The new world of Internet live bidding

On Dec. 31, 2008, eBay pulled the plug on its Live Auctions division. Seven months earlier, eBay had notified its Live Auction marketing partners that the shutdown was coming. The announcement sent shockwaves throughout the auction industry. Many, if not most, fine art auction houses had become very comfortable with Internet live bidding and had come to rely upon both the service and eBay’s enormous volume of global traffic as a means of attracting bidders to their sales.

With eBay Live out of the picture, the few firms that had been working in tandem with eBay Live as authorized eBay Live Auctions facilitators – including – were left with the challenge of steering Internet live bidding into the future. EBay had left some very big shoes to fill.

LiveAuctioneers’ founder and CEO, Julian R. Ellison, spoke to Antique Trader about the transition, which has not been without its rocky patches, but which now seems to be on a buoyant upward course.

Antique Trader – On Jan. 1, LiveAuctioneers essentially took up where eBay Live left off when the latter company closed down its Internet-live-bidding platform. What was involved in preparing for this changeover?

Julien R. Ellison – The first issue we addressed was that of technology and infrastructure, so we could move from purely maintaining a management system and client base of auctions houses to providing a secure platform that was robust enough to handle the number of bidders we knew would be using it. What we faced was more than just coming up with the design of a pretty applet. LiveAuctioneers has been serving the marketplace for eight years, now, and has a continually growing database of 3 million registered bidders, so we knew we had the traffic, but we had to make sure that the platform we were rolling out could actually handle upward of 400 to 500 people watching any given auction, with the same number again bidding live. The platform itself had to be stable.

AT – Did you develop the platform in-house?

JRE – Initially we chose to use a third-party company to develop a custom platform per our instructions, but during that developmental period our hand was forced, and we had to divert our efforts toward using a company that already had an existing platform.

AT – Did eBay ever tell you why they were abandoning their Live Auctions division? If not, why do you think they did it?

JRE – They never told us why they were getting out of this space, and to this day we still don’t know for sure, but we can guess that lawsuits that were pending and the likelihood of other lawsuits would have had an enormous impact on their ability to continue with their eBay Live Auctions division.

AT – What was the reaction from auctioneers when they learned that eBay was opting out of real-time Internet bidding?

JRE – A lot of auction houses were relieved in one sense but obviously also concerned because a lot of them had been able to develop their businesses very successfully using LiveAuctioneers’ and eBay Live Auctions’ collaborative services. With the move into a down economy, there was an uncertainty about whether or not auction houses would be able to enjoy the same level of representation worldwide by using a stand-alone LiveAuctioneers platform, without eBay. But LiveAuctioneers has been very pleased with the level of traffic and participation so far. The average number of bidders in auctions we support has dropped only ever so slightly, and we’re seeing more, and better-qualified, bidders taking part.

AT – How many auction houses use LiveAuctioneers’ services?

JRE – As of today, we have 775 auction-house clients, and at any one time, 350 to 400 of them are interacting within their back-end accounts through LiveAuctioneers.

AT – Who are some of the better-known auction houses that use LiveAuctioneers?

JRE – David Rago’s companies, Leslie Hindman, Heritage, Cowan Auctions, Morphy’s, Bertoia’s, John Moran, Clars, Treadway, Millea Bros., Neal, Dallas Auction Gallery, Kaminski’s, Noel Barrett and many others.

AT – The period immediately following eBay Live’s shutdown must have seemed like a Twilight Zone to bidders. What measures did you and your staff take to prepare for the unexpected?

JRE – Six months before eBay left the space, we started a comprehensive multimedia campaign to inform our database of bidders of the changes that lay ahead. We put out the message through various Web pages on LiveAuctioneers, the bidder registration form, through our search engine and newsletters, and through our sister company’s (QM4G Media) Web sites. Additionally, we’ve had ongoing campaigns to attract quality buyers to the site through Internet and print media.

AT – How does the applet – the window that opens to allow bidders to lodge bids and monitor an auction as it is taking place – compare to the one that eBay Live provided?

JRE – The applet that we launched with on Jan. 1 was definitely stable and capable of handling the large traffic loads, but because it was fairly different to eBay Live’s applet in appearance and functionality, we knew from the get-go that there would be some marketplace resistance. People are, by nature, reluctant to accept change once they’ve become comfortable with something they use regularly, and that was the case with former users of the eBay applet. But with any kind of technology, online or otherwise, the idea is to improve as one goes along, and to do this successfully, you have to listen to feedback from those who use the product. We received an enormous amount of constructive criticism regarding the first applet, both from auction houses and bidders, and that input is what we are using in creating our phase-II applet. We want to deliver exactly what our customers have asked for. The applet will launch in early April and will include the most-requested features plus audio/video, which allows bidders to watch and listen to what’s actually going on at the live auction. It adds another dimension of reality to the bidding experience.

AT – In the beginning, when LiveAuctioneers and eBay Live were first providing Internet live-bidding services to auction houses, some auctioneers were quite vocal in their opposition to it, but one by one they changed their minds and, in fact, became reliant upon it. What made them change their minds?

JRE – It didn’t take long for those who resisted to see that they were being left out of the picture while their competitors’ sales were grabbing market share through Internet bidding. But another significant reason was the input from potential consignors, who would ask before consigning if an auctioneer included online bidding, and if so, through which company. In today’s marketplace, if an auction house is not using online bidding, it simply cannot compete. Surprisingly, there are still some that do not, but one by one, they are going to have to get on board with it. It’s sink or swim.

AT – Infamously, eBay Live had problems with both their applet and servers crashing, and there were many auction houses that severely criticized eBay’s absence of technical support during those incidents. Now that LiveAuctioneers is in the driver’s seat, how have you addressed potential problems of this type?

JRE – I think the reason we’ve remained the leader in our space is because we’ve built our company on unfailingly reliable, 24/7 customer service. Our support team came to the rescue time and again when there were technical problems with eBay Live, even though the technical issues causing the meltdowns weren’t related in any way to LiveAuctioneers. We would never, ever leave our customers stranded and defenseless, no matter what. There’s always someone available at the other end of the phone, and now we’ve added online support with ‘Live Chat,’ which means both bidders and auction houses can reach the support team instantly with any concerns they might have.

AT – These days everyone’s thinking about and how to economize. There are basically two or three companies providing Internet live bidding, each with their own methods and protocols, but how do buyer’s premiums compare? Would someone bidding on an item through LiveAuctioneers pay the same buyer’s premium if they bid through one of your competitors, or is this an industry secret?

JRE – No, it’s no secret at all. We’re quite happy to let people know that we aggressively undercut our competition in order to attract new bidders for our auction-house clients. Auction houses that use LiveAuctioneers pay what really amounts to a catalog-advertising fee, but they pay no postsale commission, as they did with eBay Live. On the other end of the transaction, an online buyer using LiveAuctioneers will pay, on average, an additional 1.5 percent fee, but if the very same item were purchased through one of our competitors, the fee would be as much as 5 percent – same item, but considerably more expensive if purchased online through our competition. Because our costs are lower, LiveAuctioneers bidders have more buying power, which in turn helps our auction houses to be more competitive. To me, that is what a marketplace partnership is all about.

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