Auction Tips: 5 Rules for Online Marketplaces

Auction Tips: 5 Rules for Online Marketplaces

At SAE we love helping auctioneers run their business and grow their own brands, but we also realize that it may not be a practical option for everyone to make the jump to hosting their own private software. For some auction houses in the industry, another option might be joining an online marketplace. Joining a relevant marketplace can link these auction houses to pre-existing buyers and establish connections they might not have otherwise had, making it a potentially highly valuable and rewarding enterprise.

It is always wise, however, for these businesses to be prudent in their selection of a marketplace, should they choose to go that route. In a previous blog post we outlined some ways in which shared databases can potentially be misused or mishandled, creating a problem for those on both sides of the process. This need not always be the case. There are applications in which the shared database is used in a way that is mutually beneficial for all parties involved; responsible, ethically run marketplaces can be one of these. Here are our top five recommendations for those hoping to create a successful, respectable marketplace.

 

As history shows us, sometimes a marketplace is just what the auctioneer needs.

 

A historical painting of a market

 

1.) Work with auctioneers you trust.


A single rotten apple can spoil the whole bunch. That’s why it’s crucial to establish a rigorous vetting process for the auctioneers you allow to operate on your marketplace and remain proactive about weeding out those who have questionable business practices or fail to uphold their end of the bargain on any transaction. Scam sellers are out there, and reports of swindled bidders being ignored by undiscerning marketplaces are prevalent. Protect both the bidders on your marketplace and the reputations (by association) of your legitimate auctioneers by being thorough with your screening process. In the event of a bidder being taken advantage of in any way, be prepared to reach out to them immediately and find a solution. You also want to ensure that your auctioneers have strong, quality inventories, and aren’t pedaling junk within your fine establishment, either.

 

2.) Screen your bidders.


Similarly, all bidders who are allowed to do business on your marketplace should be screened so that your auctioneers know that they are dealing with legitimate, serious bidders who will come through on their commitments. If you simply grant unrestricted bidding privileges to any bidder who happens by, you run a serious risk of creating a scenario in which someone places the winning bid on a lot in bad faith, and then fails to pay up. This could very easily result in a legitimate bidder being completely pushed out of the equation, thereby ruining what would have otherwise been a valuable sale. This is your and your auctioneers’ livelihood – protect it by being able to assure them that the bidders you bring to them will always pay their dues.

 

3.) Get feedback.


Make sure you listen to your auctioneers and assure their satisfaction. The better equipped your auctioneers are to conduct smooth, uninterrupted business, the better equipped they will be to strengthen your marketplace. Maintain responsive customer service and technical support teams, and be sure to have a good, communicative relationship with any other outside teams, such as the one operating your back-end software, in order to assure that your entire system runs smoothly. A single bungled auction experience may be enough to drive some auction houses to seek other marketplaces, so be sure that you are prepared to meet any potential issues head-on and make amends.

Sites like Bidspotter are a good example of an online marketplace that is responsive to the needs of their clientele and knows the importance of establishing goodwill and trust with their auctioneers.

A screenshot of BidSpotter.com's front page

 

4.) Don’t be shady.


You want your auctioneers and sellers to know that their data and reputation is safe with you. Use an ethical back-end software company (like ourselves, if we may be so bold) that doesn’t utilize bidder data against you or your auctioneers in any way. Ultimately, your marketplace represents their business as well, and it is their right to confirm that all aspects of that business are secure, reliable, and have transactional integrity. Some auction software companies are known to use the data they have access to to directly aid outside competition, leading to what some auctioneers feel is a “short term gain, long term loss” scenario, where the benefits of using the online marketplace are ultimately outweighed by the effects of having its mutual database also utilized by larger, household-names with a nationally established presence. These behemoths then dominate the market and take business away from the smaller, more vulnerable sellers, who put in value but don’t see much of a return on it. We see this as a major violation of trust. Don’t let your auctioneers be taken advantage of, and they will repay you by continuing to build a thriving marketplace.

 

5.) Don’t compete; facilitate.


The onus is on you, the marketplace owner, as well. Don’t use your consignors’ data to compete with them. It is important to build trust with your auctioneers. Don’t take their business and connections with one hand and feed them to market-dominators with the other hand. The stronger your reputation for aiding all of your auctioneers is, the more likely you are to attract more business and achieve liquidity in your marketplace. The more effort and care you put into your sellers’ business, the more they’ll give back to you. Your goal should be to achieve a positive feedback loop where the more business your auctioneers do, the more bidders they attract, which in turn attract more auctioneers to your marketplace. To achieve this, it is vital to foster the success of the auction houses operating within your marketplace.

 


 

The Takeaway

 


 

The most important part of operating a reputable and ethical marketplace is to remember that the marketplace represents the auction houses they host, and vice versa. It is thus important for them to share similar values and business standards as each other, and to maintain an open, receptive relationship with one another.

One of the primary benefits of an auction house having a private database is the assurance of integrity it can give their bidders, but if they work with a similarly-minded, respectable marketplace with an ethical software backbone, they can have the best of both worlds.

It is possible for auctioneers to take advantage of a consolidated marketplace, and all the benefits that come with it, while also knowing that their business (and their bidders) are in good hands.

If you’re interested in finding out about how Sharp Auction Engine can help you get your own ethical marketplace running today, visit us online, contact us at help@sharpauctionengine.com, or call (256)261-3159. We’ll be happy to get you up and running.

 

 


 

Start your marketplace today or use us as your own private label platform. Whichever you decide, Sharp Auction Engine offers a free 30-day trial.

     

 

Like our article? There’s more where that came from…

 


 

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