blog.auctionflex.com

Taxes and Sliding Scale Commissions; they both cost you money. One of them can be entirely avoided (legally).

There are 3 basic types of commission structures:

• Fixed rate – a single rate charged regardless of how much a lot sells for
• Sliding scale – a variable rate charged on the selling price of a lot
• Incremental – a multi-level rate charged in increments based on the selling price of a lot

Fixed rate is simple. Sliding scale is bad. Incremental is good. Let’s put together some real world examples of sliding scale and incremental to see why.

• Assume a commission structure of:
  • 30% up to $100
  • 20% up to $1,000
• When a lot sells for $100?
  • Using sliding scale = $30 commission
  • Using incremental = $30 commission
• When a lot sells for $110?
  • Using sliding scale = $22 commission ($110 * 20%)
    
  • Using incremental = $32 commission ($100 * 30%  +  $10 * 20%)
• When a lot sells for $150?
  • Using sliding scale = $30 commission ($150 * 20%)
  • Using incremental = $40 commission ($100 * 30%  +  $50 * 20%)

Compare the commissions at $100 hammer price vs the commissions at $110 hammer price. At $100 with sliding scale we made $30 commission. At $110 hammer price with sliding scale we only made $22. We actually gave back $8 in commission even though the hammer price increased $10! It’s not until $150 hammer price that the sliding scale commission gets back to $30 commission which was the same commission earned on $100 hammer price. Let’s visualize that:

Sliding scale looks like a lightning bolt. Lightning is bad. Incremental just goes up and up. Up is good.

Using sliding scale, the interest of the auctioneer (commission) is at odds with their fiduciary responsibility to the consignor. Commission should always increase with the hammer price. With a sliding scale commission structure your commission will drop at each and every level in your schedule. By contrast, an incremental commission structure always results in increasing commissions; it aligns the interests of the auctioneer with the consignor.

Now consider the effects of sliding scale commission on a 400 lot consignment auction that grosses $30,000. Let’s compare:

• Flat 20%
• Sliding scale – 50% up to $25, 30% up to $100, 10% thereafter
• Incremental – 50% up to $25, 30% up to $100, 10% thereafter

With flat we earned $6,000 commission
With sliding scale we earned $6,700 commission
With incremental we earned $8,280 commission

What’s interesting about the comparison is the 50% section of the sliding scale vs incremental. Notice how much bigger the 50% section is on incremental? That’s because we earned 50% of the first $25 of every lot that sold. With sliding scale we only earned 50% on the lots that sold for $25 or less. As you can see, that difference added up significantly on the entire auction.

Despite the shortcomings of sliding scale commission, its use is common place. Hopefully this blog post has, at the very least, persuaded you to give thought to the topic. It goes without saying, but it’s still worth mentioning: If you decide to start using incremental commission structures, make sure to update your consignor contract accordingly.

Is sliding scale really a debacle? Of course not; commission is commission. Please forgive the dramatic title!

Leave a comment if you agree, disagree, or just want to share your experiences.

Internet-Only Auctions
Internet-only auctions (also called timed auctions) bring their own set of techniques for achieving the highest hammer price for your consignor. There are specific features that are unique to internet-only auctions that elicit greater bidder competition. One of these features is called soft close.

Soft Close
When an auction uses soft close, the closing time of a lot is extended by X minutes when a bid is received on that lot in the last X minutes. X can be defined as 2 minutes or 3 minutes or 10 minutes; that’s up to the auctioneer. Imagine that lot #10 is down to 5 seconds and a bidder places a new high bid. In a normal auction, that bidder would have “sniped” the lot. That is, they bid in the closing seconds which prevented any other bidder from countering that bid. With soft close enabled, when that bidder waits until 5 seconds are left to place the bid, the bid on the lot gets extended by X minutes thus giving other bidders a chance to raise their bids.

Grouped Soft Close
There is another type of soft close that we call “Grouped Soft Close”. In a grouped soft close multiple lots are “grouped” together such that a bid on one lot will extend other lots in the group. It’s important to point out that there are two different types of grouped soft close and they serve different purposes:

1. Synchronized – All the lots are set to close at the same time. Any time one lot extends, all other lots in the group are extended as well. This is useful as an online choice between multiple similar lots. For example, if I were selling multiple four-wheelers, lot 11 was the best one, lot 12 was the next best, and lot 13 was the last. As a bidder I may bid on lot 11 until such time as it exceeds my budget. I could then fall back to bidding on lot 12, and finally to lot 13.

2. Staggered – The lots in the group have their closing times staggered. Earlier lots extend later lots in the group, but later lots do not extend earlier lots in the group. An example where this is useful is a tractor and its implements: Lot 5 is the tractor, lot 6 is a mower deck, lot 7 is a box scraper, etc. The tractor extends the implements but the implements don’t extend the tractor. Someone bidding on the tractor may only be interested in bidding on the implements if they win the tractor. A staggered, grouped soft close allows the bidder to win the tractor and then proceed to bidding on the implements.

Invaluable
Both soft close group methods can be very effective and invaluable online selling tools (Bidopia 1.0 and 2.0 support both of these grouped soft close methods). If you aren’t yet using grouped soft close in your internet-only auctions, you should be; or at least you should know that the option is available.

If you have any questions, as always, please feel free to contact us.

 

The Monkey, Banana and Water Spray Experiment
5 monkeys are locked in a cage, a banana was hung from the ceiling and a ladder was placed right underneath it. As you would expect, one of the monkeys immediately raced towards the ladder to grab the banana. However, as soon as he started to climb, the researcher sprayed the monkey with ice-cold water. As an integral part of the experiment, the researcher would also spray the other four monkeys. The consequence of the one monkey’s action was doled to all.

It didn’t take long before another monkey tried to climb the ladder. The researcher again promptly sprayed the monkey with ice-cold water and the other four monkeys were sprayed as well. This was repeated again and again until all the monkeys learned the very simple lesson: If any monkey tries to get the banana, all the monkeys gets sprayed with ice-cold water.

Now that the action and consequence was ingrained in the group, the researcher replaced one of the monkeys with a new inexperienced monkey. As one would expect, it didn’t take long before the new monkey spotted the banana and tried to climb the ladder. The other four monkeys, aware of the consequences, pounced on the new monkey before he could reach the ladder and promptly give him a beating. The new monkey doesn’t know why he’s getting beat up but after a few drills he now understands that if you try to get the banana you get beaten. Keep in mind the new monkey has never been sprayed with water.

The researchers repeat this scenario 3 more times replacing one of the original water-sprayed monkeys with a new monkey. Each new monkey goes through the process of trying to get the banana and getting beaten by the other monkeys. Furthermore, each of the monkeys that had never been sprayed with water readily joins in on beating up the new monkey.

Finally, the last “original” monkey is removed from the cage and replaced with a new monkey. The new monkey goes for the banana and is promptly beaten by the four other monkeys. During the beating, the new monkey asks the other four monkeys why he wasn’t allowed to get the banana. The other four monkeys stopped and looked quizzically at each other; they had never been sprayed with water and really didn’t know why. They quickly settled on the answer: Because that’s the way we do things around here, and then resumed the beating.

Process Improvement
I’m a process improvement junkie. There, I’ve said it! I love going to customers’ sites to help implement Auction Flex. During these visits I am often afforded the opportunity to improve processes too. When I encounter a procedure that is ripe for improvement, nearly without fault, the reason they do a task a certain way is because “that’s the way we’ve always done it”. Once upon a time there was a good reason for that process, but nobody can remember what it was or why they still do it like that.

By no means am I suggesting that Auction Flex is absolved from this scrutiny. We continuously self-evaluate and whenever we find an out-of-date process we immediately write it on a whiteboard for discussion during the next company meeting. (Yes, we have a low-tech whiteboard hanging on an office wall!)

In the end, every successful company will end up with legacy processes that no longer make sense. The key here is to constantly be on the lookout for them. If you find any, that’s just proof that you’ve been in business long enough to have accrued them, but now it’s time to trim the waste! If you’re not moving forward, you’re falling behind. In business, there is no standing still.

Love/Hate
One of the challenges that auctioneer’s face is the necessary task that is cataloging. Cataloging can be slow, tedious, and time-consuming. Cataloging, however, is necessary for opening the auction floor to bidders that can’t physically attend the auction. Cataloging permits internet absentee bidding, internet live broadcasting, and internet-only (timed) auctions. It’s fair to say that auctioneers have a love/hate relationship with the cataloging process. There is no doubt though, that opening the auction floor to more bidders brings higher bids to the consignors and higher commissions to the auctioneer.

Slow is a No-Go
There are many different processes for building auction catalogs and taking lot photos. Different types of auctions (on-site estate auctions, gallery auctions, fine-art auctions, heavy equipment auctions, car auctions, etc.) will have different processes that work best for them. When and where lots get described and entered into the computer is subject to the workflow specific to your business. There is not a universal correct answer for the best way to catalog. All auctioneers, however, can agree that building a catalog with images can be a time-consuming affair and any improvement to this process goes a long ways towards saving labor and money. In this article I would like to discuss some common cataloging processes and the opportunities available for improving on them.

Typical Cataloging
The typical process for building an auction catalog involves 4 steps.

• Step 1: Attach the lot label to the item.
• Step 2: Enter and describe the lot on the computer.
• Step 3: Take pictures of the lot(s).
• (We typically do 20+ lots of Step1, 2, and 3 before proceeding with step 4)
• Step 4: Attach the camera’s memory card to the computer and assign the pictures to the correct lots.

The biggest issue with this process is that attaching images after describing lots is inefficient. What if there was a way to attach the images in real-time? Keep reading.

Wireless Image Capture with an Eye-Fi Card
An Eye-Fi card is a special SD memory card with built-in WiFi that can be used with nearly any digital camera that accepts regular SD cards. Using an Eye-Fi card we can take pictures with our regular camera, however, instead of the image just sitting on the memory card, the images are wirelessly transmitted to your computer in real-time. The image then automatically gets attached to the lot that you are working on in Auction Flex. Removing an entire step (step 4) in the cataloging process is a big improvement and a huge time-saver. Read more about the Eye-Fi card here.

What if the process of describing and imaging lots in front of a computer isn’t a process that works for your company? Keep reading.

Reversi
In Auction Flex version 7.10 (released January 2011) we introduced a brand new capability called catalog by image. What we did was reverse the typical process of building a catalog. Instead of entering lot descriptions and then taking pictures, we actually take pictures and use them to describe the lots with. Here are the steps:

• Step 1: Attach the preprinted lot label to the item.
• Step 2: Take your first picture of the lot with the lot label visible. Now take more pictures of the lot from different angles ensuring you include pictures of specific details you want included in the description of the lot. If you want to include dimensions in your description simply include a ruler or tape measure in your photo.
• (repeat steps 1 and 2 for as many lots as you like)
• Step 3: Attach the camera’s memory card to the computer and open Auction Flex’s new Catalog by Image form. You then actually use the pictures to describe the lots. When there are multiple images of the same lot the Catalog by Image form intelligently allows you to add to the description of the previously entered lot.

This new catalog by image process is very efficient and can result in a huge reduction in the time it takes to build a catalog.  Click here to want to watch a video of the Catalog by Image process.

Time=Money
We recognize that there is no universal process that works best for every auction. Our goal is to give you the tools you need to work effectively and efficiently with whatever process works best for you. My personal preference for cataloging, however, is undoubtedly the new Catalog by Image feature. This is the way I would catalog whenever possible because it is uniquely efficient and encourages the user to take multiple images of each lot.

As always, if you have any questions or comments please don’t hesitate to contact us.

 

New Office
On October 14th we moved into a larger office and as part of that move, we needed to address the best way to ensure uninterrupted phone service. Perhaps, where you live, this means calling up the local phone company, they click some buttons, and now your phones magically start ringing at your new location. In Ocala, this is far from being so simple. Our local copper line phone service is provided by Sprint who, because of such a bad reputation, renamed themselves Embarq, and then when that didn’t work, sold out to CenturyLink. This company, no matter what they name themselves, is the worst company I have ever had the mis-pleasure of dealing with. I don’t exaggerate when I say that every single time I had them modify my service they would break my ability to receive phone calls.

Change Is In The Air
Sensing the opportunity to break free from the shackles of Sprint/Embarq/CenturyLink hell, I started investigating VOIP systems.  VOIP stands for Voice over IP and allows phone calls to be placed over the internet. VOIP can offer significant cost savings over traditional phone services, however, it does require a high-speed connection to the internet. I must confess that I have dabbled with VOIP in the past and the quality, at that time, was still lacking. I knew though, that it was time for a reevaluation. I fired up my trusty FireFox browser (with NoScript extension) and Googled ”VOIP for business” and was astounded, confused, and a bit intimidated at just how many vendors there are. Aptela, 8×8, GrassHopper, Vocalocity, RingCentral and the list goes on and on. Their product offerings can be anywhere from very similar to wildly different. Their pricing can be unlimited or metered. And with all that, it’s next to impossible to figure out who the market leaders are in this space. With too many variables to process in my head and being naturally inclined to build spreadsheets, I fired up Excel to start documenting specific comparisons.

Decision
In the end, my spreadsheet made the choice for me. I decided to try out Aptela. They offer a reasonably priced unlimited voice package and their negative reviews online were few and far between. As a side note, whenever I’m researching a vendor/product I always Google the name of the product with the word “sucks” after it. I find this is the quickest way to get a ballpark estimate of real world feedback. I talked to an Aptela rep, and really liked their business practices which are similar to ours. They don’t require long term contracts, only month-to-month. If you don’t like the service, you can return the equipment for a refund within 30 days. With that peace of mind in place, I ordered our VOIP phones and received them in just a few days. The installation was straight forward and preliminary testing for quality passed our very unofficial “can you hear me now” tests.

Jumping In With Both Feet
With the move to the new office we forwarded our old phones to our new phones and never missed a beat. We now have more options and bells and whistles than we ever had with our old low-tech PBX. With our old PBX we had 5 lines. If all 5 lines were in use and someone needed to make a call out, they had to resort to their cell phone. With the VOIP systems, every extension has it’s own line and we never have to wait to dial out. The old PBX had a simple ring-down wherein if line 1 was busy, line 2 would ring, if line 2 was also busy, line 3 would ring, etc. We had one message if nobody answered and calling the auction-emergency number meant that our customers had to write down and dial a separate number. With the new VOIP system we set up an auto-attendant where customers Press 1 to talk to sales or support, or press 2 if they are having an auction emergency. The sale and support department is manned by dedicated support staff. The auction emergency department rings all workstations, the call is identified as an emergency phone call, and furthermore, if nobody answers in the office, the phone call auto-forwards to a dedicated 24-7 cell phone.

Other Nifty Features
The phones will literally work with any high speed internet connection, so even though we all work in a single office, it is completely feasible for us to have remote workers across the country all answering the phones exactly the same as they do now. You can configure extensions to automatically follow you, so that it rings the office 5 times then automatically forwards to your cell phone, or you can have it simultaneously ring your office phone and your cell phone. Administrators can monitor phone calls so that if one of our reps needs help on a phone call an adminstrator can listen in and talk directly to the Auction Flex rep without the customer hearing. This causes fewer delays for the customer getting the information they need while simultaneously building the knowledge of the representative.

Good Riddance
In short, I am absolutely thrilled with the VOIP service thus far. I can’t wait to cancel the Sprint/Embarq/CenturyLink service and tell that miserable company they no longer have me shackled. With VOIP we are now leaner and smarter and more flexible than ever. We can easily adjust our phone system to meet the needs of the company (imagine that). These baby-bells with their woeful customer service and antique phone systems are relegated to a by-gone era and will go the way of the Corvair. I have seen the future, and it is undoubtedly VOIP.

Good day Flexers,

I’ve put together a quick demo to show the capability of the Detailed Entry screen from Auction Lots and Preview. Combined with a Web Cam or Video Camera, we are able to quickly catalog an entire auction. In this particular video we are also showing the use of User Defined Fields and the Auto-Lead feature. These options are located from the Inventory drop down menu. Click on Inventory Type Maintenance to get started.

As always, if you would like additional support on this or any other topic, call the office and speak with our Support Staff.

Effective
Bulk email is a highly cost effective means to keep your customers and potential customers abreast of their topics of interest; namely, your auctions. The caveat here is that you must not abuse your goodwill. That means you must obey this list of do’s and don’ts.

DO (Good)

Always include an easy-to-use opt-out link in your emails.

Use plain text emails whenever possible – HTML emails look better but plain text emails are easier to read on smartphones and encourage you to be concise. If I want to look at auction images I will click on the link in the email.

Double-check ALL links in your emails. A broken link in your email aggravates your customers.

Clean up your email list to eliminate bouncebacks (bad emails). Failure to do this increases the likelihood of your emails getting marked as spam.

Send your emails from a branded email account like auctioninfo@myauctioncompany.com NOT from ilikechickensoup@noodles.com

Ensure you have an easy to use sign-up form on your home page where someone can simply enter the email address and click Submit. Let me repeat that: The only field you need is the email address.  

  

DO NOT DO (Bad)

Do not send more than one or two emails a month. Sending more than this reduces your read percentage and yields higher opt-out rates.

Never, ever purchase or harvest email lists. Using purchased lists can immediately and irrevocably harm your company’s credibility not to mention it will elicit vile responses from the recipients.

Never use unscrupulous bulk email service providers. They will collect the email addresses you send to and sell them to spammers.

Avoid spammy keywords in your emails like FREE, CLICK NOW!, etc.

 

Self-Service or Full Service

You have the choice of sending your emails yourself or using a bulk email service provider. The biggest issue that most people face when attempting the self-service route is limitations from their Internet Service Provider (ISP). Most ISP’s limit how many emails you can send in an hour. This number is often very low (50 or less) which means that sending a bulk email blast of 5,000 emails would take 100 hours… ugh. That is where the bulk email service providers step in. Because they run their own servers that are connected directly to the internet they don’t have these limitations.

 

Scruples

I can attest to the following list of scrupulous bulk email service providers. They will automatically allow recipients to opt-out of your emails.  They will automatically eliminate bouncebacks from your email list. They will not harvest or sell your email lists to spammers. They can typically send your entire email blast out in less than a few hours. In short, they make bulk email easier to manage.

•  Auction Flex bulk email service (is available only to our auction software customers)
• Auction Services IBEAM - http://www.auctionservices.com/products-ibeam.php - an auction-industry focused vendor.
• Constant Contact – www.constantcontact.com - this is the big dog in the email marketing space.

C.Y.A.
There is really only one reason that we record an auction; it provides indisputable evidence of the auction proceedings. If you don’t dot your i’s and cross your t’s then this can obviously work against you. But if you are a by-the-book, list-making, agenda-following auctioneer who always follows protocol, then the auction recording is your best friend.

Compunction
A customer suffering from bidder’s remorse might allege that the terms and conditions weren’t disclosed and somehow we’ve lost their signed registration card accepting the terms and conditions. This isn’t a big deal on a 5 dollar boxed lot, but up the ante a bit, and this becomes an expensive headache. A little playback from the recording where the auctioneer actually read, out loud, the terms and conditions prior to the auction, and poof! The bidder’s lawyer magically goes away and the bidder pays up. It’s not always that simple of course, but the message here is clear; recordings serve to cover our posteriors.

Tapes O’Plenty
It wasn’t that long ago that we used audio cassettes to record the auction. Typically, the cassette recorder was placed near the auctioneer and every hour or two the tape would be flipped or swapped for a new one. During a long auction this was tedious (to say the least). Then came along the early camcorders. One wise auctioneer postured that if audio was good, video must be better and I, for one, agree. But, unfortunately, the tape swapping issues remained.

Digital Juice
We now have the option of recording audio or video digitally. These recording devices have several advantages over their aged brethren.  1) No tapes  2) Can record 20+ hours of continuous audio/video 3) Files can be transferred to your computer for archiving. The beauty here is that we have no tapes to swap. We press the record button at the beginning of the auction and hit the stop button when the auction is done. Even if we’re doing an all day, 12-hour, industrial liquidation marathon, it’s no problem.

Toys Toys Toys
The Olympus Digital Voice Recorder VN 6200PC can be purchased from Amazon for $46. It provides 400+ hours of uninterrupted audio in LP mode.

The Sony DCR-SR68 80GB hard disk drive camcorder that can be purchased from Amazon for $340. It’s a business expense and, rumor has it that it works just as well recording family outings.

Both of these devices enabled you to transfer the audio or video file to your computer. From there you can treat the file like any other file. You can burn it to CD, email it, etc.

What’s Your Angle?
There tends to be two schools of thought on recording video of an auction. 1) Record the auctioneer or 2) Record the audience. There is, of course, a third option; do both with 2 video cameras. If the auction is large enough, and there is enough money at stake, this may be worth the extra effort.

Consonance
There are few things that offer as big a bang for the buck for your business as recording your auctions. The mere fact that disputed bid prices can be recalled and reviewed serves to eliminate the disputes to begin with. Scheisters know when the house is in the winning position and that’s what recording your auction does; it stacks the scales of justice in your favor.

I’ve read my fair share of business books and articles over the last few years including; Mavericks at Work, What Would Google Do?, The Tipping Point, etc. These scribes inspired me to write my own keys to success, or rather more accurately put; to record the things they said that resonated with me the most. Drumroll please.

Passion
If we don’t have passion for what we do, no amount of other chicanery is going to make up for this fatal shortcoming.  Without passion we’re just phoning it in and somebody else that actually does have passion is going to kick our butt doing whatever we do, but better.

Confidence
Confidence in oneself is crucial to success… even to the point of being over-confident, but tread carefully; there is a fine line between over-confidence and delusion.

Weaknesses
It may seem an odd characteristic to follow confidence, but remaining cognizant of our weaknesses is vital to our success. Misplaced delusions of grandeur serve only to provide an express ticket to failure. We all have weaknesses to go with our strengths. We must embrace those weaknesses so that we can avoid their inherent pitfalls.

Honesty
While dishonest people can succeed, being a straight-shooter makes success easier to attain. That, and I like to believe that karma eventually serves the liars their just due. 

Principals
Our core beliefs provide the necessary foundation for our life-long success. Without a solid set of principals our lives meander like San Francisco’s Lombard Street.

Calculated Risks
Risk is a core function of life. The keyword here is the calculated before the risk. If there is quantifiable data to be measured, success thrives on taking the time to do the measuring. The calculated risks work out more often than the hunches. When those calculated risks fail, that’s okay. We can take that data and apply it in the future. When a hunch turns sour, we have nobody to blame but our lazy selves.

Failure
We can not be afraid to fail otherwise we won’t ever achieve anything of merit. Failure means we have discovered one more way that doesn’t succeed. Failure means we have set our sights high enough that success on the first try isn’t a given.

Never Give Up
This is a simple one isn’t it? Without perseverance, nothing else matters. We must set our goals and unabashedly pursue them.

Customers First
Our customers are our most important and valuable form of marketing. No amount of money spent advertising a company is as effective as positive word of mouth and referrals. Consequently, a poor customer experience is more detrimental to a business than any marketing dollar can overcome. The proof of the pudding is in the eating; I just ran our marketing numbers for 2009 and Auction Flex added more new customers via referral than any other single marketing channel.

Definition Please
Internet-only auctions (sometimes called timed auctions) are auctions that take place completely online. There is no live audience sitting together in a physical place in front of an auctioneer. Bidders bid online against other internet bidders. The internet bidder with the highest bid at the end wins the lot.

Trends
Over the last few years we have watched the increasing success of our customers as they conduct internet-only auctions. During that time we have identified several key factors to succeeding with online auctions. I will expound on those keys in this post. Additionally, any features or capabilities described below are already built into Auction Flex and can be put to use immediately by any of our customers.

Not Necessarily National
Some people believe that the real benefit of internet auctions is the increase in the size of the potential bidder-pool based on the alleviation of geographical limitations. In other words, it’s online so I’m naturally going to have millions of bidders from around the country (or even around the world). I argue that even though this is certainly a possible benefit, it is not a necessary attribute for your online success. We have many customers that conduct internet-only auctions for the bidders in their own backyard. They have trained their existing customer base to bid online in lieu of attending an actual live auction.

If You Build it, They Will Come = FAIL
What would happen if you conducted an auction in a new location and didn’t advertise? Your bidder turnout would be horrible at best. That is exactly what will happen if you conduct an internet-only auction without advertising.  An internet-only auction must be marketed the same as you would market a regular live auction. In fact, if your traditional customer base is accustomed to attending live auctions, I will argue that for your first few internet-only auctions you need to market even MORE than regular.

Preview Too
An internet-only auction can have a preview just the same that a live auction can. Sometimes bidders will go to preview prior to bidding online. Sometimes bidders will see an item online that they want to look at closer prior to bidding. Either way, a preview is a vital tool that adds a layer of honesty and openness to your bidders. Additionally, it saves you from exhaustively describing and picturing each and every item (especially the lower dollar items that may not justify the time/expense).

Show Me the Money
A concern with internet-only auctions is payment, or lack thereof. Feedback from our customers has been that non-payment issues are commensurate with regular live auctions. One step you can take to help with this issue is to require authenticate credit card information before an internet bidder is allowed to bid. Additionally, I recommend that you explicitly state in your terms and conditions that you reserve the right to use the bidder’s credit card for payment in part or in full for any successful bids.

Stagger Close
Assume your catalog has 400 lots in it. We don’t want all 400 lots to close at exactly the same time. Instead, we want each lot to close a little bit after the previous lot. If we set the stagger time to 15 seconds and have lot 1 close at 5:00:00pm, then lot 2 will close at 5:00:15 and lot 3 will close at 5:00:30 and so on. This allows someone interested in multiple lots to have time to bid on those multiple lots. In the case of a 400 lot auction with a 15 second close, the duration of the internet auction will be approximately 100 minutes.

Soft-Close > Sniping
Typical internet-only auctions (think eBay) are susceptible to a practice called sniping. Auction sniping is the practice of a bidder waiting until the very last second to place a winning bid on an item with the hope that other bidders do not have time to raise their bid. The intent of sniping is to win an item below the potential high bid (market value). Using a soft-close in your online auction will eliminate this practice. A lot using a soft-close ending time will automatically have its bidding time extended if a bid is placed in those last few minutes. Assuming a soft-close setting of 3 minutes, if a bidder waits until the very last second to place a bid on lot 5, the bidding on lot 5 is extended for 3 more minutes. This gives other bidders 3 more minutes to re-raise their bid. It is not uncommon for a high-interest lot to extend hours past its original close time because multiple bidders keep bidding and extending the close time on the lot.

Linked Soft-Close
Linked soft-close is an extension of the soft-close functionality. It allows you to link multiple lots together so that when one lot is extended via soft-close, all other linked lots will also be extended. This is especially handy when you have multiple similar items. For example, say you have two tractors in your auction. These two tractors are identical except that one has much lower hours than the other. As a bidder, my preference is to win this lower-hour tractor and so I place a bid on it. Other bidders are also bidding on it and after several rounds of soft-close extensions, the bidding price has exceeded my budget. Here is the good part: Because both tractors are linked together for soft-close, the other higher-hour tractor is still open for bidding (even if no one was bidding on it). So now I am able to start bidding on this second best tractor and I eventually win it. If these two tractors were not linked together, the higher-hour tractor could have already closed.

Tech-Phobic
A common misconception is that internet-only auctions exclude all other bids. This is wrong. Just because you are conducting an internet-only auction doesn’t mean you can’t accept bids manually (in person, phone, faxed, etc.). There are some tech-phobic bidders that will refuse to bid online and that is okay; their money spends just the same. You can accept their bids, enter them into Auction Flex, and Auction Flex has the built-in capability to push these “floor” bids to the internet so that these bids compete with the internet bidders.

Auction Day Labor = Nada
On a live auction day consider the additional staff that has to be brought in; cashiers, clerks, ringmen, runners, etc., etc. Now consider the additional staff required to conduct an internet-only auction on closing day — none. Instead of finding 8 people to come work your auction for 6 hours once every 2 weeks, you can have 1 or 2 people who steadily describe/image lots and help customers with pickups. This can have the drastic affect of stabilizing your labor requirements.

Shipping – The Headache-Maker
If you are conducting internet-only auctions to your backyard bidders, shipping is not a concern. Backyard internet bidders tend to come pick up their merchandise. If you do have to arrange shipping I highly suggest forming a working relationship with two or more shippers so that you don’t have to handle the shipping yourself. In your terms and conditions make it clear that the bidder will deal with the shipping companies directly to arrange for packaging and shipping. Now you are not responsible for packaging, broken merchandise, etc. and that is a beautiful thing. The shipping company will be happy for the business (they’re built for this) and you don’t have to pull your hair out dealing with this issue.

But Live Auctions are So Much Better
As an auctioneer, you will naturally be inclined to perceive an auction without a bid-caller as a travesty of magnanimous proportion. I’m not going to argue the merits of live vs online as the pros and cons list could go on for a very, very long time. The variables that determine what makes a successful internet-only auction are specific to you, your bidders and consignors, and regional variables that only you can answer.

One Size Does NOT Fit All
Some types of auctions just beg to be conducted using an internet-only format. Other auctions have no business being conducted solely on the internet. You should consider internet-only auctions as yet another potential method to use in fulfilling your fiduciary obligation to your consignors to get the best possible price. Additionally, don’t discount the potential that internet-only auctions have to reduce your costs which can, of course, provide you a competitive advantage and/or increase your profits.