social media.

The growing significance of the digital landscape in the art industry is highlighted by research on methods for maximizing success in the art market via virtual distribution channels. The internet has become a vital medium for artists and galleries to reach customers outside their immediate areas. Abbate et al. (2022) investigates the opportunities and challenges of online art sales and how the rise of digital platforms alters the art market. To reduce the possibility of fraudulent transactions, Nguyen et al. (2021) suggests using blockchain technology to facilitate the purchase and sale of artwork. Art businesses can also benefit from using AI to make pricing, marketing, and customer engagement decisions based on actual data.

As a means of gaining exposure and gaining access to new customers, social media platforms have been singled out as a vital tool (MacKay, 2022). Businesses can gain more exposure by having followers spread the word about exciting content showcasing their work. Using online marketplaces is another way artists and galleries can broaden their exposure beyond their local communities and international markets (MacKay, 2022). Artists can boost sales and income by promoting their work on online marketplaces.

As a medium that can transport potential buyers into the work of art, virtual reality has also been recognized as an essential tool for the visual arts. Using this technology, potential buyers can understand how the artwork would look in their homes, boosting sales and reducing the number of trips buyers need to make to galleries. Further, VR can facilitate the production of online exhibitions that a wider audience than traditional gallery shows can access.

And even more fundamentally, Bhowmik et al. (2019) in their research, show that more and more art collectors are making purchases online, demonstrating the need for art businesses to modify their strategies to accommodate this market. The research shows that using blockchain technology is essential for companies to gain the trust and credibility of online shoppers. The study also highlights the significance of using augmented reality and AI to provide an exceptional customer experience.

Buchholz et al. (2020) conduct a second study on the effects of COVID-19 on the art market, which again emphasizes the growing significance of online sales platforms. The study finds that galleries must modify their business models to meet customers' demands as online sales skyrockets during the pandemic. Additionally, Kraus et al. (2021) provides insights into the online art market and highlights the need for businesses to provide a seamless online experience for buyers. The research shows that it's crucial to use digital technologies like VR to give customers a lifelike experience when shopping online.

Figure 2: Summary of the Flow in the Literature Review

2.4. Research Gap

Even though studies have been conducted on the strategies that can be utilized for the success of the art market within the context of online distribution channels, there is still a deficiency in the body of knowledge concerning how these tactics may be implemented. A significant amount of research has been conducted on the tactics that may be used to ensure the success of the art market within the context of online distribution channels. There has not been a lot of research done on how specific methods, like blockchain technology or artificial intelligence, can be combined to boost the overall success of the online art market, even though a lot of studies have concentrated on specific strategies like these. Just two instances of specialized strategies are the use of the technology known as blockchain as well as artificial intelligence.

In addition, even though there have been studies conducted on the efficacy of particular strategies, there is still a requirement for research on the efficacy of numerous strategies when used in conjunction with one another (Sidorova, 2019). This research gap is significant because it is possible to combine potential solutions to comprehensively address the challenges posed by authenticity, investment, and regulation in the online art market. These challenges are present in this industry for a variety of different reasons, and one of those reasons is the current economic climate.

The purpose of this study is to investigate how the strategies that have been successful in the art market inside online distribution channels might be adapted to improve the overall success of the market as a whole to fill a gap identified in the existing body of research. Consequently, the market will, in time, be able to reach a greater degree of success. As a part of the research project, we will also investigate how successful these intertwined strategies are in addressing the challenges now experienced by the online art market.

This study is unique compared to other studies that have been carried out in the past because it does not concentrate on the execution of a single strategy but rather on combining multiple strategies to encourage the expansion of the online art market. Other studies have focused on the execution of a single strategy to encourage the growth of the online art market. Because of this differentiation, this study can be identified as being unique compared to other studies conducted in the past. This research will provide insights into how different strategies could potentially work together to build a market for online art that is safe, transparent, and equitable.

Table 1: The Results of Research Investigation

4. Research Findings

The current author has conducted and investigate the qualitative textual methodology to take a look at carefully the current and prior literature dataset to achieve the purpose of the present research (Kang & Hwang, 2023; Lee, 2022) so that the present author could obtain total 27 relevant prior studies.

4.1. Blockchain Technology

The provision of a trustworthy and open-access marketplace for the purchase and sale of the artwork is one of how blockchain technology has the potential to transform the art industry entirely (Hussain et al., 2022). By establishing a permanent and unchangeable record of ownership and provenance, the utilization of blockchain technology can reduce the likelihood of fraudulent activity and the production of fake works of art (Sidorova, 2019). In addition, blockchain technology has the potential to increase transparency in the art market, making it more straightforward for purchasers to establish the legitimacy of artworks and the context in which they were acquired (Abbate et al., 2022). Additionally, the technology behind blockchain can be used to make it easier to transfer ownership of pieces of art, which can cut down on the number of intermediaries involved and make the transaction process more efficient overall (Raman & Raj, 2021).

4.2. Artificial Intelligence (AI)

The application of artificial intelligence (AI), which may provide insights into the behavior and tastes of purchasers, has the potential to completely transform the online art market (Dwivedi et al., 2021). AI can provide buyers with customized recommendations based on the purchasers' previous purchases and preferences (Abbate et al.,2022). In addition, artificial intelligence has the potential to aid in the prevention of art theft and forgery by examining digital photographs of pieces of art and contrasting those images with a repository of examples of known frauds (Suvajdzic et al., 2022). In addition, AI may assist in the automation of administrative duties, like as the preparation of invoices and the tracking of payments, which can lead to an increase in the level of efficiency achieved throughout the transactional process (Azman et al., 2021).

4.3. Virtual Reality (VR)

The technology known as virtual reality (VR) has the potential to completely revolutionize the online art industry by giving purchasers an immersive view of the artworks for sale (Sidorova, 2019). Virtual reality (VR) technology can allow prospective purchasers to explore artworks in a virtual gallery, offering a more lifelike experience than conventional web photographs (Alyahya & McLean, 2022). In addition, virtual reality technology can give purchasers additional information about artworks, such as the dimensions, medium, and specifics of the piece being purchased. The possibility of customers purchasing artworks that are not as described is decreased due to this measure (Leroi-Werelds, 2019).

4.4. Online Market Places

In addition to being an essential tactic for developing the art market within the context of online distribution channels, using online marketplaces is also an important technique (Kingsnorth, 2022). Internet markets like Artsy, Saatchi Art, and Artfinder gives artists and art dealers a location to exhibit and sell their works to an audience worldwide. It is much more straightforward for artists to sell their works online because these platforms provide various services, including marketing, payment processing, and delivery.

However, although online marketplaces create opportunities for artists and art dealers, they also pose obstacles to the industry (Bhuiyan et al., 2021). Online markets typically require a fee payment, which can be cut into the income of individual artists and art dealers (Bhuiyan et al., 2021). There is also the possibility of placing an excessive amount of reliance on internet marketplaces, which poses a threat to the capacity of artists and art dealers to construct their brands and cultivate direct relationships with collectors. Last but not least, online marketplaces have their own rules and guidelines, making it more difficult for art dealers and artists to offer their wares in the manner they deem most appropriate.

4.5. Social Media

Within internet distribution channels, using social media is yet another tactic that can help the art market thrive. Art dealers and artists have access to a valuable tool through social media platforms such as Instagram, Facebook, and Twitter, allowing them to market their works and communicate with potential clients (Van Miegroet et al., 2019). Through social media, artists have the opportunity to present their work in a manner that is both more engaging and interactive with a larger audience, as well as to engage with collectors and curators (Bhuiyan et al., 2021). In addition, social media platforms enable real-time feedback, allowing artists to assess how the general public reacts to their works and adapt their marketing strategy accordingly (Ivanova & Nestler, 2020).

However, even though social media presents art dealers and artists with several opportunities, it also poses many obstacles. Because of the enormous amount of content shared on social media platforms, it can be challenging for artists to get their work noticed and achieve attention (Nadini et a., 2021). Also, the algorithms that power social media platforms are often being updated, which makes it impossible for art dealers to forecast the results of their marketing efforts (Nadini et a., 2021). In addition, there is the possibility of being exploited, which is primarily a concern for newly established artists who might not be aware of the inner workings of the internet art market.

4.6. Regulations

Regulation is an additional tactic that can be used to ensure the health and growth of the art market inside online distribution channels. A common criticism leveled at the internet art market is that it lacks transparency, contributing to the frequency of fraudulent activity. In response to these concerns, governments in many nations have enacted laws in the online art market designed to safeguard consumers and encourage ethical business practices (Helberger, 2020). For instance, the Dodd-Frank Wall Street Reform and Consumer Protection Act established the Conflict Minerals Rule in the United States. This rule mandates that businesses divulge whether or not their products contain minerals mined in areas considered to be in conflict (Helberger, 2020). In a similar vein, the European Union came up with the Fifth Anti-Money Laundering Directive, which mandates that art dealers must confirm the identities of their buyers and report any acts that appear to be suspicious (Burroughs, 2019).

However, while regulating the internet art market is vital to promoting fair trading, it can also create difficulties for art dealers and collectors. Maintaining compliance with rules may be expensive and time-consuming, particularly for less significant market participants (Langan et al., 2019). In addition, there is a possibility of excessive regulation, which has the potential to hinder creativity and innovation in the online art market. Hence, there is a need for a balanced approach to regulation, one that strikes a balance between the need to safeguard consumers and the development of innovation and originality in the art market (Langan et al., 2019)

In general, the online art market has the potential to become more safe, transparent, and accessible by using these technologies, which might lead to increased involvement from buyers and sellers worldwide. Furthermore, these tactics can develop a more profound sense of community within the art market by linking artists, galleries, and purchasers from different world regions. This can be accomplished by facilitating international collaborations (Tarakanov et al., 2019). This can result in broader diversity in the types of artwork generated and sold, promoting innovation and originality within the art world.

Yet, despite the possible benefits of these tactics, some potential risks and obstacles must be addressed. These risks and challenges must be considered. For instance, implementing blockchain technology raises concerns over the confidentiality and safety of user data. In addition, the application of AI in the art market raises problems concerning the function of human expertise and the possibility of bias in the algorithmic decision-making process (Tarakanov et al., 2019).

As a result, it is indispensable to carefully consider the implications of these tactics and devise suitable rules and safeguards to ensure the proper application of these methods (Kraus et al., 2021). In addition, it is essential to maintain research efforts and investigate potential applications of emerging technology and business tactics to ensure the continued growth of the online art industry. In today's digital era, this research has the potential to both make insightful contributions and contribute to the ongoing evolution of the art market.

Table 2: The Results of Research Investigation

5. Implications

Considering the initial findings, a few lessons can be learned by those working in the art market and who are interested in implementing strategies to improve the vitality of the online art market. Using social media platforms is one of the suggested ways to increase one's visibility and one's ability to communicate with prospective purchasers (Kraus et al., 2021). Businesses can generate exciting content that highlights their artwork, which can then be shared by their followers, leading to increased visibility for the business. When businesses do this, they may raise the awareness of their brand and engage with potential customers worldwide.

Using online markets is another approach that may extend their sphere of influence beyond the confines of their immediate region (Bhuiyan et al., 2021). The ability for art galleries and artists to advertise their artwork on internet marketplaces gives them access to a worldwide audience. It has the potential to boost sales and revenue for the businesses involved. This tactic is of utmost importance for smaller companies since they frequently lack the resources to sell their wares outside their geographic area.

It is also proposed that blockchain technology be implemented to provide a safe and open marketplace for purchasing and selling artwork. Companies may verify that the artwork's provenance is validated by implementing blockchain technology, reducing the chance of fraudulent transactions. This method will provide potential purchasers with trust and assurance, ultimately enhancing sales and revenue for organizations.

Virtual reality (VR) is another tool that art businesses may use to present prospective customers with an immersive experience. This technology allows clients to visualize how the artwork might appear in their homes, which can boost the chance of sales and eliminate the requirement for customers to make personal gallery visits. Businesses can set themselves apart from their rivals and offer a one-of-a-kind experience to prospective customers by making use of virtual reality.

Lastly, incorporating artificial intelligence is yet another technique businesses may employ to arrive at data-driven decisions regarding pricing, marketing, and consumer engagement. Businesses can improve their chances of generating a sale by customizing their approaches after conducting an in-depth analysis of customer purchasing patterns. By implementing this plan, businesses can improve their market competitiveness by optimizing their pricing and marketing tactics.

In summary, businesses involved in the art market industry can overcome the issues confronted by the online art market and contribute to expanding that market by implementing these tactics. The ideas presented here contain specific activities that businesses may take to improve their sales and revenue, as well as their level of market competitiveness.

6. Limitations

One of the research's potential shortcomings is the absence of data on the actual implementation and efficacy of the solutions mentioned. While the study is based on theoretical frameworks and earlier research, the application of these tactics in real-world circumstances may differ. This means that the findings may not be completely applicable in practice, and the actual impact of these tactics on the online art market is yet to be determined.

Another major weakness of this study is its narrow scope. The study focuses on employing specific strategies in the online art market. Hence the conclusions may not apply to other sectors or industries. Furthermore, the findings may not apply to different countries or locations due to changes in the online art market landscape and cultural variables that may impact the effectiveness of these tactics.

Time restrictions may also limit this research. Due to time and resource constraints, the research may not have been able to cover all elements of the topic thoroughly. As a result, there may be study gaps that could be filled in future studies.

Another potential problem is the research's lack of various perspectives. The study may have overlooked the experiences and viewpoints of all essential stakeholders in the art market industry, such as artists, collectors, and art dealers. This may limit the extent and depth of the findings, and future studies could seek a broader range of perspectives to acquire a more comprehensive understanding of the online art market.

Finally, prejudice may have influenced the research findings and conclusions despite efforts to stay objective. The researchers' viewpoints and biases may have influenced their interpretation of the data and analysis. Future studies could address biases and examine alternate perspectives to acquire a more comprehensive picture of the online art market.

7. Conclusions

The results of this analysis of the relevant literature show that the art market industry needs to adjust to keep up with the quickly shifting landscape of the digital world. To maintain their position as industry leaders and attract new clients, businesses must implement cutting-edge technologies such as social media, online marketplaces, blockchain, virtual reality, and artificial intelligence. Yet, it is essential to be aware that these tactics have some constraints, and it is possible that not all parties involved in the art market would find them appropriate (Huang & Rust, 2021). For instance, not all art forms may be suited for virtual reality experiences, and other artists may feel more comfortable sticking to more conventional methods when marketing and selling their work.

In addition, although these technologies can be helpful in addressing difficulties linked to authenticity and transparency, they cannot eliminate the hazards of fraud and misrepresentation (Fahy & Jobber, 2019). For this reason, businesses need to implement these tactics methodically and in conjunction with several other techniques, such as education and legislation (Ehsan & Yang, 2019). It is vital to conduct additional research to investigate the most efficient ways these strategies can be utilized and to locate other solutions to the problems currently facing the online art market.