Traditional auctions have changed dramatically over the past few decades. In the past, auctions were often huge events, held in a big open area. Where many people could get together and there was enough space to display all the products for sale. The person in charge of an auction, known as the colonel, could only auction one item at a time. People attending would bid if they were interested in purchasing it.
Although traditional auctions do still exist, auction methods have changed greatly with the introduction of technology. Telephones allowed individuals to bid over long distances. This opened up public auctions to larger groups of potential buyers. Although the use of telephones has had a significant impact, the internet changed auctions dramatically.
Technology is transforming auctions
Apart from the internet, electronic payment methods, global shipping with tracking capabilities and smartphones have created an environment in which auctions, including industrial equipment auctions, can thrive.
Today, the internet is an essential tool used for auctions and it has an impact on all parties involved:
- Auctions were once limited to individuals within or close to a specific location, but are now able to serve bidders globally.
- Buyers use online search to find internet auctions that offer the goods they’re looking for.
- Consigners use the internet to find the right auction company.
- Auctioneer training has evolved almost beyond recognition due to technological advances.
An ever increasing number of auction companies have decided to move to an online auction model fully, while others prefer to use a combination of traditional methods and technology to deliver auction services. Let’s have a look at how the use of technology has transformed auctions.
The upside of internet bidding
As participating in auctions from home is more cost effective and convenient for buyers; many auction houses are developing an all-encompassing online presence. Webcasting live auctions is becoming increasingly important for auctioneers wanting to expand their reach. This technology radically increases the number of potential buyers and bidders that participate in auctions. Webcasting does not only increase the number of participants, it also generates healthy competition, which often results in higher bids leading to higher profits for sellers and auction houses.
Small auction houses get better exposure:
As consumers spend more time online and auction houses increase their online presence, consumers find it easier to discover smaller auction houses they may never have found without online exposure. This allows smaller auction houses to compete better with more established and often larger companies. This is often true for industrial equipment auctions which may be highly specialized and therefore relatively small.
Bargain hunting becomes easier:
Deal-seeking buyers get some serious perks with internet bidding, because they can search all over the world to find the item they want and then compete for the best price – all without ever leaving the comfort of their own homes. This convenience and accessibility has attracted almost a third of all online customers to participate in online auctions.
Internet bidding challenges
There are however several disadvantages to changing over to auction webcasting and online auctions completely.
Additional expenses for buyers:
If a bidder on an auction places a winning bid through internet bidding; they will need to spend extra money either to have the item delivered, or collect the goods at a later date. Although buying at in-person auctions also has its own travel expenses and fees. It also gives instant gratification that is lost when buying online.
No physical engagement:
When auction houses convert to internet auctions completely, it often loses the excitement of live auctions. Potential buyer can also not touch, handle, or inspect the goods they want to bid on before the time.
Sellers chose auction companies by using technology
Sellers do research on the internet to determine which auction house will be the best at selling their goods. Auctioneer websites create first impressions with potential clients as does any other business. Studies have shown that this impression is formed in the first few seconds of visiting a business website.
Auctioneers need to make sure that their website creates a lasting, positive impression that compares favorably with other auction sites.
Auction websites should:
- Give a professional impression.
- Provide detailed information about the company.
- Explain how the company’s process works.
- Give contact information.
- Display the company’s knowledge through blogs, credentials, videos, and other web content.
Sellers are more likely to contact an auctioneer whose website looks authoritative and professional. Sellers also investigate other aspects of the company on an auctioneer’s website. The website should for example include a way to contact the auctioneer and the registration process for new bidders should be easy. Auction websites should also reflect the business culture and the auctioneer’s style. Sellers often look for online customer reviews specifically rating auction companies. Part of a seller’s due diligence is to check all this information before they decide selling at auction.
Experience and reputation
Another important aspect for sellers is to find an auction house that has handled goods similar to those that they would like to sell. A seller wanting to sell industrial equipment would prefer to use an auctioneer with industrial equipment experience. Seller confidence will increase if the auctioneer is also an industrial equipment expert.
Sellers ultimately exclude or include auction houses based on the information obtained during the online research they’ve done. Auctioneers often don’t even know they have been investigated. All the more reason to make the first impression as powerful as you can; you may not get another chance to get that specific seller’s business.
Sellers may even decide to test the auction house by registering as a bidder to check if the process is user-friendly and then attend a few auction to get a feel for how they work. A seller may peruse online auctions to determine how well the items on sale are described and how many bids specific items receive. Prospective sellers may even test the auction software used by placing bids on a few items. By acting as a bidder, sellers will be able to evaluate the complete auction process, including inspection of items for sale, making a purchase, and then requesting delivery, all without having to contact or talk to the auctioneer.
Auction bidders use technology for a seamless experience
Buyers look at and evaluate many of the things that sellers do, but primarily look at how the online auction software of an auction company works and if they can be sure that the auction process is fair. One of the most important aspect for buyers is that the process must be easy from registration right up to the point where they receive their goods.
Buyers are also interested in a number of key features typically found in auction software. These include:
- Be notified on their bid status via email or SMS notifications.
- The software should stop sniping by lengthening the time for bidding if a bid is made in the last few seconds of the auction.
- Buyers should be able to enter a maximum bid and allow the software to continue to bid on their behalf up to the maximum when others bids are entered.
Bidders also need essential information on inspection dates, closing times and dates for bids, as well as options for shipping. As with sellers, all the information can be obtained online easily without ever having to contact an auctioneer.
Buyers will also perform due diligence by using the internet. Google searches, other auction sites, specialty sites, and industrial equipment sites are a few of the resources buyers utilize to evaluate goods offered on auction. Once they have all the facts, buyers are able to bid at online auctions confidently.
Why online auctions can become addictive
Main compulsive arguments
Designers of casino slot machines use a very specific science to create perfect mouse traps. Slot machines typically come complete with a false perception of winning, an altered sense of reality and sensory stimuli.
Creating user compulsions however goes far beyond gambling and is increasingly being used in social games and lately in online auction site. The tools of this trade includes mystery boxes, drip rewards, quests and buildable items. When used properly, the power of compulsion can be leveraged on online auction sites to increase auction house profits dramatically, but it can also hook bidders to the point of addiction.
These type of online auctions have many things in common with gambling. They allow users to bid on items and potentially win them for a fraction of the retail price. To participate in these auctions, users need to buy bids at a minimal cost, e.g. 50 cents each.
More compulsive strategies
The auction uses a count-down timer and allocates the item to the highest bidder when the clock times out. Every time a bid is placed, the item’s price is increased by 1 cent, while an additional 10 seconds is added to the clock.
An item retailing for $399 may for example be ‘sold’ for only $63. In this example, the winning bidder used 343 bids costing $171.5 ($0.5 x 343) plus the sale price for a total cost of $234.50. This represents a saving of more than 41%.
The site typically displays the “savings” prominently once the auction has ended to highlight the deal’s value. What the sites do however not show was that the auction generated a revenue of $3659. A total of 7,318 bids, each costing 50 cents, were spent on the auction. The site has therefore managed to sell the item for more than eighteen times its retail price.
These type of sites definitely use much of the slot machine playbook and have often made a number of improvements.
The key drivers of user compulsion are:
The compulsion to win
Although the initial hook of a product for half the price is a powerful one. The real “hold” is the compulsion to control the auction and triumph over the competition.
Although a few cents does not sound like much; it is easy to lose track of how much you’ve actually spent if you make hundreds of bids.
A count-down timer creates a sense of urgency. It triggers the compulsion to click on the “bid” button or to reach for your credit card. Retail stores and social games both recognize the power of a flash sale and there is a sharp increase in sales when a company reminds users that they have to act quickly because the deal won’t last long.
A marketplace that’s asymmetrical
For every individual that wins a deal there are many more that lost by paying something and not getting anything in return.
Know the big spenders
If the auction is locked late into the bidding, it creates a false sense of being close to winning the deal. When an exclusive club is created, it grows the willingness to spend, enabling the auction house to squeeze more money from power bidders.
Improved technology assists all participants in industrial equipment auctions. Apart from the internet helping with the continued education and training of auctioneers, technology also provides both sellers and buyers access to critical information as well as auction companies. It also allows the auction process to run efficiently and smoothly as technology streamlines all the various tasks an auctioneer has to perform.
Technology facilitates the bidding process and makes selling at auction much easier than before. Technology also helps with the various logistic processes; including things like processing sales and organizing the shipment and delivery of goods sold at the auction. Auctioneers are able to manage most of these aspects with a laptop and a smart phone to ensure that an auction runs smoothly from virtually anywhere around the globe. Although traditional auctions still have a place and fulfil a need. Technology has already transformed and will continue transforming the auction industry.