Physical auctions are here to stay

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MacDonaldKevin MacDonald
WHOLESALE COLUMNIST

For several years, the world of automobile remarketing has changed almost as often as the seasons. I can’t remember the last time we had an extended sense of status quo as it seems like every month brings something new that challenges your command of how best to provide a return on investment.

One major move of late has been the massive emphasis on smartphone apps for remarketing purposes. TradeRev, XM trade, eBlock, Ottolane, Wholesale Express, Instant Auction and more have all been doing their best at taking a piece of the pie away from each other; in actuality, I feel they have been taking bigger dents out of your nearest auction facility.

They all offer interesting ways of disposing of inventory while making it easy for folks like me to buy something while watching Survivor with my wife on my living room couch.

I tend to be a big supporter of these platforms since they all provide different eyes on my inventory at different times. They often make it very easy to leverage one formats offers against the other in a short period of time.

But, as much as these apps want us to believe they can replace the average antiquated auction facility, I think they are kidding themselves.

As remarkable as the app may be, it still requires proper data entry, photos, and full disclosure. Despite the simplicity in theory, a proper upload of a unit on any site takes 30 minutes or more depending on how complicated the disclosures are.

You also need to take the time and research the proper value of the trade to make an appropriate call at the end of the auction/appraisal.

Roughly 30 minutes on one car when the average used-car manager needs to dispose of 15 to 20 a week adds up to a lot of time. This time is taken away from retail operations, or it gets in the way of weekend family time.

Most dealers don’t have professional wholesale managers and as such a used-car manager is typically the one tasked with handling the workload.

Nobody is saying that there isn’t a place for this technology, quite the contrary. I think that if you don’t use all of the tools at your disposal you are losing money. But the simple truth is that the brick-and-mortar advantage of your nearest auction fills the void for those that cannot compete with the clock.

Even the best app cannot guarantee an audience for your inventory at any given time. Auctions tend to have hundreds if not thousands in the lanes or online. If your inventory is presented well and given a proper price you are virtually guaranteed an offer.

The other more obvious factor is if you take all of these apps together, you will not find a single parking space between them. I doubt the average dealer appreciates the space requirements for disposal of 70 to 100-units a month.

They need that space for retail inventory, customer parking or even staff. Those spots are worth a small fortune to dealers who measure their return based on square footage.

There is plenty of room in this business for tech-based competition. I’m even sure it helps keep some balance on values between auctions as these new programs have kept everyone on their toes. Plus, increased competition will always get you the most for your inventory.

Any prediction that they spell the end of the traditional brick-and-mortar auction sites is greatly exaggerated.

Kevin MacDonald has over 15 years experience in direct wholesale remarketing throughout North America. He can be reached at smokindeal@rogers.com.