When most people think of an auction, an image of a fast-speaking bid caller with a gavel comes to mind. However, the traditional auctioneer is increasingly being supplemented by online auction platforms, where all the selling and buying happens online. Accordingly, online industrial auctions are advantageous to individuals and companies that are interested in selling their used industrial equipment. For example, in November 2017, Ritchie Bros. Auctioneers, a global leader in used equipment sales, announced that they would be closing five of their on-site auction locations across North America to focus their efforts on their online auction platform. Company CEO, Ravi Saligram, explains that the site closures are a result of bidders moving online and, that over half of RBA winnings today come from online bidders. Additionally, in the Global Online Auction Market report, analysts forecast that the online auction market is going to grow at a CAGR of 7.2% during the period of 2018-2022.
Accordingly, this shift in the auction industry can’t be ignored. Practically every reputable industrial auction firm now offers online auction services as part of their portfolio. But you may be wondering, what are the advantages of online auctions? Let’s explore some of the forces driving the popularity of online industrial auctions and what it means for sellers looking to sell used industrial equipment.
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From a seller perspective, if you are selling your used industrial equipment through an online auction; naturally, the equipment gets exposure to a significantly large group of buyers. Conventionally, a live auction is scheduled to run at a certain location and time, and depending on the size of the auction, bidders may be frequent or sparse. However, an online auction is accessible to a large geographical audience and the bidding for each lot closes when the competition ends. This is especially important if you are banking on selling large, specialized equipment and are hoping to target end-users. Moreover, when your auction is on a reputable online auction platform, buyers are pre-qualified by the site and other sellers based on past transactions. You can see who has paid promptly, who was easy to work with and who picked up their items on time.
Online auctions are also convenient for buyers. NRI Industrial Sales, an Ohio based industrial liquidator finds buyers prefer bidding anonymously online rather than bidding in person. “With the advancement in technology in terms of being able to view hi-res photos and videos of industrial equipment, more and more buyers simply bid online, instead of spending time and money travelling to the auction site,” says Scott Conway, Process Manager at NRI Industrial Sales. This means more buyers are likely to participate and drive up the bids for your items.
Who is Selling Used Industrial Equipment Online?
Aucto’s seller list includes demolition firms, equipment liquidators, and companies interested in recovering capital from their surplus equipment – but it also includes small businesses and individuals. To get an in-depth review of what are the top online marketplaces, you can head over to our blog post where we highlight the top three marketplaces for buying used industrial equipment online. Online auctions make it easy to offload equipment quickly and at a very reasonable return rate. Recently, a seller conducted a sale for MRO and spare parts from a manufacturing facility, recouping 31% of the original book value. And, they did it in 33 days from listing to selling.
Control over a sale can often be an area of concern for both asset owners and auctioneers. By control, I mean, who can participate in the sale, when the sale can take place, and the ability to protect assets through the use of reserves. Online auction or liquidation attempts to address many of these concerns and put the reins in the hands of the seller.
Control Who Can Bid in Your Auction:
Business owners interested in liquidating no-longer-needed production equipment are often concerned about the equipment being sold to their competitors. For example, Mercedes has taken a keen interest in their end-of-life vehicle program in an effort to practice sustainable disposal and recycling methods; but, Michael W. Toffel explains that this can also be seen as an effort to prevent competitors from accessing their branded vehicle parts. Or there can sometimes be corporate restrictions regarding the resale of assets. Online auctions make it far easier to screen who is bidding in the sale. Some mobile platforms such as Aucto.com even allow sellers to screen registrants based on location; in case the seller is concerned about where the equipment will end up.
Decide When the Sale Will Happen:
With live auctions, the timing of the sale will always depend on the availability of the auctioneer. The calendars of the larger auction firms fill up quickly, and the dates suitable to the seller may not always be available. Online auctions don’t require direct auctioneer input on bidding day, and therefore allow more flexibility when choosing a sale date.
Better Reserve Process:
Similar to live auctions, online auctions allow sellers to set reserves on equipment they wish not to sell below a certain amount. The difference is that this process is a lot more transparent for buyers in an online auction. In a traditional auction, a buyer won’t know whether a lot has a reserve or what the starting bid will be until that lot is up on the auction block. This can potentially be a huge waste of time for buyers who may be expecting lower starting prices or reserves. Online auctions clearly display the starting bids on all assets, and whether an item has a reserve; attracting buyers who are serious about bidding.
Traditional auctions don’t work for small scale sales. If there are not enough lots in an auction, the sale will not draw enough buyers. This is why traditional auction houses are typically interested in working with sellers who are looking to sell a lot of equipment. Small businesses, who don’t have huge amounts of capital equipment to dispose of often turn to online auctions for their asset recovery needs. The best auction and liquidation marketplaces don’t differentiate between big companies selling thousands of items and small businesses posting five or six items. Regardless of the number of items being posted, lots are presented in front of a global audience they would not have access to otherwise.
“We realized that small businesses and sellers are often overlooked by traditional auction houses.” says Jamil Rahman, Founder and CEO, Aucto. “This is why we built Aucto for sellers of all sizes. Their listings are given access to the same buyer market as Fortune 500 Companies.”
Whether you are figuring out your first sale or are an experienced seller looking to maximize your auction/liquidation revenue, here are a few tips for selling smart:
- Ask Someone Who Has Been There, Done That. If it’s your first time selling through an online auction, consult with a colleague who has experience with selling online. If you can’t find anyone, a reputable online marketplace should be happy to answer your questions. Some even offer a free consultation to new sellers.
- Understand What Type of Equipment Sells. Take a look around online to research what’s listed, what’s selling, and what isn’t. Generic industrial equipment that can be used across a multitude of industries is more likely to sell quickly than specialized or customized machinery. Review the completed listings on a marketplace to identify which items are in demand and therefore, likely to sell fast.
- Be Realistic with Your Pricing. If you are looking to liquidate equipment, expect liquidation pricing. Remember, online auctions and liquidations help you recover your capital in a very short period of time. Price is the tradeoff.
- Take the Time to Prep Equipment for Sale. Cleaning and preparing the equipment you are looking to sell goes a long way in recovering the maximum value.
- Title it Right. Ensure your title includes the right keywords so it’s easy for buyers to find it in a search. Include product name, manufacturer, model number, and important specs in the title as well.
- Post a Lot of Visuals. Ensure you have plenty of clear, high-resolution photos of the item, including manufacturer’s labels. Include videos of it in operation, if applicable. Show buyers anything they would see if they were looking at the item in person. Avoid background clutter, make lots look organized, and provide a written description with each image.