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It is a warm, mid-June afternoon at an Alex Lyon & Son auction, just outside Dallas, as rental company inventory is paraded in front of buyers, many of whom have traveled the country with hopes of reeling in the right equipment at the right price. Some come with laundry lists in tow, others with a single piece of equipment in mind.
For those in attendance, bidding at this modest, $8-million auction is expected to follow form. But for the rental companies facing mounting inventory disposal concerns, there’s hope the auction turns out to be anything but routine.
On this day, in addition to those in attendance, hordes from around the country will turn to their televisions to watch a continuous live broadcast of the auction. And while some curiosity-seekers will tune in to keep tabs on the sale, most are glued to their televisions with fingers at the ready to bid over the Internet.
With the addition of the virtual audience, bidding activity over the course of the auction is dramatically enhanced. Floor prices are sustained and in some cases, equipment sells for up to 20 percent above anticipated levels.
The good news for rental companies is that this scenario is likely to be played out time and again as e-commerce platforms continue to make their presence felt in the industrial-equipment auction business. Even better news is that of all the players in the equipment-auction equation, rental companies clearly have the most to gain.
For years, rental companies have viewed traditional “brick-and-mortar” auctions as the fastest, most efficient method for disposing portions of their inventory. In the eyes of most rental company decision-makers, live auctions consistently have provided the most efficient distribution channel and in a sense, offer these companies
a solution to the complex equation of fleet management.
Recently, however, with a dramatic influx of new equipment hitting the market, some rental companies have begun to question whether brick-and-mortar auctions alone can move their growing inventory levels while sustaining profitable bidding levels. Add to the mix an influx of auction Web sites and Web-enabled auction services and it is easy to see why rental companies are at somewhat of a crossroads when it comes to their inventory disposal practices.
While it is too early to tell which e-commerce auction application will be left standing at the finish line, rental companies must come to grips with the fact that technology, in some way, shape or form, will redefine the industrial-auction business. The question for rental companies to face is which model is most appropriate for their fleet management efforts.
Now a new, interactive service, EquipmentAuction.com, is integrating satellite television with the Internet to bring brick-and-mortar auctions to a bidder’s television in a live, real-time, broadcast-quality environment. Bidders simply sign on with The Dish Network to receive the broadcast.
By Web-enabling traditional auction venues, bidders can avoid travel costs. Also, contractors and brokers can monitor the value of equipment purchased in other parts of the country and selectively purchase the items they need. Since its inception, the Web-enabled live auction has proven to provide rental companies with increased bidding activity and, ultimately, higher sales prices.
EquipmentAuction.com’s broadcasts originate not from a Web site, but in a broad-band format. That allows for interactive bidding in a real-time, broadcast-quality format.
Virtual auction sites were the first to deliver the power of the Internet to the industrial auction business. These sites continue to provide rental companies with the flexibility to sell a product when they desire without the presence of a staged auction at a brick-and-mortar venue. With virtual auction sites, rental companies take
a “wait-and-see” approach by selling their inventory at reserved price
levels.
While rental companies may enjoy greater flexibility with a virtual auction site, inventory levels in these venues, for the most part, have failed to live up to expectations. As a result, traffic at these sites has been limited. Similarly, their smaller inventories may cause problems for end-users looking for one or perhaps two pieces of equipment.
Virtual auction sites have their place, particularly for rental companies with limited inventory that don’t find themselves under pressure to move product.
In the end, when it comes to e-commerce in the used-equipment auction business, the dust still needs to settle.
One thing is certain — acceptance of Web-enabled auctions, like virtual auction sites, will come with time. No one expects to change the model for acquiring used equipment overnight. But clearly these technologies represent a new frontier for today’s rental companies.
How will rental companies, facing rising inventory levels, use e-commerce auction technologies to their advantage? Most expect them to rely on a combination of Web-enabled and virtual auctions as they strive to maximize peak efficiency in their inventory disposition. Once faced with moving small lots of equipment, rental companies now must stand up to the challenge of disposing far greater amounts while maintaining acceptable levels of profitability.
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