The virtual auction now rules the world of iron
An eerie silence presided over 15 acres packed with machinery on the Sullivan Auctioneers sales lot near Hamilton, Illinois, in August.
More than 1,900 vehicles and pieces of equipment were on the block at this two-day event. Yet not a single buyer was in sight.
Beyond the sound of wind blowing through a nearby cornfield, the Sullivan lot was silent.
Absent was the singsong chant of auctioneers pleading for another bid. A sale of this size would have had at least three auctioneers calling the action.
Also missing was the army of bid spotters shouting out bids or enticing potential buyers to participate.
And gone was the rustle of the crowd murmuring about the news of the day, complaining about the price of corn, or exclaiming how high that last tractor sold for.
Although no buyers were on the Sullivan grounds that day, thousands still participated in a sale that, by co-owner Dan Sullivan’s account, was one of the largest consignment auctions the storied business has ever held.
Welcome to the world of the online-only auction … and the waning of in-person auction events.
When the COVID-19 crisis hit with full vigor in March 2020, auction houses at the height of the machinery sale season (which intensifies between November and May) faced a crisis of their own: Hundreds of live auctions they had scheduled could no longer be held with buyers in person.
“I recall that time well. It was St. Patrick’s Day when we metaphorically flipped the switch to go strictly online,” recalls Dan Sullivan. “We really didn’t know what to expect.”
Sullivan is no longer worried. “Today, we have more bidders at our sales than ever before. Record after record is being set on prices. Even if COVID disappeared tomorrow, I would expect almost all of our consignment as well as retirement and estate sales will be held online from here on out.”
Scott Steffes of the Steffes Group, which also made the switch to online-only sales in mid-March, adds that online buying already accounted for more than half of the transactions his firm was conducting during live sales. “Some 50% to 60% of the successful bids at our live auctions were already being placed by online buyers prior to COVID, and we’d already been operating timed online-only sales for 11 years. So the transition to online-only bidding at live sales was well on its way,” Steffes says.
Online auctions are by no means new. Nearly 20 years ago I interviewed a then-young Derek Wieman, who was experimenting with online transactions for his family’s business, Wieman Land & Auction of Marion, South Dakota. “We were already buying equipment online for ourselves, so I thought this could be part of our auction experience,” Wieman recalls.
Online Auctions in Their Infancy
Back then online sales were in their infancy, dominated by eBay-style private-treaty transactions.
AuctionTime.com (home of Tractorhouse.com) was rapidly expanding its newfangled online marketplace for private-treaty listings – catching favor with dealers – and BigIron.com was just a concept in the minds of the Stock brothers, who had operated Stock Auctions since 1984. “In 2001 we experimented with broadcasting a machinery auction live over the internet,” says Mark Stock, who founded the St. Edward, Nebraska, company with his brother Ron. “We were working with Proxibid.com [a leading online sales service] to develop our online farm sales.”
At the first such effort, a tent at a live sale had computer screens showing the bidding action. “Farmers attending that auction took a look and said, ‘What kind of BS is this?’ Few farmers had broadband access in those days, so interest was limited,” Stock recalls.
In the ensuing years the Stock brothers continued to play with the concept. Then the ethanol expansion and its impact on corn prices hit.
“That was 2008. Retirement-age farmers were making so much money due to high prices, they decided not to sell out,” Stock explains. “Retirement auctions, the bread and butter of our business, went from four or five auctions a week to four or five a month.”
That’s when the Stocks created BigIron.com, which offered farmers the opportunity to not only buy online but also sell equipment one or two pieces at a time “without having to move it to a consignment lot or take out a classified ad,” Stock says.
That first BigIron.com sale consisted of just 21 pieces of equipment. “But we had 890 people registered to buy, so we knew we were onto something,” he says.
Today, BigIron holds an online sale every week. “In the month of September we sold 8,500 pieces of equipment. At one sale that month 1,886 items from 285 different sellers sold with 1,379 buyers participating from across the U.S. and 11 other countries.”
Demand for their services has grown to the point that the Stock brothers are on the verge of going to two online BigIron.com auctions every week.
Online iron sales have also become a major transactional tool of dealers selling used inventory through eBay-style private-treaty sales or timed online auctions through sites like fastline.com or tractorhouse.com.
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Greatly Expanded Seller’s Marketplace
The growing phenomenon of online sales has been a boon to farmers seeking to sell equipment “without having to take it to a dealer or an auction,” explains David Brotton of Manhattan, Kansas-based Purple Wave, another early online auction innovator. “A farmer planning to retire can sell equipment a few pieces at a time, minimizing depreciation recapture in a single year,” Brotton says.
Such convenience is a huge attraction to sellers or buyers. “You can bid from your home computer or smartphone,” says Scott Cook of Cook Auction (cookauctionco.com). “You can be planting or harvesting and still participate in an auction.”
Many auction houses now push notifications to alert potential buyers of upcoming events and also to warn them if they’ve been outbid on a particular item. “This can all take place on a smartphone, carrying the auction to the field or shop,” Brotton adds.
Another huge attraction is that you can bid anywhere in the country. “Remember when distance kept you from attending an auction?” Steffes asks. “That doesn’t exist any more. You don’t have to drive for days to a sale being held states away if you are interested in just one or two pieces of equipment. You can find it online, buy it online, and make arrangements for it to be financed and transported online.”
Online auctions’ growth can also be attributed to offering buyers and sellers peace of mind through detailed listing descriptions, photography, and videos.
“We list the seller’s name and phone number so that if a buyer has a question prior to the auction they can call the seller,” Stock says. “We also send sale representatives out to take supporting images and videos [which are increasing in popularity] and record extensive and detailed descriptions.”
Purple Wave and other online sites take the same approach in using sales representatives as their point person for sellers. “For example, we post high-resolution images so a potential buyer can zoom in on part of the machine to inspect it,” Brotton says. “We tell our representatives to gather everything there is about a machine, both the good and bad about its condition. It all runs in the listing. That level of detail provides a huge sense of security for buyers.”
Many online auctions also recommend inspectors you can hire to evaluate equipment in person before a sale. “And we, the auctioneers, are a great source of information,” adds Steffes. “You can call us up and we’ll give you an opinion about a sales item. We’ll even go out and run it for you, if necessary.”
The Live-Only Auction Isn’t Dead
Are the days of live auctions numbered? After all live sales did return as the summer progressed. “I expect live auctions to be the sellers’ preference when they involve life experiences such as an estate or retirement auction in which the seller wants to see their equipment sell,” adds Steffes. “Yet we will simultaneously offer that machinery online at such events. Still, the vast majority of farm machinery and vehicles will sell online.”