I think this is a simple question: What’s faster — a live auction or an online auction? Maybe it’s not a simple question after all? Faster for who might be the differentiator? Let’s look at it from the buyer’s perspective.
Live auctioneers can sell 2-3-4 lots of personal property a minute. Let’s say the average lot takes 25 seconds — so they sell in 25 seconds? Not hardly. Rather, they are advertised 5-7-10 days in advance and then sold in some orderly fashion thereafter at 2 or more a minute. Auctioneer(s) say “Sold!” and the buyer pays, takes his item(s) and goes home.
Online, items could be closing every 3 seconds — so they sell in 3 seconds? Not hardly. Rather, they are listed for sale 5-7-10 days before, where bidding maybe started and then ended with possibly some extended bidding … software says, “Sold!” and the buyer waits for his item to be shipped or he arranges to pick those lots up himself thereafter.
Let’s check our scores:
- Live auction … 5-7-10 days + a few hours.
- Online auction … 5-7-10 days + a few (or more) days shipping.
There is no question there is more friction (transaction cost) in the live auction. We have held that can be good, much to the surprise in the auction community. Otherwise, who’s quicker? I’m thinking 7.2 days is less than 13 days.
It’s worth noting that the online bidder has the luxury of only paying and awaiting shipment, or go pick up, if he’s the winner. Live bidders invest time and energy on the prospect of buying something but with no guarantee.
The transaction costs can provide a seller benefit, as some bidders say, “Well, I’ve traveled this far, so I might as well bid again, or buy something else.” Of course, an online bidder could win one item and then think, “Well, I’m going to pick up that one lot, so I might as well buy some more.”
We actually wrote about this speed of purchase before when we talked about Ashley looking for a 14K gold necklace for her mother: https://mikebrandlyauctioneer.wordpress.com/2015/01/19/should-she-buy-at-auction/. Ashley was in a real hurry so she went to the local jewelry store.
In fact as Ashley now knows, auctions in general are slow for most buyers as there are far quicker ways to secure property — brick and mortar stores as well as most online retail shopping experiences provide buyers their purchases quicker than most any auction.
We also explored this “quicker” argument when auctioneers said — for example — they “Sold a house in 10 minutes:” https://mikebrandlyauctioneer.wordpress.com/2016/01/21/auctioneers-can-sell-a-house-in-how-many-minutes/. From list to close almost always takes a minimum of 30 days and often more.
Let’s just say you as an auctioneer have 200,000 lots to sell and you want to sell them at auction the fastest and most economical way? Live auction: How much time and money to inventory, photograph, advertise, conduct and close out? Probably a lot. Online auction: How much time and money to inventory, photograph, advertise, conduct and close out? Probably a lot more.
What about simulcast? Okay, we can spend a “lot of time and money” to setup the online component, and then a “lot of time and money” to setup the live component — with what most analysts suggest is generally far more expense than additional revenue. For auctioneers wanting to do both — there almost has to be some in-person auxiliary sales to justify the live auction, and enough product uniqueness (more demand than supply) to justify the online auction.
This is our current discussion with a client — where we’ve already sold about 6,000 of his lots in a simulcast fashion. He wants to maximize gross proceeds but maybe more importantly save time and minimize expenses. He’s leaning towards the live auction (several) which is quicker and far less expensive.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.