If your impression of how goods are bought and sold using online auctions is shaped entirely by eBay, you might be in for a surprise. The business of bidding has also evolved into a multi-billion dollar industry of companies selling to companies: a bulldozer for sale in Nebraska could very easily be bought by a construction company in Australia or Peru.
In Nebraska, a number of auctioneers have positioned themselves to take advantage of this expanding market. Are online sales an important part of the auction business these days?
"Undoubtedly," said Kelly Kliewer, the president of the Nebraska Auctioneers Association. "With the way social media is these days, it's coming more and more in that direction."
Video by Ray Meints, NET
Watch a video of Nebraska auctioneer Trev Moravec talking about how auctions have changed in a global marketplace - and how they've stayed the same.
Recent Lincoln auction
Photos by Hilary Stohs-Krause, NET News
Take a look behind the scenes of the multi-million dollar auction held by Ritchie Bros. in Lincoln, Neb.
Kliewer runs his family's auction business out of Aurora, Neb. Three weeks ago, he organized a toy auction where a third of sales were made to online bidders.
"We shipped toys from Canada to Australia, and from Pennsylvania to California," Kliewer told NET News, adding with a laugh, "It's a neat deal that you can sell toys to a customer living in Australia."
The scale of online auctions can be staggering. An event staged in November at the Lancaster County Fairgrounds provided one impressive example. More than 300 pieces of heavy construction equipment and industrial machinery were on display and up for sale. The auction was the latest conducted by Ritchie Bros., a Canadian auction house with a Lincoln office that currently dominates the heavy industrial equipment auction business.
The day of the auction, more than 600 individual bidders registered to participate. They came from 43 states and 35 foreign countries, including Australia, Korea, Peru and Qatar. The man organizing this sale, regional manager Ben Arbeiter, called the evolution of his business "amazing."
"The Internet has created a global marketplace" for auctioneers, Arbeiter explained on a walking tour of the arena as it was being converted into a temporary auction house. Preparations on-site focused on giving bidders up-close access - prospective buyers climbed, drove and closely inspected the machinery for sale. Weeks earlier, the company made sure information was plentiful and accurate on their website - and in 21 different languages - to accommodate customers around the world. Anyone interested in a specific piece of equipment could find detailed specifications and up to 100 photos from every conceivable angle.
Arbeiter said the company hopes customers will "feel more confident when they are searching equipment."
Putting goods measured by the ton up for sale online might surprise those only familiar with auctions designed for items you can fit into a mailbox. The equipment organized in neat lines on the fairgrounds ranged from big to huge.
Marty Meid, a grain bin installer from central Iowa, showed up on auction day to bid on a bright yellow hydraulic truck crane weighing 80 tons. He knew he could be bidding against construction companies based in places as far as South America or Asia. He was unfazed.
"It doesn't make any difference where they are from," he said. With the auction a few minutes away, a bystander asked him if he wanted to share how high he'd be willing to go to buy the monster crane. Meid smirked.
"No. Not really."
He ended up being outbid by someone in British Columbia, Canada.
The crane Meid wanted wasn't even close to being the biggest item up for sale: one crane weighed 250 tons. Parked nearby were lines of asphalt spreaders, bulldozers and forklifts.
While Meid didn't have to travel far, the online market creates an international demand for heavy equipment previously untapped. And Arbeiter said Ritchie Bros. is eager to reach them.
Since the company added Internet bidding in 2002, it has sold more than five billion dollars of heavy equipment on line. That makes up about a third of Ritchie Bros. total sales.
Other Nebraska companies are also benefiting from the fast growth of the online auction. Omaha-based Proxibid runs a website that hosted more than 800 auctions at once this past September. Up for sale was everything from collectable comic books to a helicopter. In July, the company announced that bidder registrations for its commercial and industrial auctions increased more than 20 percent in the first six months of 2011 over the same period in 2010.
However, the heavy equipment auction business is not recession-proof. This year started slow for Ritchie Bros.; the supply of equipment available to sell dropped because businesses held on to their stock of old bulldozers and dump trucks instead of springing for new ones. Compared with the first three quarters of last year, Ritchie Bros. profits were cut in half. Projections for their fourth quarter profits were optimistic.
For buyers, bringing the world to any given auction can completely change the dynamic. In the past, it might have been easier to get a bargain when local economic conditions were not good: reduced demand for equipment and fewer bids could mean lower prices for buyers. Today's worldwide reach means it might not matter if the local economy is depressed.
Arbeiter gave the following example: Say a person in Australia desperately needs a piece of equipment that they can't find close to home. As a result, "they are willing to pay that certain price," which might be higher than those with easier access to that equipment. Even with the additional costs for shipping it around the world, it would be a bargain for the buyer and thus considerably more than a local contractor might be able to afford.
That is good news for those selling used equipment on consignment, using an auction house as middleman.
"It definitely makes it competitive, and that's our goal," Arbeiter said. "That is the value we bring to our consigners."
The auction held in Lincoln, Neb. reflected the diverse market attracted to heavy equipment auctions. Men in dirty work-boots and torn overalls took their seats on the aluminum bleachers while a well-groomed pair in suits and cashmere overcoats stood nearby. Hunched in the stands, a woman quietly spoke into her cell phone, providing a running commentary in Japanese.
"Customers have really taken to it," Arbeiter marveled. "A lot of customers that you wouldn't think would take to technology have taken to it and done it well."
As the event began, it was clear that one thing had not changed: the role of the auctioneer. The first bid-caller of the day was Trev Moravec from David City, Neb. He grew up in a family of traditional auctioneers, so he never forgets his most important role on-site is to encourage the highest bids possible.
"You're not only here to relay the bids, you're here as an entertainer," Moravec said before climbing into the auctioneers' trailer.
He used his fast-paced chant to create an "urgency to bid. We want to keep it live and rhythmic for the audience to pay attention, keep them at the edge of their seats and turn in that next bid as fast as they can."
The two auctioneers on duty ripped through the first 100 items in two hours, which breaks down to just a little more than a sale every minute.
In the arena, high definition monitors flashed the amount and the location of latest bid. West Virginia, Mexico, Texas, Korea, Kansas, Qatar all showed up as contenders for various pieces of equipment. Bids placed online get picked up by a spotter at the Ritchie Bros. home office in Vancouver, Canada. Over an open phone line, they let out a yelp on the public address system, alerting people onsite that another far-away bid had been cast. Moravec had a computer screen in front of him throughout.
"I can always make contact to see where that Internet bidder is (from)," he said, pointing to a regular and very active customer from Saudi Arabia whom he recognizes by bidder's customer number.
The amounts of money being spent can appear staggering. On this day, bidders pushed the price of one large crane to just short of a million dollars. It came close to a bidding war.
"If two guys want the same thing, and they lock horns, that's a war," Moravec explained with a smile. "If they are from the same state or country, they may not want their competitor to have it, so they are going to go after it."
Getting that kind of excitement going on site or online is one of the reasons old-school auctioneers do not believe technology will ever completely replace the lively chant of an auction caller.
"I hope not," said Kliewer with the Nebraska Auctioneer's Association. "People are pretty much fascinated with it."