The world is changing: Some thoughts on the auction industry

Few people know that the mission statement for which Jerry Maguire was so famously fired, was actually based on a real document, written in 1991 by Jeffrey Katzenberg, called “The world is changing: Some thoughts on our business”. Katzenberg was working for Disney at the time and wrote the memo in the realisation that the business was losing focus from its core philosophy. It is no surprise that just 3 years later he left to start up Dreamworks with Steven Spielberg and David Geffen.

Whilst Katzenberg was writing directly about Disney, its position within Hollywood, and the way in which films ought to be made, many of the sentiments translate across industries, including the auction market.

The Problem

The number of residential properties sold by auction has traditionally nestled in at around 2% of the total number of residential properties sold in the UK. Rather worryingly however, in the last two years, this percentage has decreased 1.7%, despite an increase in the total number of properties sold in the UK.

There is something worrying about this statistic. In a world where speed, convenience and transparency is ever more essential to customers, auctions should be a more widely used method of sale.

A Solution

Give vendors more flexibility

Vendors shouldn’t have to base their decision to sell on when the next auction is. They should have the freedom to sell when they want or when they need to. The financial strategy of an auction house, by default does not allow for much flexibility; it is more cost effective to sell properties in bulk on one day than individually. Fundamentally, this strategy is designed with the convenience of auction house in mind.

To better serve the needs of the customer, auction houses should be able to auction a property on any day of the week. Technology allows for this to happen.

I do not suggest that technology replaces the auction room. On the contrary, technology should be used to compliment the auction house’s existing services. The room is a tried and tested way to sell properties; it should not be replaced. An online property auction platform simply adds another tool to the belt and provides vendors with additional flexibility that they otherwise would not have had.

Buyers are ready

Rightmove and Zoopla changed the way buyers search for properties. 80–90% of buyers start their search online. It makes sense that they can convert that online search into an online purchase.

Much has been made of online innovation and how “proptech” is changing the way that the property industry works. We have seen online estate agents emerge and raise huge amounts of money; the marketing power of these online estate agents is slowly changing customer attitude. The novelty of an online estate agent has already disappeared and it’s slowly being seen as “normal”.

Buyers are already comfortable with the idea of online auctions. You just have to look at eBay for proof. You only have to look at the buyers in an auction room and most of them are either on their smart phone or iPad. The willingness and ability is there for all to see.

Harness more data

The cumulative wealth of all individuals in an auction room is likely to be very high. There is a huge amount of data in the room, but to date no-one has cultivated it. An online auction platform is able to harvest this data and provide information to the auction house, so that no buyer leaves empty handed.

Of course, some buyers will like the thrill of the live room. There is an intensity and a community that cannot be recreated online. For other buyers, where convenience is more important however, technology is the answer.

“Success requires access”

This was one of Katzenberg’s solutions to Disney’s problem. He was referring specifically to the ability for all individuals to be able to contribute towards the success of a company. He also encourages everyone to keep all doors open so that creativity and innovation can be fostered.

In much the same way, the door to online auctions should not be closed. Instead, online auctions should be embraced as an innovative way to enhance a tried, tested and traditional way of selling property.

“This is a special business to be in. And people on the outside sense it.…let’s not be afraid to admit to others and to ourselves, up front and with passion… that we love what we do.”

Bamboo Auctions builds branded online auction platforms for auction houses, allowing buyers and sellers to exchange online, immediately at the end of a specified time period. For more information or to arrange an online demonstration call 0330 088 9659 or email hello@bambooauctions.com