There are approximately 350 auction companies in the U.S., and many of them offer online auctions as a service to their customers. Many of these auctions focus primarily on the automotive side, but more and more are finding a foothold within the powersports segment. Whether you’re buying or selling, or both, online auctions have become a necessary part of the powersports dealer’s arsenal of tools to help drive profits to the bottom line.
Probably the biggest, most well-known player in the wholesale powersport auction segment is National Powersport Auctions (NPA). NPA has been around since 1989 and is the largest remarketer of pre-owned motorcycles, ATVs and PWCs in the U.S.
“Today, we offer 100 percent of our units online,” says NPA partner and executive vice president Justyn Amstutz. “Anything that runs in a live auction is offered online through our live simulcasts. We are converting about 75 to 76 percent of everything we sell to the Internet. That’s not including the virtual sales we do for the OEMs like Yamaha, Kawasaki, Suzuki and Ducati. We do a private label OEM factory online sale for these manufacturers and it’s 100 percent online.”
Auction experts say that the powersport and motorcycle segment has the highest conversion ratios to online sales compared with other segments. One reason for this may be due to the overall growth of retail online properties and e-commerce in the last decade — many people have simply become more comfortable purchasing products online.
“The reason that I think there’s such a huge adaptation, first of all you can thank Amazon.com, there are some big e-commerce companies who have built buyer confidence, and it translates here,” says Karen Braddy, Manheim Specialty Auctions. “I think that powersports are a little bit of a lower price point unit so dealers are more comfortable buying a little lower priced unit online.”
Braddy adds that on the automotive side, Manheim typically converts around 19 or 20 percent online, but for motorcycle and powersports auctions they did 49 percent last year.
NPA’s Amstutz says that so far this year, about 85 percent of its sales have been converted online. “With the economic downturn that we’ve had, people aren’t traveling as much. Dealers today want to stay at the dealership and run their business and also still acquire pre-owned product.”
The online auction environment has evolved, according to industry experts. Most now include a vehicle exchange or eBay-like listings for wholesalers to post on an eBay site. In many of the wholesale auctions such as NPA and others, the inventory is inspected so that dealers feel comfortable purchasing the product online. You can also pay a third party to do this for you on eBay.
“Everyone is working toward the model where you can buy sight unseen,” explains Steve Kendrick of IronPlanet Motors. “We saw saw a niche opportunity with powersports where we could actually try to bridge the gap going from a wholesale-to-wholesale auction to a wholesale-to-retail auction. At IronPlanet 30 percent of our product sells outside of the U.S. We are trying to do something a little different in the market. The struggle with dealers is channel conflict with other dealers. On a wholesale-to-wholesale level everyone feels comfortable dealing with each other.”
Condition Reports
Auction companies say the reliability of condition reports put dealers at ease. “Our condition report system is second-to-none,” says NPA’s Amstutz. “We do over a 100-point inspection on every unit. The integrity and transparency of this system along with the consistency of the condition report is what allows us to convert so many units online. I’d say most dealers are very comfortable buying online now judging by the numbers in the last few months.”
Auction experts say that the condition report is one of the keys to buying with confidence online. “Each one of our condition report writers is certified, and they come from Motorcycle Mechanics Institute or they’re certified through one of the OEMs in powersports,” says Amstutz. “Not only are there hundreds of points of inspection in the condition report, but the report writers take a bare minimum of eight high resolution photos so that not only can the dealer read the condition report, but they can drill down to a photo that shows the scratch or dent or the bad or good condition of that particular unit.”
Manheim’s Braddy echoes the sentiment that dealers need to be comfortable with the information they receive online.” I think that our condition reports help ease the buyer’s mind that what they’re buying is what it is,” she says. “It shows through our online sales percentages that about 50 percent of what we offer in this category is sold online.”
Simulcast
Most of the auction companies offer some type of simulcast (online streaming) version of their live auctions.
“We do have live physical auctions, where people can come preview, touch and see the product, but we also have a simultaneous online auction where buyers can bid in real-time,” says Dan Oscarson of Insurance Auto Auctions. “You can pre-bid ahead of the live auction or bid in real-time as the auction is happening.”
At IAA’s simulcast auctions, the auctioneer is calling bids on the company’s powersports units in real-time literally all over the world.
Online Options
Many providers offer electronic auctions (eBay-style), special auctions and dealer exchanges that feature inventory that was not sold through simulcast or a live auction.
“We rolled something out several years ago that has gained tremendous traction in the last five years called Harley-Davidson Dealer Exchange,” says NPA’s Amstutz. “Its methodology is three-fold: it allows Harley-Davidson to put non-current or dealer inventory on the website; it allows their remarketing team to put any consumer repossessions (Harley credit repos) on the website; and it allows the Harley-Davidson authorized dealer to put their trades on the website, meaning if it’s a Harley unit it goes on Harley-Davidson Dealer Exchange; they never have to ship the unit from their store, they can auto-load it from their store onto our website. If it’s a metric unit, a Japanese unit or Italian unit that they’ve taken in on trade, it’ll actually go right onto our eSale platform.”
Manheim’s Braddy says after live auctions they put all of their units up on an event sale that happens every Thursday, called Thursday Thunder. “Our motorcycle and powersports sale is the third Thursday of every month. Anything that ran at all of our nine locations and didn’t sell is offered again online through what we call Online Vehicle Exchange (OVE).
Braddy says dealers can look at the offerings online through OVE, which has a “buy it now” feature. “If you don’t get something in the live lane via simulcast, and you don’t get anything in the once a month Thursday Thunder motorcycle OVE event, you can also search on OVE and bid or buy it now. That can be motorcycles from anywhere in the Manheim inventory. It doesn’t have to be a branded sale. And it can be inventory from any motorcycle dealer’s inventory as well. So any dealer can use it to post their inventory for wholesale any time that they want. You can be selling anytime, and you can be buying 24/7.”
Amstutz says NPA’s eSales are more of an eBay-style format. “It’s a live competitive bidding process, but there’s no auctioneer. It’s run through a click-bid management system. And the NPA eSale, we have a very similar offering to what you would see in a live auction except it runs on an electronic platform 24/7/365. It can be viewed on our website (www.npauctions.com) at any time by any registered NPA dealer.”
IronPlanet’s Kendrick says they can post six auctions at one time and are not constricted by physical lanes. “For us, what we’ll do is we’ll have six or eight units on a block, what I call an electronic block, at one time in six minute increments.”
People go to auctions to network and rub elbows and so on, so experts say online auctions probably won’t completely replace physical auctions. It’s just another option that dealers can use. If you’re a remote dealer in Minnesota, for instance, and there aren’t any auctions that are within a reasonable distance for transport, then you’re kind of stuck unless you have other options such as online.
Software Solutions: Simply Sell Unwanted Inventory
For powersports dealers that post their inventory on eBay, a company called Auction123 can help you integrate your inventory.
“The benefit of using us versus going through eBay is the presentation and number of photos, integration of YouTube videos, and we provide dealers with bidder contact information for each bid that they receive,” says Auction123’s Tracy Roche.
If a motorcycle or ATV gets 50 bids, Auction123 can provide the dealer with the name, telephone number, email address and address of each bidder. Dealers can log into their system and utilize Auction123’s tools for their eBay ads. It’s more of a management and online marketing system for handling eBay auctions.
“We’re a tool that can be used to enhance a dealer’s online presence and help them manage their Internet marketing efforts,” explains Roche. “We pull inventory from dealer’s DMS, receive a feed of the inventory, or the dealer manually builds the inventory into our system. We are an Inventory management and online marketing solution. Dealers can use our tools to manage all their online activities from one centralized location. What we try to do is create a seamless integration with eBay for Powersports dealers. Once the inventory is in the dealer’s Auction123 dashboard, they can enhance it by adding photos, descriptions, video, etc. We then serve as a jumping off point for their online advertising such as the dealer’s website, eBay, CL, Facebook, CycleTrader, etc.”
Roche says to think of their system more as the starting point for all online advertising. “Dealers need to update their vehicle records wherever they are advertising, and Auction123 eliminates the need to navigate to multiple locations to make these changes. We get the raw data from the DMS, they enhance it in Auction123, and we send the data where the dealer wants – their website, CycleTrader, Facebook, etc. Or, the dealer cherry picks the units they want to send to eBay and CL.”
Dealers need to treat each online prospect like someone who just walked into their showroom, says Roche. “Don’t treat them like some random person who’s calling you. Most people who walk into your showroom are probably not going to buy that day, and maybe they won’t even buy that month, but they could buy something in the next couple of months. Every online lead should be treated that way. If you get an eBay prospect who commits to making a bid, that’s a serious buyer. We don’t look at eBay as 100-percent a selling tool, although it is mainly that, it’s also a huge lead generator if you know how to follow up on each person who bids on your bikes. You could potentially create a relationship with someone who’s ready to buy from you in, say, three to five months.”
Roche says their system has features that allow dealers to send a full vehicle presentation to a single email address. So when you get on the phone with a prospect, you can send him something that is more in his price range. Roche recommends dealers work their online leads and build a relationship with their online prospects as much as possible.
