How do Auction Houses get such good stock?
Helen Parker is Founder and Chief Exec of Bid on This, who aim to bring the world of auction houses to everyone, through their online auction platform. Helen is repeatedly asked “How can auction houses can afford to sell quality products at such a good price?”. Here’s what Helen has to say:
How do Auction Houses get such good stock?
The quick answer is because they aren’t limited by price at the point of purchase. But that’s obviously a bit simplistic… in actual fact Auction Houses get their stock from a number of places, and all of those heavily influence what can be sold.
For those not deeply involved in the world of auction houses – it’s probably worth first debunking one of the big myths of auction stock. The majority of the number of goods sold at auction are NOT antiques and high value paintings! That might be more true of the money made, as obviously highly sought after collectable items get the highest price by nature, but on a day-to-day basis 1000s of items are sold by auction houses which fetch much lower value – it’s just those aren’t the ones talked about in the news stories.
So, where do auction houses get their goods to sell? From a number of places, as diverse as they are exciting! The easiest thing to do is run through the top 3 to give an impression of how the auction market works….
House Clearances and Liquidated Businesses
We all have an image in our heads of Antiques Roadshow and people gasping as Aunty Flo’s vase is valued at £2,000 when they only found it in the attic last week. This is why auction houses clear houses and business’ – these goods are generally great value for everyone involved with selling, because they aren’t influenced by a purchase price.
They take the goods at low cost, return the sale price to whoever has commissioned the sale (who generally has little idea of what it is worth), take a fee from the seller, and a fee from the buyer. It doesn’t take much to see that works for everyone – the seller gets the benefit of the expertise, the auction house gets nice stock with no purchase, and the buyer gets what they see at a great price.
An added benefit is when you think there may be some items of value but don’t know which they might be, an auction give the opportunity for that one item of value to reach a much greater than expected price.
Overstock and Returns
After businesses such as John Lewis, Tesco, Amazon and Next have sold through their bricks and mortar stores and their own websites – they have 2 problems left. Stock left over at the end of the season which needs to be cleared for new goods to be sold… and customer returns which are often too time consuming to sort through.
Most businesses will sensibly give this stock a write-down value rather than put energy into flogging it – and also don’t want to sell at this heavy discount through their own stores or websites as it impacts the value of their brand. So they clear this – and often the easiest way to do this with the minimum fuss is through auction houses. Again the goods aren’t heavily influenced by a price point and can therefore be offered at a much lower price.
Buying through Expertise
Auctioneers are generally experts, they’re skilled at agreeing the right price for goods, they understand how the market works and what stock is likely to sell at, and ultimately they know what their buyers want, what industry they are in, and what price people will buy at either for personal purchases or to make a profit selling on.
This world has changed significantly, expanded from the pure antique/housing/livestock trade to include anything from mobiles, to electronics to small domestic appliances, to toys… and the list goes on.
Their buyers have also changed from the traditional trader to include small business’ or individuals taking advantage of selling on eBay/Amazon/Etsy/own online shops – and Auction Houses have done an incredible job of adapting to the changing markets. But they remain experts.
People and businesses love a bargain
There are many other places Auctioneers will buy and sell from, and the fundamental key to why the 700+ Auction houses in the UK continue to be a credible area of business – because they work hard to adapt and to ensure that they are involved in any area where goods that people want (however niche!) are being sold for a decent price and they continue to find new ways to reach their target market and expand their buyer list.
Oh, and people will ALWAYS continue to LOVE participating in an auction and getting a bargain… but that’s a topic for another time! It’s also the reason it’s very unlikely that eBay will close down the auction side of their business.
In the day to day grind of selling and shipping fixed price goods on eBay it’s all too easy to forget the excitement of our first purchase and the excitement of seeing that “Congratulations. You are the winning bidder” message or perhaps the first time you sold something by auction and watched the last flurry of bidding activity push the price up.