Selling used heavy equipment online provides a financially viable opportunity for hire and rental companies, contractors and liquidators to dispose of heavy equipment assets.
Traditionally, equipment owners have had limited options when it comes to selling used equipment: trade it in to a dealer or list it in the classifieds.
Like buying a new car, many owners believe they will get the best value by trading used equipment in to a dealer when they purchase new equipment.
“Although this might provide leverage for price negotiation on the new equipment,” explains McPherson, “It doesn’t always yield the best price for the used item.”
To remain viable, dealers must create acceptable profit margins on each piece of equipment, making it difficult for owners to get premium prices for their used equipment. Geography can also limit owners’ choices, as many are unwilling to get competing offers from dealers in other locations.
To increase resale value, many owners are now trying to sell their used equipment through classified advertisements. Sometimes this approach yields a higher resale value for the owner. However, it can often be a time-consuming process, as sellers must be available to answer questions and handle prospective buyers.
Advantages of online auctions
“Online auctions offer a valuable new marketplace in which to sell construction equipment,” says McPherson.
Auctions can provide a hassle-free, profitable sales channel as they are not tied to a specific location or region and can reach a global audience of interested buyers. As a broader audience of buyers compete to “win” items, owners are able to realise better prices for their used equipment.
Some online auctions also take on traditional seller responsibilities such as fielding calls and handling questions from prospective buyers. In addition to listing the equipment and necessary information, online auctions can actively market items to better connect buyers and sellers.
By monitoring website traffic, online auctions can create a strategy to increase the number of visitors to certain items. By using print ads, HTML e-mails, phone calls and other tactics, some online auction companies even allow bids to be placed before the auction begins.
”Online auctions are very convenient as sellers are able to list their equipment from their workplace or home,” explains McPherson.
Once the equipment is consigned, the seller has little to no responsibility to find interested buyers, and often does not even need to transport the equipment. Online auctions allow items to remain at the seller’s location. Once the item is purchased, transportation can be arranged to pick up the item directly from the seller.
What to look for in an online auction
Detailed inspection reports provide an invaluable service to online auction participants. Because sellers cannot physically show their equipment to interested buyers all over the globe, a detailed equipment inspection report on the company’s website provides a way to communicate the exact condition of the equipment.
“Auction companies that provide inspection reports ultimately generate better prices for sellers, especially when accompanied by an equipment guarantee,” states McPherson. “Anyone looking to auction equipment online should choose a company that offers both services.”
McPherson believes that a secure payment and equipment delivery process is the most significant aspect of an online auction, and crucial for both buyers and sellers.
“Sellers should look for an online auction company that can verify and guarantee payment. The best auction companies function as intermediaries between the buyer and seller, protecting both parties,”
A good example would be that once a buyer wins an item, they are required to pay the auction company directly. The auction company then notifies the seller to release the equipment. When the equipment is received by the buyer and its condition verified, the company then releases the payment to the seller. In this situation, the auction company stands behind the entire process, fairly moderating the exchange.
How to sell equipment online
Before selecting which online service to use when selling equipment, visit auction company websites to get an understanding of how the auction company does business. McPherson advises sellers to look for pages that clearly explain auction formats, policies and features.
“This allows sellers to place themselves in the buyers’ shoes. The site should be easy to understand and use and have a plenty of information on equipment offerings, including equipment makes and models, product categories and locations.”
The next step is to meet with an auction company representative. Many online auction companies have regional representatives who will meet with prospective sellers. In the event that it is not possible to meet in person, contact customer service to address any remaining questions.
McPherson suggests that sellers ask the representative about providing an inspection report to buyers.
“In most cases, this report increases equipment resale value. Be prepared to furnish documentation on equipment to assist in the inspection process.”
Next, arrange for the equipment to be listed online. The listing agreement legally recognizes the right of the auction company to sell the item(s) and obligates the seller to deliver the equipment.
It’s also important to understand all options, says McPherson.
“Sellers may be able to establish the price at which an auction opens, or set a “win it now” or reserve price, depending on auction type and relevant policies.”
Setting a reserve price allows sellers to retain equipment that does not reach a pre-specified bidding amount. “Win it now” prices designate the amount buyers are required to pay to end the auction early by purchasing the product immediately.
Finally, if not already completed, register an online account with the auction company. Registering an account often gives sellers access to important auction information, messages, special offers and other features.
IronPlanet Australia is currently sourcing stock for their first auction on 14 February 2008. If you would like to list your stock, contact Graeme McPherson at [email protected]