In the auction business, the elements of success include quality goods and a reputation to match, followed by a packed house each time the auctioneer starts the bidding war.
For Vancouver-based Ritchie Bros., 40 years in the industrial equipment auction business has delivered a solid name in
the business. So when the company decided to expand its reach and offer auctions online to customers around the world, it knew what was at stake.
“”We had some strict rules we wanted to operate under. We weren’t willing to risk the customer experience. We had an existing business model and our goal was to find a way to use technology to
enhance that model, not replace it,”” says Bob Armstrong, vice-president of finance and Internet services with Ritchie Bros.
The company facilitates the auction of heavy indus-trial equipment for the agricultural, construction, forestry and other industries.
Last year Ritchie Bros. held auctions in eight different countries. In order to participate bidders had to be at the auction in person or place a proxy.
At the time the company began investigating its online options, the dot-com frenzy was underway and E-bay was gaining traction. There was pressure to take a look at that model says Armstrong, but it wasn’t appealing. “”Ours is very much a kick the tires business. The stuff we sell can’t really
be sold like collectibles or commodities. We had to build a system that allowed people to have all the same benefits and experience of our live, unreserved auctions but not be there.””
As Internet technology continued to improve Ritchie Bros. concluded it was the best route to go. “”It was the cleanest technology — scalable, universally available,”” he says.
Launched in March 2002, in one year the auction house sold about $100 million in equipment to online bidders. To put that in perspective, last year Ritchie Bros. sales totalled US$1.4 billion worldwide.
The highest value piece of equipment sold so far was a $775,000 ashphalt plant sold to an online bidder. A man online in California bought it at an auction in Texas beating out live bidders.
“”Development of our live, real-time bidding service has definitely enhanced the ability for bidders to participate in our auctions,”” says Armstrong.
It also appeals to a generation that has embraced e-commerce as a means to get the job done quickly says John Donaldson, business unit executive for IBM Websphere in Canada.
“”Younger buyers have no patience for traditional means and they want to get in fast, get quick access to information, make their purchase and get it delivered,”” says Donaldson.
While the auction application is separate from the site, the registration and security controls are handled through the Web site.
Currently, Internet buyers represent 10 to 20 per cent of the registered bidders at Ritchie Bros. sales and they bid on up to 40 per cent of the lots. They also end up the buyer or runner up on 10 to 15 per cent of all sales.
The investment was “”less than a million in development”” but if it wasn’t producing results, the online option wouldn’t be there.
“”If the Internet gets unplugged the auction carries on,”” said Armstrong.