Signed, sealed and delivered. We just got an auction and it’s time to put it on the calendar. For nearly 100 years our plan has been the same: to hold an on-site auction. It’s all we knew. It’s all the industry knew. But times have changed and my auction business is changing with it, which brings us to a hairy crossroad. Nowadays when getting an auction there are a number of options: do we have a traditional on-site auction or catch on to the 21st century and hold the auction online? Or maybe a hybrid?   How do you choose what type of auction to host – On-site vs. Online Auctions? Well, the answer is…. there is no definitive answer. And I know that’s not the response you’re looking for, but it’s the honest truth. There’s no step-by-step, 20-page guideline to follow that will direct you to the pot of gold at the end of the rainbow. Because there is no right answer. It’s like choosing between a beach house in Miami and a ski house in Vail.   What Can You Do? The best thing you can do is spend a few hours and weigh the pros and cons of each. Understand all the different variables of the auction, including but not certainly limited too… Commodity to be offered Potential buyer base Business location Weather Backstory of the auction …and ask yourself what would capture the largest, appropriate audience given the circumstances? Selling a commodity that would be of interest to tech-savvy people? Are the assets located in a trashy, tiny warehouse 50 miles from the nearest sign of civilization? Is it the middle of winter and the building has no heat? These situations could warrant a desire to hold an online auction. Is the business located in NYC where there will be a ton of foot traffic? Are you selling cars – a commodity customers want to touch, feel and hear? Is it a beautiful summer day? Maybe hold an on-site auction. But again, there is no right answer.   Results My business has been hosting on-site auctions for almost 100 years and online auctions for sveral years now. It’s always a give-and-take scenario, but we have come to terms with what approach would yield the best results. From our experience, below are the Pros and Cons of both On-Site as well as Online Auctions.   On-Site vs. Online Auctions   On-Site Auctions Definition The old-fashioned, outcry auction hosted live at a public setting. These auctions have been around for thousands of years. (I wasn’t kidding when I said “old-fashioned.”)   PROS The Human Element The auctioneer calls for a $100 opening bid. *Crickets*. He lowers it to $50, then $25. At $25 four bidders jump in, competitvley bidding against one another driving the price all the way up as to where the item closes at $250. So why were there no initial bids at $100? This happens all the time. An auction is a psychological game. Customers do not want to seem too eager while the auctioneer doesn’t want to sound desperate. Placing the auction online takes this human element out of the game. It’s makes it tougher for the auctioneer to read the crowd and the bidders to get a sense for the competition.   The Auction Environment  “God help us if we ever take the theater out of the auction business. It would be an awfully boring world.” – A. Alfred Taubman (Businessman, Investor) Auctioneer surveys the crowd at a car auction. Explaining the feeling, the environment of an on-site auction won’t do it justice. You need to experience it first-hand. The feeling all other bidders surround you, each of you trying to read the other’s hands. Wanting to walk away a winner, but not wanting to overexpose yourself. It’s like playing a poker game – wondering what cards every player is hiding, and if you should hold, place a bet, or just fold all together. It’s this spirit, excitement & competitiveness that keeps customers coming back to auctions. There’s no ball game on TV distracting you. You’re not going to miss out on an item because you “forgot”, or because you got into an argument with the spouse. It’s just you and the auction.   Appreciation of the Equipment You are selling a 1985 Ferrari 288 GTO, with custom painting, souped-up wheels and a surround sound that will put an opera house to shame. How are you supposed to appreciate this online? Yes, a picture may be worth a 1,000 words, but seeing the Ferrari in person will tell the whole story, and ultimately bring the most money.    CONS People are Busier Than Ever Work, Sleep, Dinner, Gym, Social Life, Baseball Game, Family Time. Who has time to spend an entire day at an auction? There are still plenty of auction regulars, but that number seems to be slowly dwindling.   Location, Location, Location!  Northern New Jersey, one of the most densely populated and easily accessible locations in the US struggles to bring qualified auction bidders. Now imagine anywhere else in the country – enough said.       Online Auctions Defintion A new type of auction held over the Internet. Go back 15 years and the only online “auction” (I use that term very loosely) is eBay. The Internet has completely changed this industry.    PROS Globalization There are 7.4 billion people on this planet, 1.7 billion MAUs on Facebook and 317 million MAUs on Twitter. The world is your oyster. Putting an auction online multiplies your potential audience by an infinite amount. The question is: Are you able to successfully reach the audience you want?   Societal Habits We keep talking about those good ‘ole days and auctions which is nice and all, but the truth of the matter is those days are gone. With the advent of technology, people would rather lie on their couch, sit behind a computer screen and enjoy the ease of bidding on items while in their pajamas. You don’t need to travel anywhere or deal with any other logistical issues. It’s a 30 second investment versus a full day. Who can argue that?   CONS You Lose the Customer Experience The auctioneer’s chant, lively competition, constant heckling – just a few of the aspects that make an auction more than just a business event. It’s a show for many – like attending a football game. But putting the auction online takes out much of the showbiz. Your customers are now “Joe from Ohio” and “Bill from Charlotte” instead of the long-lasting business relationships you have developed.   Pictures Can Only Tell You So Much  Even with a paragraph description and 20 pictures of every nook and cranny, you can only learn so much about an item on a computer screen. What if you’re looking to buy a guitar? Don’t you want to hear its chords? Test it out? All online auctions should allow for customers to check out the equipment beforehand, but someone living in California is unlikely to travel 3,000 miles to New York for a single guitar.   Who Is on the Other End? An auction company is only as good as his ability to sell the client’s assets and generate a return – the main reason the auctioneer was hired. With an on-site auction, the auction company is able to meet customers face-to-face, easily gather deposits, speak with them and ultimately get a read on the customer’s removal/payment plans. But online, who knows? You can have someone from their apartment 2,000 miles away bidding with no intentions of payment or pickup. Cruel, yes, but it would be naïve to ignore this possibility. Of course there are steps for online auctions to prevent this, but speaking with someone in person removes at lease some of this sense of doubt.     As you can see, there is no definitive answer. Every situation warrants a different conversation. In fact, these aren’t even all the choices for auctioneers. Sometimes my business goes with a 3rd option…     Option C: On-Site Auction with Web Simulcast Bidding An On-Site Auction with Web Simulcast Bidding A fantastic combination of the two, a web simulcast auction is a hybrid of on-site and online auctions. In this option, we conduct your everyday live, on-site auction with an auctioneer selling and customers bidding in-person. But simultaneously, the auction is simulcasted over the Internet, allowing online buyers to follow along with the auction in real-time, listening and bidding against those on-site. I know what you’re thinking – how on Earth do I support that capability? Well unless you run a global auction company, the odds are that you don’t have your own web simulcast platform, which is totally okay. There are plenty of great platforms out there. My company uses BidSpotter. We tend to go with Option C especially for the bigger auctions to reach the largest possible crowd and accommodate all potential bidders. But it also comes with more expenses. There’s always a tradeoff.     Recap As we’ve made clear, when it comes to choosing what type of auction to hold there is no definitive answer. It’s not black and white. But in understanding all the variables of the auction, the scale can begin to point to one side over the other. To recap, here are the pros and cons of On-Site vs. Online Auctions:   And don’t forget about Option C: Web Simulcast Auctions! ...read more