Online Auc ons: Adap ng to Thrive with the E‐Commerce Business Model By Paul Gibson, President of Shipping Saint
In our small town, Friday night at Eric’s Auction was an event. There, you could get your nicotine intake at no charge, experience the buzz of an auction taking place, and maybe pick up a deal or two to bring home. I worked at a furniture store and the owners would let us take any of the old pickups as a bonus, so we would take them to the auction house. Sometimes, the other delivery person and I would bet on who would get the price closest on the mattress, and the winner would take all of the proceeds. So much has changed in the last 20 years. No more smoking in the auction house and no more selling used mattresses. There were also changes on a larger scale related to regulations, competition and mergers. But by far, the biggest change to the auction industry has been the seismic shift from live auctions to online auctions. Auctioneers and buyers have both moved their auction experiences online. E-commerce has taken over the way auctions are done, and the auction industry will never be the same. The e-commerce and online auction industry is expected to be a $739 billion market in 2022, with continued growth anticipated for the foreseeable future. In 2018, UPS set out to invest $20 billion in their automated facilities, and looking back on the growth in e-commerce in 2020 (thanks to the accelerated growth due to the global pandemic), it’s easy to see that it paid off for them. They were years ahead of USPS exactly when they needed to be.
Rather than viewing the new business landscape as an insurmountable obstacle, successful auctioneers have seized the opportunity to adapt to the new ecommerce model to thrive. In addition to offering auctioneers access to a bigger and better pool of buyers, online auctions offer more control for sellers, while allowing small auction houses to compete with much larger firms, including Facebook Marketplace, auction platforms, Amazon and other big e-commerce competitors. But, with a constantly evolving business model, it’s easy to fall behind on new software and technologies. For independent online auction houses, the business bottleneck has always been how to get sold items to distant buyers. Auction buyers aren’t from your town anymore. They are across the country or even the world. Having the pickup option seems harmless, doesn’t it? However, not only is it inconvenient for the buyer, especially if they have to pick it up from a few hours away, but your employee has to spend time waiting for the pickup to happen. Of auction house respondents, 87.5% said that a pickup can take over five minutes, which costs approximately $1.25 per buyer for pickup. This doesn’t seem like much, but multiplied out over several sales and that labor adds up to a lot of lost expense. Shipping items can
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