It’s generally believed in capitalist systems that competition drives prices down. But a notable exception to this is the situation of an auction; Google Executive Chairman Eric Schmidt once observed that “There is a surprising, if not bizarre [fact that] more competition in auctions can actually produce more revenue, rather than less.” In fact, auctions are a multi-billion-dollar industry, and new online options are only causing it to grow. Here are some things to keep in mind when using technology to help your auctions become more profitable:
- Broaden Your Base
One of the factors in creating a successful option is drawing in as many qualified bidders as possible, and the Internet offers a massive pool of buyers unlimited by geography. You may have heard of online auto auction software such as SmartAuction and OpenLane, but there are actually quite a few ways to expand your auction to the web. The best of these is simulcasting (live broadcasting online in real time), which combines the best of both traditional auctions and online auctions.
- Encourage Interaction
One of the reasons auctions can be so profitable is that they rely on interactions between buyers to push up prices, all the while offering bidders the tantalizing prospect of getting a steal. “Auctions push a number of our psychological buttons,” Tom Stafford wrote for a BBC column in 2012, and one of the most important parts of creating a successful auction is what is called “social facilitation.” All this fancy term means is that it’s important to choose a simulcasting software that allows your online bidders and your in-person bidders to interact almost as if they were both present. (It’s also worth noting that the auction catalogue, whether physical or digital, is an important psychological motivator, since bidders will place a higher value on items they’ve already imagined themselves owning.)
- Keep Your Data
Make sure whatever car auction software you’re using keeps audio and video recordings for all your lanes. This data can be of use when it comes to security, arbitrating disputes and documenting legal matters. You should also make sure the data is searchable, so you can find what you need when you need it.
Have you ever bid in an online auto auction? How did the experience compare to an in-person auction? Share your experiences in the comments.