Online Auctions: Are eBay and LiveAuctioneers a good fit?

On May 8, eBay and LiveAuctioneers.com announced an online auction partnership to “bring unique fine art, antiques and collectibles inventory to millions of buyers.”
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Like baseball great Yogi Berra said, “It’s Deja vu all over again.” On May 8 (2019) eBay and LiveAuctioneers.com announced a cooperative effort to “bring unique fine art, antiques and collectibles inventory to millions of buyers.” [https://bit.ly/2X6NeFx]

At least that’s the plan.

Of course, eBay has gone down this path before: They’ve previously partnered with auction houses Sotheby’s, Invaluable, and Phillips, and mega-retailers Target, Nieman Marcus, Barnes and Noble, and others. Those efforts produced mixed results, and many of those partnerships have been discontinued.

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Will the LiveAuctioneers partnership prove to be any better, or will it, too, bite the dust?

At first glance, the LiveAuctioneers (LA) and eBay partnership seems to make sense. LiveAuctioneers has about 5,000 member-auctioneers that run both live and timed auctions. Unlike eBay, whose auctions open individual lots to bidding for up to a week, a timed LA auction consists of multiple lots, as in a live auction. Photos of the lots scroll across one’s screen, and competitive bidding is accomplished one item at a time. Items and descriptions can be previewed prior to an auction. When an item no longer draws a bid, it is declared sold to the highest bidder (if the reserve is met) and the next item appears.

Under the new eBay agreement, vetted LA auctioneers can opt to have their unsold lots posted to eBay as Buy-It-Now (BIN), Make-An-Offer listings. LiveAuctioneers transfers the listings as part of their service, which individual auctioneers pay for in advance. Auctioneers pay no listing fees to eBay, but they pay eBay a commission when their items sell.

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Here’s what is supposed to happen under the new agreement:

  • LA auctioneers have their merchandise exposed to a much larger audience, resulting in increased revenue and happier consignors.
  • eBay has a steady supply of “unique fine art, antiques, and collectibles.” Their press release states: “visitors will have access to a select inventory of fixed-price art and high-quality collectibles that previously would have been available only via the live-auction route, with anticipated prices ranging from $50 for a vintage toy to $200,000 for an original Impressionist artwork.” (ibid)

Here’s what has happened so far. LA listings began to appear Feb. 1, 2019; and as of June 10, 2019:

  • Total number of listings: 2,421
  • The median price of items offered is in the $100 range (roughly half the items are under $100)
  • Completed listings, past 30 days: 3
  • Items sold in past 30 days: 3
  • Gross revenue, items sold in past 30 days: $675.
  • Feedback rating: 12, 100% positive 5-star. This speaks well for the sellers and the LA vetting process.

So, in the past 30 days slightly over 1% of the LA listings sold. I have not totaled the dollar value of all the LA listings; but using my median price I estimate that the listings total just over $200,000. If that’s true, $675 represents about 4% of the total dollar value.

Admittedly, LiveAuctioneers is still vetting auctioneers for the program, and perhaps they haven’t brought their full force to bear. What I find troubling is the ratio of sales to listings. Regardless of the number of listings, sales must be made, or auctioneers will opt out of the process. More listings may result in more sales, but it’s the ratio that’s important. If an auctioneer held a live auction and only sold 1% of the lots offered, he would go out of business in a heartbeat. So far, neither eBay nor LiveAuctioneers comes close to accomplishing what they had hoped to accomplish. I blame the poor results on an innate disconnect between eBay and LiveAuctioneers.

In the past decade, eBay has become increasingly buyer centric. Sellers are encouraged to offer liberal return policies and free shipping, and (other considerations notwithstanding) are rewarded for doing so with more favorable search placement. These policies create built-in obstacles for LA auctioneers, since LA auctioneers charge for shipping and don’t take returns.

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*Photo courtesy Mortgage Orb

In the offline auctioneer world, lots are sold “as-is, where is,” without any warranty. Nothing can be returned once it has been purchased. Also, a buyer’s premium is typically added to a lot’s hammer price. The online portals of “traditional auctioneers” (LiveAuctioneers, Heritage, Juliens, etc.) typically add a buyer’s premium of up to 25% of the hammer price plus other fees.

LA auctioneers can’t charge eBay buyers a premium, which puts them in a tight spot vis-a-vis pricing. The key to running a successful auction company is a steady supply of quality antiques and collectibles. Consequently, auction companies sometimes cut their selling commission in order to get quality consignments (in some cases, down to zero percent). Operating revenue must come from somewhere, so it is passed on to the buyers in the form of premiums and fees. (Behind the Gavel readers are familiar with my opposition to buyer’s premiums; see my November 14, 2014 column titled “Buyer’s Premiums: The price of the auction business” https://bit.ly/2F3Yc4q.)

LiveAuctioneers auctioneers selling on eBay must therefore keep their prices high in order to pay eBay and their consignors and still have enough left over to pay their expenses and make a profit.

Why would eBay buyers, who are accustomed to perks like competitive pricing, free shipping, and liberal returns accept LiveAuctioneers restrictions when they have so many other buying options available? They don’t, hence the sales-to-listings ratio of 1%. LA sellers can’t compete with eBay sellers based on return policies, price, or variety of selling options.

In my opinion, LiveAuctioneers and eBay are mis-matched, and the partnership is doomed. I hope I’m wrong; the intentions of both parties are worthy. Frankly, I don’t see the point in LA auctioneers offering their unsold lots to eBay, since LiveAuctioneers offers the same BIN option on their own website. Yes, eBay has more traffic, but has that translated into higher sales for LA sellers? No, and it’s not likely to.

A better course of action for LA sellers would be to list their unsold lots directly to an eBay or Shopify store of their own and bypass the eBay-LiveAuctioneers partnership altogether. By doing so, sellers may pay less commission and keep more of their money.

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