Article courtesy of African Mining Brief and written by Jimmy Swira
Covid-19 has forever changed the traditional live auction model, forcing a “new normal” digital standard on the industry if it wants to remain profitable and relevant.
There will always be a place for live auctions, but every auction company must have secure, industry-tailored digital platforms that reach larger audiences and they must invest in the technology now if they have not already done so.
This is the opinion of renowned property auctioneer, Joff van Reenen, who was speaking at the South African Institute of Auctioneers (SAIA) first-ever online webinar to discuss the implications of Covid-19 on the auctioneering industry. Rather than hampering auctions in some sectors, the move to online platforms has proven more effective with larger and more diverse audiences than on-the-spot auctions.
“Covid-19 has done what our company has been trying to achieve for ten years – it forced people to try virtual auctions. When we quiz our audiences now, not one exclusively wants to move back to the old way of doing things. Online auction platforms have become the perfect place to dispose of certain items in certain markets and we believe that this part of the auctioneering industry is set to grow,” said Van Reenen.
He advised auctioneers who have not yet adopted online technologies to do so immediately and become part of the future growth of the industry. As distressed sales as a result of the pandemic’s fallout become more common, the need for more auctions will increase in the months to come.
Reality check
This sentiment was shared by SAIA president, John Cowing, adding that the industry had received a rude awakening when lockdown prohibitions prevented physical gatherings and rendered onsite auctions illegal. Although online auctions have been around for many years, the Covid-19 pandemic has popularised this type of auction.
“As with everything there are pros and cons that come with this type of auction. The most important advantage is that it takes auctions to the people and has the potential to attract far larger audiences. and bigger audiences are one of the pros. It also improves reporting and administration of auctions as all proceedings should be recorded.
“Online platforms also allow better marketing of assets, as photos and video, or live feeds can be used to view items and can be viewed at the potential buyers’ leisure. However, there are also disadvantages, such as the need to do much more work upfront to load information and get it online. It also requires up-to-date IT infrastructure and a reliable internet connection and backup connections in the event of failures.
“Another consideration is the ability of the target audience to access technology and as a result the auctions should always be run with proxy lines such as telephone or fax lines for those who may not be able to connect,” says Cowing.
Trust concerns
Fellow SAIA board member Gift Ngwenya said that online auctions may not be able to replace all auctions though, as many bidders may still want to see and investigate their purchases before making final bids and although high quality photographs and videos may go a long way to meeting these requirements, some bidders may not fully trust online portals.
“With post-Covid-19 hardships ahead, we believe that the vehicle market will see a big move away from new vehicles and even the second-hand market may be severely affected at the upper end. This will spell good news for the auction industry and there will even be a big swing to more affordable vehicles, salvage and even used parts.
“As we enter these uncertain times it is important to keep innovating, to stay positive and give customers what they want and need. We will need to keep listening to the market,” Ngwenya says.
Gut instincts
Livestock expert, Kwanele Boltina agreed with this sentiment and said that different methods may be required for different purposes. Although agricultural auctions were allowed to continue during lockdown, the sector also needed to innovate and online auctions did grow. However, there are many issues that buyers need to assess and not all can be done online. “For example, the stance, health and fertility of animals needs to be gauged on the day and may be difficult without seeing and sensing the animal first-hand.
“It is evolving and there are still stumbling blocks that need to be overcome, not least of which is the fact that not all farmers are tech-savvy and connections in rural areas are not always reliable,” Boltina added.
Cowing concluded that the market is in for some major changes. During and after the Covid-19 pandemic however, there would always be a requirement for professional and trustworthy auctioneers and that SAIA members were up to the challenge.