Online Auc ons: Adap ng to Thrive

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

increase revenue up to $12 per sale and free up your employees.

Pick-up isn’t always an option, so how do you get their purchased items into their hands?

Clearly, shipping is the answer, but the solution isn’t as easy as it sounds.

After surveying auction houses that had started offering shipping, it was found that without marketing the option to ship items, 30% of buyers chose to have their items shipped instead of picking them up. Imagine what that percentage would turn into if shipping was advertised!

Auctioneers who deal with online sales agree that making their operations efficient (profitable) is a top priority. Auction items come and go even faster with online auctions. You have bids coming in from people all over the country and potentially the world; you have to keep up.

This goes hand in hand with adaptability - being able to conform to what is demanded in the moment. Starting in 2020, when COVID struck down most inperson events, auction houses had to adapt and become more friendly to online sales, or they were limiting themselves. This is when a lot of light bulbs turned on when it came to increasing the auctioneer’s market range. When change happens — and it always does — it’s easy to miss out on efficiency while trying to adjust to new growth.

The shipping process doesn’t need to be complicated. Between trying to ensure you have every label printed that you need, and having it coordinating with USPS, FedEx or UPS, there’s hardly any room for offering more sales. It takes time from what you love to do, diminishes potential revenue, and takes space in your auction house that could be used for bringing in different items to sell. Having logistics software to handle these things can save your auction house thousands of dollars and dozens of hours of work!

Even though the demand for shipping due to online auctions is rising, your stress level shouldn’t. It’s predicted that by 2024, 20% of all sales will be specifically from e-commerce, which takes a lot more adapting. Will your auction house be ready?

Paul Gibson is the president and founder of Shipping Saint, a webbased pack-and-ship logistics software company. With a background including accounting, business management, and organizational efficiency consultation, Gibson founded Shipping Saint in 2018 to meet the needs of the growing online auction industry.