Since the Vinfolio Marketplace went live last week, there's been some discussion in online boards about its fees and how they compare with primary alternatives (i.e., bricks-and-mortar auction houses and online auction players). The Marketplace differentiates itself on many dimensions, including fees, but this post provides a fee-only-based comparison (OK, I've added some other comments too because "normalizing" fee charging methods requires some explanation).
Comparing "apples to apples"
All other auction houses require the wine being auctioned to be in their custody prior to the auction. While not required in the Vinfolio Marketplace, the seller has the option of transferring wine to Vinfolio storage first which is the nearest equivalent of the traditional auction house approach. Therefore, for a true "apples-to-apples" comparison, the Marketplace seller's commission when sold from storage is the only relevant basis of fee comparison.
Normalizing fee methodologies
Auction houses (whether traditional or online) tend to charge both a buyer's premium and a seller's commission on a transaction. Many sellers tend to ignore the buyer's premium because, after all, it's not charged to them. That logic is fallacious because any rational buyer faced with paying a 20% buyer's premium on his/her bid (or "hammer") price, will lower his/her bid to reflect the extra cost. Doing so ensures the total out-of-pocket price reflects what he/she believes the bottle to be worth.
The table on the right shows the universe of leading auction houses and their current buyer's premiums based on June 2009 U.S. auctions (note: if an insurance fee percentage is required, it is included).
To normalize different fee methodologies, I used a fixed $100 total price paid for a bottle and calculated the bottom-line net proceeds received by a seller (which is all anyone cares about!) when sold through different types of auction channels. The final result is a table showing a comparable single metric representing an "equivalent" seller's commission.
Vinfolio Marketplace vs. Traditional Auction Houses
The following chart illustrates that the Vinfolio Marketplace generates greater seller proceeds than using a typical auction house. Auction houses don't publish their seller's commission fees (why not?). They tend to be negotiated based on the estimated value of the consignment but the range shown is fairly typical (with Acker Merrill being the exception at 0% but with their 21% buyer's premium, the net proceeds only reach $82.64). Keep in mind that for larger consignments where the lower-end auction house seller's commission probably applies, the Vinfolio Marketplace's cumulative volume discounts would also, raising the Marketplace's net proceeds to $86.50.
Vinfolio Marketplace vs. WineBid and J.J. Buckley (WineCommune)
The following chart shows why the Vinfolio Marketplace is better than using WineBid or J.J. Buckley (a WineCommune affiliate). Some additional explanation is needed here:
- Winebid's seller commissions are not published (at least nowhere I could find) but are believed to vary between 12%-19% based on the volume of wine consigned.
- J.J. Buckley is a retailer owned by WineCommune that uses WineCommune to run consignment auctions (WineCommune sellers as of 12/08 must possess alcohol licenses to use it directly, hence the J.J. Buckley "tag team"). There's no buyer's premium and the seller's commission is linked to the bottle value with break points at $250 and $1,000. In checking WineCommune's site, there were only 3 listings with prices of over $1,000 per bottle (13% fee) and just under 10% of listings with $250 in total value (15% fee; listing measurement includes multiple bottle lots) so most people sell bottles for less than $250 which is a 17% seller's commission. The 16.8% shown in the chart is an estimated weighted average.
Other material differences exist that you need to know about. With WineBid and J.J. Buckley, any wine which doesn't sell in a weekly auction has its reserve and/or starting bid lowered each week until it sells (or you can ship it back to yourself any time at your expense). If you feel like gambling, you can reduce the seller's commission to 10% at J.J. Buckley if you sign up for a weekly auction with a $1 starting bid and no reserve. As that's an "orange" in this "apples-to-apples" comparison, I didn't include it in the chart above.
Selling fee summary
The table below says it all. The far right column represents the "expected" fee borne by the seller based on which firm is used.
Bottom line: The Vinfolio Marketplace is the most cost-effective solution for selling your wine, even without considering its many other differentiators. Review the Marketplace overview to learn more.
