Auction Podcast Episode 6 – Internet bidding primer

In this episode, we’re going to cover the basics of Internet bidding including the different types of Internet bidding, or online bidding, and the different kinds of providers.

There are three main types of Internet bidding. Some Internet bidding providers allow some but not all of the types of auctions. I’ll cover some of the basics here, with future articles and podcasts building on these topics by discussing the combinations of the types of Internet bidding as well as going deeper into the benefits of certain types of auctions and providers.

Let’s begin by discussing the three main types of Internet bidding which are Internet only, pre-auction only Internet bidding, and real-time Internet bidding.

First, let’s address Internet only bidding. When the items sell based solely on the bids from the Internet, it’s an Internet only auction. Internet only auctions may have a bid caller and they may have a crowd, but when software is calculating the time remaining and the current and final bid prices, it’s an Internet only auction. Internet only bidding is sometimes referred to as an eBay-style or static auction, but those are horrific terms for it. Modern Internet only auctions have staggered endings and automatic extensions, more closely simulating a live auction. These modifications move the game so far away from eBay rules that there isn’t a legitimate comparison. The term static implies nothing changes. It’s very definition means fixed or motionless and the auction industry is doing itself an enormous disservice by using the word static to refer to this very active and exciting method of bidding. This method drastically lowers overhead, as well as provides a viable means of selling small groups of assets in multiple locations.

Second in our types of bidding is pre-auction bidding. Pre-auction bidding is the method of accepting Internet bids up to a point slightly before the auction begins to end and representing the Internet bids as absentee bids against the live crowd. This method offers the advantage of increased speed of the event as the auctioneer can see everyone who can possibly bid and doesn’t have to wait for an Internet bidder he can’t see. When the live crowd is done bidding he can sell the item and move on. It offers the convenience for buyers to place bids without having to attend the event or sit in front of a computer.

Finally, real-time bidding is probably the most common type of Internet bidding currently. The process involves an audio or perhaps video stream so that buyers can view the auction as it happens on their computers. They can place bids during the auction based on the audio and the display of the current bid price on their computers. This method has the advantage of allowing bids right up until the second the item closes, but forces users to wait in front of their computers until the items in which they’re interested sell. Many buyers no longer have that time available, or, when first seeing the auction, plan to sit in front of their computers during the event but forget by the time the auction starts to end.

Now let’s move on to the two classes of Internet bidding providers which are portal site solutions and integrated solutions.

When Internet bidding is offered but that bidding occurs on the website of a third party, that third party is a portal. That is, auctions from many auction firms are listed and the bidding is handled all within that site. This method offers the benefit of cross-promotion, where the customers driven to the site by one auctioneer may see the assets listed by another. The downside is that it makes brand-building very difficult and makes buyer retention next to impossible. This kind of solution is good for an auctioneer who needs results quickly. Examples of this kind of provider include Bidspotter, Proxibid, AuctionFLEX and NAA Live.

The concept of an integrated Internet bidding solution is less well-known in the industry. An integrated solution embeds the Internet bidding pages within the website of the auctioneer. The software may not reside physically on the auctioneers’ servers, but the website is built so that the buyer can’t tell the difference and never sees any logo or promotional materials of the provider. This method has the advantage of being excellent for brand building and buyer retention, but has the disadvantage of taking some time to build a buyer base. Examples of this kind of provider include JBS Software’s Maxanet and NextLot.

That’s it for episode six. I’m excited to announce that my friends Robert Mayo of Mayo Auction and Realty and Darron Meares of the Meares Auction Group have agreed to be the first two guests on the show, so look for those two interview episodes over the next two months.

You’ve been listening to the Auction Podcast from AuctioneerTech. If you have suggestions, questions or comments, or are interested in being a guest, please let me know by going to www.auctioneertech.com/feedback and leaving a message. You can also post public comments about this or any other episode, as well as find show transcripts, on the auction podcast page of auctioneertech.com.

Thank you for listening. Now go sell something.

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Aaron Traffas, CAI, ATS, CES

twitter.com/traffas | aarontraffas.com | aarontraffasband.com

Aaron Traffas, CAI, AMM, CES, is an auctioneer from Medicine Lodge, Kansas. He is currently community evangelist for Purple Wave in Manhattan, Kansas. Aaron serves as the current president of the Kansas Auctioneers Association and in the past has served on the National Auctioneers Association Education Institute Board of Trustees. He is a past instructor at CAI and co-wrote and instructed the ATS designation course from NAA. He currently instructs the Internet Auction Methods course offered by the NAA. An active contract bid caller, he has competed in multiple state auctioneer contests including placing twice within the top 5 in Kansas.

During the summer, Aaron operates a farm in south central Kansas. Aaron is an active singer and songwriter and the Aaron Traffas Band‘s latest release, Enter: The Wind, can be found at iTunes, Amazon and Spotify.

  • Joe Abal

    Aaron,
    I just came back for a short tutorial.I’m loading a couple of auctions soon and my fellow Auctioneer Betty and I were discussing our marketing matrix.After reading your stuff I have been questioning my local market approach.
    Ever since going to Proxi I don’t use alot of local advertising because I never got alot of local bidders.My auctions got better when I went to Proxi and started advertising on AZ with side bar and banner ads.
    When I have good stuff,like the upcoming rifles which are WW 1 and 2 what I notice is all the cross bidders I receive from proxi. Honestly,in the current money markets with all the stress on the economy its the only way I can make money.

    Keep up the good pods and Blog.Your thoughts keep me thinking. I downloaded Safari based on your recommendation to my windows.Man that worked better than my FFox.Cool tip!

    Keep up the good work.
    Joe Abal

  • Joe Abal

    Aaron,
    I just came back for a short tutorial.I’m loading a couple of auctions soon and my fellow Auctioneer Betty and I were discussing our marketing matrix.After reading your stuff I have been questioning my local market approach.
    Ever since going to Proxi I don’t use alot of local advertising because I never got alot of local bidders.My auctions got better when I went to Proxi and started advertising on AZ with side bar and banner ads.
    When I have good stuff,like the upcoming rifles which are WW 1 and 2 what I notice is all the cross bidders I receive from proxi. Honestly,in the current money markets with all the stress on the economy its the only way I can make money.

    Keep up the good pods and Blog.Your thoughts keep me thinking. I downloaded Safari based on your recommendation to my windows.Man that worked better than my FFox.Cool tip!

    Keep up the good work.
    Joe Abal

    • @Joe Abal
      I’m working on a way to describe an axiom that is ‘if you ship, your marketing has failed’. There are exceptions, but I believe it holds true for all general merchandise. Why let money go to transportation when if you found someone more local he would have been able to bid higher, given that price is constant. I’ll be working on that theory in a future article.

  • Aaron,

    I believe you’re missing one aspect of online bidding that is very popular, and another that is gaining momentum.

    In my experience, most real-time bidding online auctions are a hybrid of real-time bidding and pre-bidding. Thus, a bidder has the option of pre-bidding or bidding in real time. I know both Proxibid and Bidspotter have been implementing the majority of their auctions in this manner. This eliminates many of the disadvantages of implementing only one type.

    What intrigues me is the latest developing online auction type of combining all three types for a super-hybrid of Live Online Only with Pre-bidding. It’s just what it sounds, bidders can pre-bid online, and/or they can participate live with an actual auctioneer selling and making decisions regarding increments, and when to say sold. However, in this super-hybrid there is no onsite crowd. I’ve not tried an auction of this type yet. However, I’ve heard that they are very effective (specifically firearms and heavy equipment). I’ll be conducting a “super-hybrid” in the middle of November (on a two-part coin auction).

    Great job on this site! I’ve been reading through your posts, and they are very good and practical!

    Thank you,
    John

    • @John Schultz
      Thanks for the comments, John. I believe that, as a general rule, if you allow real-time bidding, you will have customers who will not bid that would have otherwise participated due to forgetfulness. Your pre-auction bidding total will be lower, your auction will be slower and your final sales total will not be as high as it would have been had you forced everyone to place bids before the auction. We’ve done it before, with multiple providers, and have never had the same success as we do with pre-auction bidding only. We drop from 140 lots per hour to 60, and don’t see as much participation from the crowd. There are auctioneers who have had success in this manner, but I don’t think we’d have our 60%+ sell-through to the Internet if we ran in real time. There are certainly exceptions, and mileage may vary between locations, auctioneers and asset types.

      We have had great success with a live crowd bidding in an Internet only auction. It uses all the elements of a live auction except for a bid caller. I’ll be discussing this method in future postings and podcasts, but the benefit is that you can sell an unlimited amount of items per minute because you don’t have to wait on a bid caller.

      Thanks again for the comments!

  • @John Schultz
    Thanks for the comments, John. I believe that, as a general rule, if you allow real-time bidding, you will have customers who will not bid that would have otherwise participated due to forgetfulness. Your pre-auction bidding total will be lower, your auction will be slower and your final sales total will not be as high as it would have been had you forced everyone to place bids before the auction. We’ve done it before, with multiple providers, and have never had the same success as we do with pre-auction bidding only. We drop from 140 lots per hour to 60, and don’t see as much participation from the crowd. There are auctioneers who have had success in this manner, but I don’t think we’d have our 60%+ sell-through to the Internet if we ran in real time. There are certainly exceptions, and mileage may vary between locations, auctioneers and asset types.

    We have had great success with a live crowd bidding in an Internet only auction. It uses all the elements of a live auction except for a bid caller. I’ll be discussing this method in future postings and podcasts, but the benefit is that you can sell an unlimited amount of items per minute because you don’t have to wait on a bid caller.

    Thanks again for the comments!

  • @Joe Abal
    I’m working on a way to describe an axiom that is ‘if you ship, your marketing has failed’. There are exceptions, but I believe it holds true for all general merchandise. Why let money go to transportation when if you found someone more local he would have been able to bid higher, given that price is constant. I’ll be working on that theory in a future article.

  • Aaron,

    I believe you’re missing one aspect of online bidding that is very popular, and another that is gaining momentum.

    In my experience, most real-time bidding online auctions are a hybrid of real-time bidding and pre-bidding. Thus, a bidder has the option of pre-bidding or bidding in real time. I know both Proxibid and Bidspotter have been implementing the majority of their auctions in this manner. This eliminates many of the disadvantages of implementing only one type.

    What intrigues me is the latest developing online auction type of combining all three types for a super-hybrid of Live Online Only with Pre-bidding. It’s just what it sounds, bidders can pre-bid online, and/or they can participate live with an actual auctioneer selling and making decisions regarding increments, and when to say sold. However, in this super-hybrid there is no onsite crowd. I’ve not tried an auction of this type yet. However, I’ve heard that they are very effective (specifically firearms and heavy equipment). I’ll be conducting a “super-hybrid” in the middle of November (on a two-part coin auction).

    Great job on this site! I’ve been reading through your posts, and they are very good and practical!

    Thank you,
    John