We previously wrote about Selling at auction: online versus live. Today, we write about selling at auction with both online and live bidding.
Again, we look at a research paper titled “Selling online versus live” which was released as a result of work by,
- Eiichiro Kazumori, PhD (California Institute of Technology)
- John McMillan, PhD (Stanford University)
dealing with the issue of utilizing ascending auction methods.
One particular paragraph from this study deals with today’s topic:
- “Online bidders in a live auction are in a no-win situation; the theory says they can expect to pay the item’s full expected value. They can overcome their informational disadvantage by either inspecting the item themselves at the presale exhibition or hiring an agent to do the inspection; but this means incurring the same transaction costs as the live bidders. Rather than providing the best of both worlds, mixing online and live bidding combines the disadvantages of both …”
While many auctioneers utilize live bidding augmented with online bidding, Kazumori and McMillan seem to suggest that:
- If the bidder wants maximum knowledge, they must incur the transaction costs of attending the auction. Therefore online bidding is not prudent.
- If the bidder wants to save transaction costs, they must bid without full knowledge. Therefore live bidding is not prudent.
Kasumori and McMillan’s conclusion is based upon the bidder’s prospective.
If bidders wish to eliminate their lack of knowledge and inspect the item, they may as well attend the auction and bid live. Otherwise, they are at an informational disadvantage by bidding online, but save transactional costs associated with attending.
However, what about the other side of the transaction — from the seller’s perspective?
- Do the online auction costs of additional cataloging, picture-taking, description and the online platform suggest then the additional costs of hosting the auction live may not be prudent?
- Do the live auction costs of tables, chairs, parking, utilities and staff suggest then the additional costs of hosting the auction online may not be prudent?
I wonder if the seller-perspective argument is not at least as strong as the buyer-perspective argument. Ultimately, is it fair to say, “Either have a live auction, or an online auction” but not both?
It is important to note here that not all auctions are alike. For instance:
- Could a live auction with 100 cars benefit from online bidding?
- Could an online auction with 100 cars benefit from live bidding?
For the live auction, it’s probably safe to assume the cars are all lined up with sufficient space between — so how hard would it be to take, say, 10 pictures of each, and upload that to an online auction?
For the online auction, it’s probably safe to assume the cars are all lined up with sufficient space between — so how hard would it be to, say, setup a registration area there at the location, and conduct a live auction?
Many auctioneers talking about (and/or arguing about) the merits of a live auction versus the merits of an online auction seem to tend towards agreement that maybe doing both is the best solution.
However, the research thus far seems to suggest the opposite — that either piece is better than the sum of the parts and/or the whole — far from Aristotle’s thought that the whole is greater than the sum of the parts, and therefore greater than either.
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 is adjunct faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.