Online Sales The Wave of the Future?

A second share in Siyouni (Fr) (Pivotal {GB}) will be auctioned off on Arqana online Dec. 9 and 10. (Register to place bids at www.arqanaonline.com).  The sale follows on the heels of the successful auction of a Siyouni share to Hesmonds Stud for €355,000 in November, and a sale last week for a share in leading National Hunt stallion Martaline for €50,000.

As with the share last month, this share comes with the right to one free nomination each year, plus an extra one every other year, beginning in 2016. Siyouni was the champion sire of two-year-olds in France and is currently the second-leading European second-crop sire. He is fully booked for 2016, and will stand for a fee of €30,000.

With momentum building, officials at Arqana said they believe they have taken an important first step toward the creation of a viable online sale they hope will grow into a established way for people to buy and sell not just stallion shares but virtually every type of horse that can come up for sale.

“The (first) share in Siyouni belonged to small breeder, a man from Belgium,” said Arqana's managing director Olivier Delloye. “He bought into the horse a few years ago but didn't have the type of broodmares suitable for him. The stallion has made quite a big impact in the last two years, so the breeder thought this was a perfect time to sell.”

This past week in America marked the official opening of the Christmas shopping season with the traditional post-Thanksgiving shopping splurge `Black Friday.' Brick and mortar retailers saw a 10% decline in shopping, while online and mobile sales surged by 14%.

But while Americans now buy 8% of all products online, and with European e-commerce expected to rise 18%, according to figures published for the third quarter of 2015, online horse sales in both America and Europe have struggled to find a foothold.

Can Arqana reverse that trend with a new model? Some Americans, at least, were still skeptical.

“When you are selling valuable horses, you cannot skip what really matters,” said Keeneland's Director of Sales, Geoffrey Russell. “People want to go and see the horses and see that they are what they are looking for and make sure they are sound enough. All these processes cannot vanish just because something is sold online. People will not buy horses blindly online. The only exception will be the low-value horses that people are trying to get rid of and buyers can accept because they are only paying a small price and there is not much risk involved.”
Russell said Keeneland tried an online auction of RNA'd horses in the late nineties and it was only modestly successful and was dropped. Like most sales companies, it also allows people to make on-line bids on RNA's after a sale has ended.

Perhaps the leading on-line sales company in the U.S. when it comes to thoroughbred racing is Starquine.com. It sells everything under the sun, including racehorses, but most sell for $10,000 or less. Other companies had success in the eighties selling seasons and shares outside the traditional sales ring, but that business largely dried up when farms decided to go into that market themselves.

American buyers and agents seem skeptical a robust online marketplace can be established.

“Possibly you can get away with it with broodmares and you can definitely get away with it with shares, but there's not a very big market for that,” said bloodstock agent and owner Peter Bradley. “I'm probably a bit of a dinosaur and I dragged myself kicking and screaming into the 21st century, but I just don't see this type of sale moving forward.”

“The opinion of the person buying a horse on the physical is such an important part of what we do at horse sales,” Bradley continued. “That's why If you have two Tapits with similar pedigrees one will bring $1 million and another one will bring $400,000. It is very difficult to see in photographs and videos what you are buying, at least for me it is. That's the biggest thing. One Frenchman I know, he buys on what he calls the presence of the horse. That's just not something that can be translated through camera work.”

Arqana is fully aware of the reasons why people might shy away from online sales, but they also know that this has become an online world. By limiting their online sales, by sticking to quality horses and stallions and by doing everything they can to replicate the up-close-and-personal feel a buyer can get with a horse at a traditional sale, Arqana is hoping to create something the consumer will accept as an important and viable alternative to a traditional sale.

Prior to the sale of the Siyouni and Martaline shares, Arqana's on-line platform sold a share in the top French trotter Bold Eagle, who is both racing and breeding. It also offered the Group 2-placed racehorse Toruk for sale but he didn't meet his reserve.

Delloye realizes that Arqana's biggest obstacle will be to make buyers comfortable with the online nature of the sale. While selling stallion seasons and shares is not particularly difficult to do online, he said there are not enough of those available to make this venture worthwhile. That makes selling yearlings, horses-in-training and broodmares a must.

Arqana is looking for customers who want to sell their horse at an ideal time–within days of a sibling winning a major Group race, rather than waiting for the next traditional auction to roll around. Yet, that still means finding a way for buyers to have full confidence in what they are purchasing without necessarily having the accessability to the horses that is available at traditional sales. In order to overcome that hurdle, Arqana is pulling out all stops to give buyers every piece of information about the horse possible.

For a period of seven days before the sale, the horse will be available for inspection on the premises where it is kept (racing stable, stud farm) and its veterinary records will also be made available. If the buyer cannot make it to France, Arqana will hire a team of professionals to do a thorough inspection of the horse.

“When we sell a horse in training on line we offer the buyer the opportunity to go see the horse ahead of the sale and we do all the due diligence you need to do to buy a horse in training,” Delloye said. “I think we can combine all the traditions of sales, going to see the horses, inspecting them, X-rays, sending a vet. And also with the opportunity to buy online, you can buy from wherever you are in the world at any time.”

Delloye said that their online platform is based on the concept of `one horse, one sale,' with only one horse or one share or season sold at a time. That way, he said, Arqana can devote all of its attention to that product.

“Clearly, our strategy from the very beginning, this is not something where we would organize sales on a regular basis,” he said. “Maybe once a month and when the right opportunities are available. The model is one horse per sale and really focus on that one horse. With the time and energy we spend on every sale this is not something we can do that 100 times a year.”

Sixty-nine percent of Americans now shop on line at least once a month, according to Intel's Online Shopping U.S. report, and e-commerce is the fastest growing retail market in Europe. Will they shop for racehorses, seasons and shares there as well?

“So many stallions are in the hands of a few powerful stallion operators who do not share their stallions with any other breeders,” said Delloye. “And there are so many horses in training. I think we can really give people the opportunity to expose these horses to a larger audience when it comes time for them to sell their horses.