Who are the Winners in Online Auctions: The Sellers? or Auctioneer?

The question today is whether online auctions actually make more money for sellers or auctioneers. Of course, it might make more of both – which would be ideal. The costs of live auctions have been known for centuries, but the online environment (and associated costs) is relatively new.

Most live auctions (without online content) may advertise important lots with a photograph of each item, some descriptions ending with “… There are countless more lots “ends. This type of advertising engages people through deals and treasure-hunting type adventures.

In the United States, thousands of auctioneers still use this advertising technique in live auctions held every day. However, with the advent of the Internet, many auctioneers only sell items online, and some auctioneers combine live and online into a simulcast environment.

Nevertheless, our focus here is on network-to-seller in live auctions versus network-to-seller in online-only auctions. While it’s possible to make more selling only online, what does the seller achieve by comparison, after expenses?In our view, online auctions require more time to set up and wrap up, as well as additional software costs, including enhanced payment processing, that are largely absent from live auctions.

Of the 1,500 lots in a live-only auction, more than 500 May be physically listed, with pictures and descriptions. 1500 lots online auction (not including combination lots) 2-3-5-6 images per lot (10,000 photos?)Coupled with a more detailed description (size, make, color, weight, serial number, model, condition, any damage, etc.)- or at least preferably have – gives those who haven’t seen a lot in person the confidence to bid.

One online auctioneer recently said commission rates had reached nearly 50 percent to pay for software, extra staff and support time. Inventory, photography, description, etc. Given the inventory he described to us, many auctioneers will charge less for the same property sold on site, and may reduce revenue.

If inventory is sold for $100,000 at a 25% commission, how much would it take to sell at a 50% commission to net the seller the same amount of money? Simple calculation :$100,000*.75/. 50 is $150,000. Our live auction sellers make $75,000, and our live auctioneers make $25,000; We only sell online for $75,000 for the seller and $75,000 for the auctioneer – but only if he sells for 50% more…Even so, the seller does the same thing.

What if the online auction had grossed $130,000 instead of $100,000? Sellers of the live auction netted $75,000, while sellers of the online-only auction netted $65,000. Here, live auctioneers make $25,000 and online auctioneers only make $65,000.

Of course, auctioneers also receive “gross” commissions and fees, which means they net less. There is no doubt that online auctions cost more to produce than live auctions in almost all cases, so online auctioneers need to charge more.

That’s the question: Will the online-only auction revenue be enough to make up for the higher commissions? If they don’t, and those auctioneers/agents charge higher commissions, maybe they just make more pennies for the auctioneers and the sellers make the same or less?

Of all the comments about the merits of online-only auctions, most seem to be about gross proceeds, with some mentioning that auctioneers make more in their so-called “pajamas.” My question is: Is the seller making good money? Will the net-to-seller be enough?

There may be more questions than answers here. However, auctioneers should always strive to elevate sellers above their own status. Moreover, it has nothing to do with gross proceeds or the auctioneer’s commission— This is about the net seller and fully resolving the seller’s problem.