With years of experience and feedback from thousands of auctions, key performance indicators (KPIs) have been identified to determine the success of an auction.
Understanding the importance of these KPIs can significantly increase the likelihood of success.
Items that do not sell due to reserves or lack of interest negatively affect the affiliate network. Therefore, providing affiliates with this information is crucial for those facing these challenges to review and adjust their business models. If affiliates find themselves struggling in these areas, they are encouraged to seek assistance.
Lot Composition
Low lot values pose a risk for affiliates. Key points to consider include:
- Initial Lot Values: If the first few lot values are low, bidders may assume the auction contains only low-value items and move on to the next auction.
- Reputation: An affiliate’s reputation with bidders and sellers is influenced by the items they sell. Specializing in low-value assets can deter higher-value asset sellers from consigning with the affiliate.
- No Show Rates: Winning bidders of low value lots are three times more likely to become no-shows. For example, 77% of no-show invoices for EQUIP-BID affiliates in a recent month were for bid prices below $50, and 65% were below $25.
To mitigate these risks, low-value items should be grouped into larger lots.
Reserves
Affiliates must conduct due diligence to determine asset value before agreeing to sell items with a reserve. To avoid using the term "reserve" with sellers, affiliates should:
- Market Research: Identify the selling price of similar assets recently sold on EQUIP-BID or other online auction websites.
- Acceptable Reserve Percentage: Determine an acceptable reserve percentage, typically 50-70%. Anything higher is too high.
- Reserve Calculation: Multiply the average price of similar items by the reasonable reserve percentage to set the highest acceptable reserve.
- Standard Practice: Equip-Bid.com’s standard is no reserves for items valued under $2,000.
If a seller insists on a higher reserve-to-asset value ratio, they may not be motivated to sell, and affiliates should decline these sellers, but offer to revisit the discussion when they are ready to accept a more reasonable reserve.
'No Bid' Items
‘No bid’ items are detrimental to bidders, sellers, and affiliates. To avoid this, it is important to understand why items receive no bids:
- Lot Composition or Asset Type: Before taking a consignment, affiliates should check past auctions on Equip-Bid.com to see how similar assets have sold.
- Categories to Avoid: Certain categories rarely do well, such as:
- Collectibles (e.g., Precious Moments, Nascar)
- Most furniture
- Costume jewelry.
- Miscellaneous household items
Presentation
In online auctions, meticulous presentation significantly impacts final bid prices. Key elements include:
- Upkeep: Maintain the area where items are showcased for photographs.
- Promotion: Spread the word about the auction on social media to attract local buyers.
- Item Descriptions: Provide full disclosure of any defects to build trust with bidders.
- Reserve Prices: Use reserves sparingly to avoid dampening bidding enthusiasm.
Patience
Bidding often surges by 100% to 300% within the final 24 hours of an auction. Prospective sellers can request a watchers list to gauge interest and strategize their end-of-auction bids.
Establishing Value
- Market Understanding: Know the market and set minimum lot and auction value requirements.
- Seller Preparation: Ensure sellers are prepared, educated, and have managed expectations. Know when to decline offers.
Marketing
Effective marketing drives the right buyer audience to auctions, maximizing results.
Presentation
The physical presentation of auctions is crucial. Detailed descriptions, appealing images, and clear logistics contribute to success.
Location
Building trust through branding and clear location markings assists bidders and enhances auction success.
Implementation
Service skills for buyers and potential sellers are essential. Addressing issues promptly and providing clear communication enhance the auction experience.
Conclusion
Understanding key performance indicators helps determine auction success. Unsold items due to reserves or lack of interest negatively affect the affiliate network. Reviewing business models and making necessary changes is essential for struggling affiliates. Conduct due diligence, group low-value items, and avoid excessive reserves to improve auction outcomes.