Some online-only and online-assisted auctioneers are characterizing their company’s abilities by quoting statistics, including: the number of bidders per item and number of bids per item.
Clearly the use of a computer allows for these counts to be calculated and reported. The more of each is deemed better for the seller; we would submit to some extent the more bidders (total) the better for the seller.
Otherwise, we’re not sure of the merits of these “more bidders per item” and “more bids per item.” However, some are comparing (contrasting) these statistics to what they believe are comparable numbers in a live auction setting. Such as:
- “An interesting comparison to live auctions is the average number of bids per item. An live auction item with a lot of bidding activity may receive five or six bids before all the bidders are done bidding. Our online-only auctions average 15 bids per item …”
It seems to us that the number of different bidders per item is of little statistical value. A longtime saying in the auction business is, “You only need 2 bidders,” and in fact, all any auctioneer needs for any particular item are the last two bidders.
Further, the number of bids per item seems uninteresting and not statistically significant. In the spirit of needing “only 2 bidders,” an auctioneer only needs the last 2 bids for each item in order to maximize the seller’s proceeds.
Taking a look at the 2011 Florida Citrus Bowl pitting Notre Dame against Florida State, we see Notre Dame ran 69 plays, and Florida State ran only 62. Notre Dame had 19 first downs, and Florida State had only 13. Notre Dame had 7 3rd-down conversions, and Florida State had only 3. Yet, Florida State won the game 18-14.
In regard to the number of bids per item:
- I attended a live auction the other day where the auctioneer was selling coins. One such lot was a 1922 Peace Silver Dollar AU. The bidding started at $5 and continued $6, $7, $8, $9, $10, $11, $12, $13, $14, $15, $16, $17, $18, $19, $20, $21, $22, $23, $24, $25 and $26 (22 bids per item.)
- Not two days later at another live auction, a very similar coin came up for auction and the bidding started at $5 and continued $7.50, $10, $12.50, $20, $22.50, $25 and $26 (8 bids per item.)
- As can be seen here, there was no benefit to the 22 bids over the 8 bids. In fact, it was probably better to have less bids (and therefore less time involved) in selling the second coin over the first.
- Of course an online auction would have (or could have) more bids per item, as it might extend over a week or more and the bidders can’t easily evaluate the amount of interest (demand) in any particular item, and therefore bid just a bit more than the previous bid in hopes that is all it takes to win.
In regard to the number of bidders per item:
- An online auction is significantly different than a live auction in this respect. In an online auction, each bidder registers and bids largely independently — and without knowledge — of the other bidders. Any higher bid is accepted from the first bidder to offer that higher amount, and this could well extend over a week or more.
- In a live auction, bidders are literally looking at each other, and at the other bidders in the audience. Many wait and only bid if the current high bid is lower than their perception of value. And, they only wait, on average, no more than 30 seconds for the item to sell.
- As well, many (if not most) auctioneers only take bids from 2 bidders until that highest bid is resolved, and then look for another 2-bidder combination.
- We discussed this common method of live bid calling here: Keeping the bid between two bidders … This type of bid calling indirectly lessens the number of bidders per item, and typically speeds up the auction process without forsaking any (and possibly enhancing) profit to the seller.
Which auctioneer to hire? The one who historically gets more bids on each item? Or, the one who historically has more bidders bidding on each item?
The statistic that matters, if any, is actually which auctioneer is historically getting more net proceeds for their sellers; I’m not convinced higher net proceeds are necessarily a result of more bids per item, or more bidders per item.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He serves as Adjunct Faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.