84: Will Self-service Websites Impact Your Business?
The other day, I had a rousing conversation with one of my buddies in the auction business, talking about whether real estate auctioneers will be replaced by self-serve auction websites like AuctionPoint.com (commercial) and ebay.com (residential). He pointed to the cattle and auto auction professions and how bid callers are getting downsized left and right, being replaced by online bidding portals.
It’s happening all over America: technology replacing the labor force, particularly the least adaptable portions of it. And it’s undeniably happening in the live auction industry. Candidly, as someone who wins his bread from advertising live auctions, I wonder where I’ll be a decade from now.
Thankfully, many of my clients are ahead of the curve, running to beat this technology to the pass. And I don’t think full-service auction marketing will grow extinct in my lifetime. For hundreds of years, people have needed fair, transparent, accelerated marketing. That need will be here after my obituary is written. How that need will be fulfilled, though, will require adaptation by the entire industry.
A decade ago, during the dot com bubble, billions of dollars were spent on the idea that self-service Internet would replace full-service brick and mortars. In many cases, that happened—if not for whole industries at least for specific segments of it. Most sports card and comic book stores either moved their inventory into online stores or closed their doors. Most travel agents either moved to niche markets (and many have successfully) or moved onto new careers. You get the idea.
Industrial adaptation isn’t exclusive to our online generation. Pontiac Spring and Wagon Works prolonged its death for roughly a century by switching to automobiles and eventually selling to General Motors. The Pullman Company, at the decline of the passenger rail era in America, diversified to trolleys and buses, and then transitioned to automotive parts manufacturing and specialty contracting. Nokia, a small manufacturer of galoshes and rubber products, acquired Finnish Cable Works and subsequently became a dominant world player in industrial and consumer electronics.
These companies stayed alive or even grew exponentially by asking, “What growing needs can we effectively meet?” instead of “How can we keep making wooden wagons, railroad cars, or rubber boots?”
The question for the auction industry is not, “How do we convince people of the value of a bid caller?”—any more than it’s, “How do we prove the value of horse-drawn wagons?” No, the question will be, “How do we market property in a way that someone can’t do on their own—or at least in a way that someone is willing to pay someone else to do for them?”
I’m inextricably biased, but I see the core value of the professional auction marketing process to be the ability to gather motivated bidders through a multi-faceted advertising campaign. If the right buyer doesn’t know about the auction, he won’t be there in person or online to bid. If the right bidders or referring agents aren’t reached through compelling media, they won’t drive the sales price. Throwing an auction on a website or network of affiliated websites may find a buyer for someone in the self checkout lane; but it’s less likely to find it’s highest price. I’ve always been told that a successful auction—especially an absolute one—requires only two bidders; but sale price is often relatively-proportional to the quantity of bidders.
“Well, the difference in price I could achieve with a full-service auctioneer isn’t any more than the double-digit commission that leading auctioneers charge to make that difference,” a self-service seller might retort. And this is what my industry friend asserted.
But I know an auctioneer who once proposed 100% commission and got the auction under those terms (because the sellers just wanted the subject property off their hands). I remember helping one auctioneer with a proposal, when he knew the proposal against which he was competing would be requesting half the commission percentage. My conversation with him was indelible. He told me, “We just have to prove we’re worth twice the cost.”
Proving where we add value and enough value to equal our fees will be one of the main challenges facing auction marketers in the future, as self-service websites attract more and more MLS agents and FSBO (For Sale By Owner) properties. Different auctioneers will have different valid answers to the question of value. It might be their unparalleled experience and connections within a geographic or asset market. Their worth might come in their reporting and CRM (customer relationship management) infrastructure or in their affiliate network’s cumulative reach. Maybe it will be the incorporation of multiple, simultaneous bidding platforms. It might just be the bandwidth of staff and auction events to handle the headaches others want to unload or the size of portfolios being liquidated.
On the flip side—in the absence of sufficient provable added value—the answer might even be lower commissions and/or fewer marketing fees. (I still shake my head when I see “sale day labor,” “A/V rental,” “photocopies,” and similar charges in advertising budgets. Shouldn’t that be covered by the double-digit commission?)
The solution won’t be a one-size-fits-all number or universal defense. It will be a case-by-case adaptation. And it won’t be easy or static—just necessary. Are you ready to answer those questions? Can you prove you’re worth your hire in an increasingly self-served, connected economy? If not, what color is your parachute?
On a regular basis—including this week—I lose jobs because I’m more expensive than other vendors in the marketplace. During most of the year, when I can’t stay late at morning basketball and Saturdays are regularly workdays, I chalk it up to supply and demand. During the slow winter months and occasional summer doldrums, I’m tempted to worry, to second guess myself, to question whether I’m just wrapping arrogance with supply-side economics and a decade’s worth of track record. Even during my busy seasons, I typically don’t have more than three to five days’ worth of work on my desk; some days, like this week, it falls less than that.
My wife and I have paid down well over half of the twenty-some thousand dollars we had on plastic 18 months ago. The end of our forty-to-fifty-some thousand in car payments could happen in another 18 months, if biplane averages what it has since we started the debt-free chase. As I feel the pull of debt, taxes, and life on one side and the fluctuating income on the other, I’m pushed to healthy, needful questions:
Do I trust God’s sovereignty?
Am I willing to admit my frail mortality during the feasts, not just the famines?
Am I praying for others and thinking about their problems—or just my own?
Am I being a wise steward of Someone Else’s money?
How can I simplify my life and demands?
Do I feel entitled to a certain lifestyle?
Am I doing all I can do?
How ‘bout you? When stress and uncertainty arise, how do you face that reality—in your time management, your prayer life, your late night thoughts?