Nothing quite gets people’s attention more than the word, “free.” Of course, there is another phrase that gets considerable attention — “You get what you pay for.” Today’s topic is an auction platform that is free (no charge) to the sellers and the buyers … and how this could possibly be.
If a platform is free, and paying the expenses to operate such, they are either earning auxiliary income from advertising on the site and/or collecting buyer and seller data to be used later to then charge buyers and sellers. We suspect many auction platforms have explored the free-model for both advertising income and to gather data.
For auctioneers, this might sound like another site that was free to list your auctions … until it wasn’t. This is generally the pattern as nothing is free very long before someone finds a way to charge for it. And as many auctioneers often remark, “If the product is free, then you’re the product.”
Companies are gathering data like never before, accumulating it themselves and/or buying other companies who have amassed large databases of customer/client data. This data helps companies better sell products and services and make more money.
Auctioneers tend to think they have choices, but it’s about maximizing seller proceeds, and often that comes from using platforms with the most data — the most bidders — and the most reach. Auctioneers can use their own online platform or utilize other platforms which do not gather buyer/seller data, but usually to the detriment (and expense) of their client.
If a platform has no “marketplace” then the auctioneer must advertise to get the attention of those bidders — either by charging more commission/expenses and/or making less profit as the service provider. Buyers can pay this additional marketing expense as a premium, but at some point, they bid less to compensate.
Oh, that’s right — bidders never figure-in the buyer’s premium — they are completely unaware of this additional charge when bidding? As we’ve suggested, if that’s true, why don’t you raise your buyer’s premium? https://mikebrandlyauctioneer.wordpress.com/2013/09/12/the-buyers-premium-doesnt-matter/.
Some auctioneers argue that the cheapest platform is always better — no matter the reach or level of the marketplace — in other words if it’s online, bidders will find it. We wrote about this misnomer here: https://mikebrandlyauctioneer.wordpress.com/2020/03/31/just-get-it-online-no-matter-the-platform/. Remember our other phrase? You get what you …
Do you have your own marketplace? Database of bidders? If that list is stagnant without supplementary marketing, we wondered if you are truly obtaining market values for your seller’s property: https://mikebrandlyauctioneer.wordpress.com/2019/06/17/we-have-a-big-mailing-list-and-a-large-database-of-bidders/. Further, if you are creating a “marketplace” with lots of auctioneers, what makes you any different than any other current marketplace?
Any large database — with continual updating — has value, and once that database becomes a material size, others will have interest in it. It seems to us unlikely any so-considered auctioneer will avoid those riches, as has been demonstrated time and time again. If I’m an auctioneer giving you my (your) data, what guarantees do I have? I can answer that — none.
For that matter, are you advertising your auction sufficiently? As we survey the auction industry, it seems to us many auctioneers do a less-than-stellar job marketing their sellers’ auctions. Without an accompanying marketplace, it’s likely you aren’t maximizing seller net proceeds. https://mikebrandlyauctioneer.wordpress.com/2020/10/05/youre-not-marketing-your-auction/.
Lastly, could your goal of keeping your data away from prominent, valuable marketplaces be costing your seller? We as auctioneers always have to put our clients front and center and our endeavors to accumulate data otherwise shouldn’t trump our seller’s interests. We’ve certainly argued to promote your own company but we must keep our eye on the ball.
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, and an Instructor at the National Auctioneers Association’s Designation Academy and Western College of Auctioneering. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.