Don’t penalize Internet buyers

Our friend John Schultz wrote a great blog post this morning about the importance of ensuring that registration requirements were similar for Internet bidders and live bidders. He describes the effect of restricting Internet bidders as follows.

John Schultz

Auction companies need to apply the same set of registration terms to both online and onsite bidders. In fact, approving an online bidder to participate in your auction that has a history of purchasing and paying for items is safer than handing bidding numbers out to anyone that produces a valid photo ID in person. By overly restricting online buyers, auctioneers are dampening the impact online buyers will have on the bottom line of an auction, and are not serving the seller’s best interest.

We completely agree. We’d like to take that thought a step further, however, and say that there should not be a difference in cost between bidding live and using Internet bidding.

Many auctioneers charge a higher buyer’s premium to Internet bidders, usually because there is a sell-through percentage charged to the auctioneer by some Internet bidding providers. The sell-through percentage is a fee charged by some bidding providers that is a percentage of each item sold to Internet buyers. Most auctioneers elect to pass that sell-through percentage on to the buyers.

Here’s the problem. A higher buyer’s premium charged to Internet bidders is absolutely a penalty for placing Internet bids as opposed to placing bids at the auction. The incentive is to not place Internet bids, and the bottom line of the auction suffers.

How, then, can an auctioneer pay for the sell-through percentage charged by the Internet bidding provider if he uses a provider with such a fee structure? Is it simply a cost of doing business like credit card fees? Should it be passed to the seller?

The majority of the costs of conducting an auction are incurred because of the live bidders. The live bidders require bathrooms. The live bidders require labor to clean the auction location. The live bidders require paying a ring staff, bid callers, cashiers – all sorts of expenses that are in addition to and greater than the after-auction labor involved with handling the Internet bidding. With this regard, it absolutely makes sense to increase the buyer’s premium for live customers at least to match that premium incurred by Internet bidders.

Auctioneers who figure out how to make not only buyer registration requirements the same but also make sure that there is no financial penalty for placing Internet bids will see more participation from Internet bidders and do a better job for their sellers.

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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 elect for 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. 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.
  • Peter Gehres

    I agree 100%.

  • Peter Gehres

    I agree 100%.

  • The problem is that the fee is not as low a credit card fee.

    When online auction providers charge fees that are two or three times the amount of the average credit card fee it puts the burden on someone.

    The question is how to remain profitable. Charge the seller more? Charge the live bidder more? Charge everyone more? someone has to pay, and you have to live to sell another day.

    My two cents,

    Robert

  • The problem is that the fee is not as low a credit card fee.

    When online auction providers charge fees that are two or three times the amount of the average credit card fee it puts the burden on someone.

    The question is how to remain profitable. Charge the seller more? Charge the live bidder more? Charge everyone more? someone has to pay, and you have to live to sell another day.

    My two cents,

    Robert

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