Whether or construction, landscape, utility or agriculture, the professionals working in these and related fields have one thing in common: all require a large and diverse amount of equipment. Dealers play a key role in providing companies with the equipment they need to operate, making inventory management a key component of day-to-day operations.
Moving used equipment is often the greatest challenge in the process, but a necessary evil none the less. Slow moving “aged” equipment takes up space, ties up capital and can negatively affect the bottom line. In recent years, online equipment auctions have become increasingly popular as a way for dealers to manage aged inventory and make room for new equipment. While live auctions certainly have their place, there are several advantages for dealers who choose the online avenue – particularly the no-reserve format.
After more than 25 years in the industry, Ron Lucas can attest to the benefits of utilizing online auctions for better inventory management. As president and owner of Goodland Greenline, an agricultural equipment dealership in Kansas, Lucas has seen the industry undergo some significant changes in how used equipment is managed and sold. Always up-to-date on trends and better practices, Lucas turned to no-reserve online auctions as a way to more efficiently manage his dealership.
“In my years of utilizing online auction services, I’ve seen firsthand how they enhance the inventory management process,” he said. The primary benefits, Lucas says, range from cost savings to expanded market reach to simple convenience, and they demonstrate why all dealers should consider online auctions as a way to manage used equipment.
1. Surefire Sale
It’s a reality for any dealership: To reduce inventory and acquire new equipment the old must be cleared out. Planning a purchasing strategy that relies on equipment being sold at a live reserved auction is time consuming and there’s no guarantee that the equipment will sell. However, a no-reserve online auction guarantees the sale of every piece of equipment, allowing for better planning, ordering and overall inventory management.
Ron Stock, co-founder and president of Stock Realty & Auction and Big Iron, a no-reserve online auction company, further explained, saying, “With a no-reserve format, there’s no minimum set price on the piece of equipment, so it’s assured every item will sell.” While Stock understands the no-reserve format can still be a bit intimidating to potential sellers, he feels the immediate reward more than makes up for the risk.
Helping to negate this perceived risk, Stock says equipment does in fact sell at its fair market price. Online auctions are able to do this by reaching a great number of potential bidders – and solid bids. Bidders know this is the only opportunity to buy this item and they bid accordingly.
2. Expanded Reach
A major benefit of online auctions and one of the primary ways sellers are able to net true market value for each piece of equipment comes from the market area they can reach. Bidders in multiple regions, states, even countries have access to the auction. A live auction is typically limited to those within a reasonable distance. Greater reach means more bidders – and more bidders equals a better sale.
“Certainly with any auction, you want a lot of bidders, but it’s especially valuable in the no-reserve format,” Lucas explained. “At a traditional auction, the more bidders, the better chance that piece of equipment is going to sell. But in no-reserve, you know the equipment will sell, it’s a matter of for how much. So the more potential bidders you can reach, the better chance you have to get top dollar.”
3. No Moving
Additional monetary benefits can be found with online auctions. Dealers looking to move inventory via a live auction have to do just that – move the inventory. The equipment must be relocated to the auction site, which could be tens, even hundreds of miles away. And transportation requires time, manpower, and money. Furthermore, a machine that doesn’t sell at a live reserved auction must be transported back to the dealership – doubling the time, cost and hassle.
Online auctions eliminate the headaches associated with moving equipment off-site. Factor in the price of fuel and other transportation costs, and the savings become substantial.
4. Flexible Schedule
When selling at live auction, sellers are restricted to the date and seasonal factors associated with that particular event. However, online auctions provide dealers with the flexibility to move any piece of equipment at the time of their choosing. Whether timed with fiscal schedules or sales cycles, or just as one sees fit to auction a certain machine, the equipment is sold at the most opportune and convenient time for each individual seller.
Most online auction companies hold regular auctions, whether on a weekly, semi-monthly or monthly basis. Big Iron, for example, still makes the online auction a special event by having auctions on the 2nd and 4th Wednesday of each month. “Our company hosts auctions twice a month,” Stock said. “We’ve found that’s the ideal number to give sellers ample opportunities to move their equipment, yet without diluting the experience for buyers.”
5. Customer Is King
Online auctions aren’t just beneficial to sellers, they offer a great advantage to buyers as well. One of the greatest challenges in inventory management is securing a sale of the used piece of equipment, primarily because purchasing a piece of heavy equipment is a big decision for a potential buyer. It’s not something that can be done on impulse or a whim, at least not for most. It’s imperative the potential buyer feel confident about the purchase, and online auctions do just that.
At any auction, interested buyers can examine the equipment, along with reconditioning and work orders. These documents detail what has been done to the equipment concerning repairs and maintenance. While buyers have the opportunity to review these at a live auction, the amount of time they’re given is limited. The online format allows bidders to look at these forms in detail and at a time that’s convenient for them. From the day the equipment is posted to the date of the actual auction – a time frame that can span several weeks – buyers have the freedom to review the equipment thoroughly, rather than rushing through the process. Additionally, our online auction services encourage buyers to contact the sellers with questions or concerns. This communication leads to a more confident buyer and greater likelihood of a market value sale.
Once it’s decided that online auctions are to be implemented into the inventory management process, it’s imperative to get the most out of the process. The following quick tips will enhance the experience and maximize results.
Securing the best sale requires some preparation, particularly, the equipment needs to look its best. Take the time to clean equipment before posting it online, fix minor issues, and disclose any defect you know about the machine.
Working with an online auction service that sends out representatives adds value to buyer and seller by having a third party go through the piece in detail. These representatives take photos and write the listing bios that are eventually posted, so this is a great opportunity to point out the major benefits and selling points on each piece of equipment.
Inventory management is a major component of day-to-day operations and the overall success of an equipment dealership. Online auctions can help make the selling process more efficient, effective and profitable, allowing dealers to focus on better, more strategic planning.
“We’ve come to rely on the no-reserve online auction format to help us make good, confident purchasing decisions,” Lucas said. “It has put us in position to better serve the needs of our customers. And in the end, that’s really what we’re all about.”