Yes. Many online auction businesses have gained traction in these slippery times of uncertainty. The real question is, shouldn’t yours be one of them?
There’s an old adage in the restaurant industry that two things cause liquor sales to increase.
- An economy that’s booming.
- An economy going bust.
Financial firms promote recession-proof, inflation-proof, or, now, COVID-proof investment strategies. Perhaps what their investors want most are fail-proof investments.
No such thing as fail-proof
When you run an auction business, you know there is no such thing as “fail-proof.” On the contrary, you have to prove yourself every day. Posting all of those pictures, visiting customers’ sites to evaluate merchandise, managing the inventory. For the business to work, you have to work. With time and some well designed processes in place, the business will keep working even when you’re not.
So, why have auctions been so successful for so long?
- People want to buy stuff.
- People want to sell stuff.
The beautiful thing about the auction industry is that you’re in a position to accommodate both parties. When the economy is booming, people are buying more and looking for the best deal. When the economy is lagging, folks are selling more and willing to offer better deals.
Is the auction business model fail-proof? No. But it’s a business model that has withstood the ups and downs of the economy over time, and benefited because of – not in spite of – those ups and downs. The same is happening now with COVID-19.
Online auction business success in a downturn
For example, Stella Graves and her business partner Tammy run Star Auction Resources in Denton, TX. Their auction sales have increased 25% since COVID hit in March of 2020. Prior to that, they were seeing a 48% increase over 2019 results.
Stella says that her business has not succeeded in spite of COVID-19, but largely because of it. She’s added two full-time employees to keep pace with the business growth and also to help implement the necessary safety measures.
“We go above and beyond to minimize personal contact. Whenever possible, we meet customers outside to deliver their purchases. Our aim is to do everything we can to make our clients comfortable with the process. It’s all just part of doing business now.”
The way they do business has changed a bit, but Star Auction Resources is doing more business now than ever.
Stella and her team use Maxanet online auction software and she is quick to state that none of this success would have been possible if she hadn’t taken the auctions online in 2019.
So, what works for online auction businesses?
Given that an auction business offers the opportunity for success, even during a downturn, how can you make the most of it? As with any other viable business, you’ll need a strategy in order to compete. Here’s a short list to consider:
1. Find your niche
The auction business works better in some industries than others and in some segments within industries. Balance your interest with what will actually sell at auction.
For example, this post suggests that online auctions have already become the norm in the auto industry. However, the author suggests budget and older classic car auctions may still do better offline. Right or wrong, he’s doing the kind of analysis you should do.
Some of the best opportunities exist at the fringes. High-priced online auctions like Sotheby’s continue to enjoy increased sales, as do the lower-priced auctions like those that Stella and Tammy run.
The more you narrow your focus on a particular niche, the more familiar you’ll become with it, and the better you’ll get to know your customers.
2. Work the medium
When you take your auction business online, you create a new environment for your customers. One they may have some reluctance about initially. It’s important to make this adjustment as smooth as possible.
Since you cannot offer the same look and feel of an onsite auction event, make the effort to provide the next best thing. Video can be a powerful tool for promoting your online auctions. The quality of video available from your smartphone is amazing and improves with every upgrade release.
A little extra effort here will dramatically enhance the element of human interaction.
Similarly, brushing up on your photography skills will make a huge difference over time. Which of these auction items is more appealing to you?
You may not be a world-class photographer, but you don’t have to be in order to present a better image of your products and thus your company.
3. Improve by inches, not miles
Your self-development is key to the development of your auction business. Take the long view with regard to learning. Sometimes you’ll have to cram in order to get up to speed quickly, but more often the smaller, narrower incremental approach works best. It also prevents burnout.
Take the photo examples above. There are times you’ll have to get your photos posted online ASAP. But meanwhile you could be working on one aspect of photography where you’d like to improve your skills.
Lighting would be an excellent place to start. Check out a few youtube videos on the topic, then map out a plan. The simpler the better. How about spending 15 minutes a day learning about and practicing your lighting skills? You’d be surprised how quickly and dramatically your photos would improve.
Whether it’s photography, or videography, or your new accounting software, think incremental progress rather than wholesale mastery.
Don’t make the mistake of trying to learn too much too fast.
Is now the time for you to get started?
Begin with who your buyers and bidders are. What might drive them to sell or buy right now, given the economic realities?
In developing your niche, consider auction types as well as product types. For example, estate sales are an evergreen category, while business liquidations are especially active now.
Finally, once you’ve got a business up and running, decide on a few opportunities to apply incremental self development in order to separate yourself and your business from the crowd.
If you’re ready to get started, Maxanet is ready to help with a complete online auction solution. Everything from a WordPress website, to our own proprietary payment processing platform is baked into our software.
Contact us if you’re ready to get cooking!