Asset Auctions: Online vs Traditional
Richard Cobb interviews Simon Cornelius-Light, Divisional Director of ES Group (Exeter Branch) regarding the use of online and traditional auctions in the manufacturing industry, here is what he had to say...
Across our Machinery and Business Assets (MBA) team at ES Group, we have seen exponential growth in online auctions, over the past 5 years or so. We currently estimate that the ratio of physical to online sales sits in the region of one in every hundred sales.
Underlying economic factors have undoubtedly accelerated this growth in online auctions but the primary motivation is undoubtedly something more prosaic, linked to the basic practicalities of online versus traditional auctions.
Online auctions – pros and cons
Economically speaking, online auctions tap into a growing international audience attracted by the fluctuating pound. Interest from both European purchasers and emerging markets is sustaining values for second hand machinery, for example, where UK sales figures have been hit over in the past.
While these economic factors won’t last forever, the practical benefits of online auctions will. These include:
- an increasing familiarity of online auction systems, such as Ebay and others
- the trust that auctioneers have built up in the accuracy of their lot descriptions
- The ability and feasibility to market individual pieces of equipment which will benefit from the same extensive marketing exposure, as a collective sale
- intrinsic benefits to vendors of online auctions – indeed, having built up targeted sector-specific UK and international databases at ES Group over the past years, we can now market kit to the right people and secure quick, effective sales to an international market
The latter is perhaps the most important ‘pro’ point; where clients are still looking for timely and efficient returns for the sale of their surplus plant & equipment – and this is where online auctions come into their own.
Technology faults can have a detrimental impact on the success of an online auction, however very rare these days but as a factor this is largely insufficient to outweigh the reduction in client management and risk offered by:
- longer market exposure
- extended bidding times
- reduced cost
- reduced clearance periods
- ease of controlling defaulters
Traditional auctions – pros and cons
Compared with online auctions, live sales incur notably higher sale costs and resource issues. Live auctions require considerably more client management time, more purchaser site visits and have longer clearance periods. Returns are also often affected by buyers’ unwillingness or inability to attend.
It’s important to acknowledge, however, that for some vendors and buyers nothing beats the face to face contact offered by an onsite auction, the buzz of the auction room, and the skill of an auctioneer. And for some asset classes, notably agricultural and some stock type sales, the traditional auction will be the best disposal method, but these sales are becoming very far and few between and the traditional Auctioneer is becoming a rare breed.
For these both practical and nostalgic reasons, there will always be some onsite auctions – but the online alternative is here to stay. The auction houses that build the confidence of vendors and purchasers in online sales, and who use and build strong and targeted international databases of purchasers, will fuel this continued rapid online growth well into the future.
If you have a requirement to dispose or value your surplus machinery & business assets, please contact Simon Cornelius-Light, Divisional Director, ES Group (Exeter Branch) at firstname.lastname@example.org or 01392 880180