28 February 2008
One relative newcomer to the equipment auction market, IronPlanet in the US, conducts business exclusively over the Internet. The company, founded in 1999, sold US$165 million (€117 million) worth of equipment in 2006, all sourced in North America and most of it construction equipment, including access.
However, Jeff Jeter, the company's newlyappointedsenior vice president, international andnew business, told AI, “Our success proves ourmodel and the model is portable. We will be takingit international.” He said the company plans toenter Europe “some time in 2008”.
Most of the Pleasanton, CA-based company's 300000 registered bidders are in North America. That number includes customers from about 200 countries.
“Key to the business is our inspection service,” says Mr Jeter. IronPlanet has 350 inspectorswho travel into the field and assess machinecondition, including taking fluid samples. Reportsbecome part of the information package availableto bidders, and the information is fundamental toIronPlanet's 'IronClad' guarantee of condition.
Inspecting is expensive, and “Basically, westrive to inspect anything where the inspectionis providing some value to the buyer and wherethe cost to inspect does not exceed a reasonablecost to the seller for that particular piece ofequipment,” he says.
The company does other “legwork” for itsconsignors. Most significant is estimating marketvalue, and its auctions are reserved. An item upfor auction has a price below which it will not besold. Mr Jeter said the company monitors auctionactivity and actively promotes bidding to reachthat price.
Other advantages of its business model, suggested by Mr Jeter, include cost. It eliminatesthe transport and handling costs to get equipmentto physical auction. Items stay on sellers' premisesuntil sold; a buyer pays only the cost of getting hispurchase to his location.
Additionally, Mr Jeter says online auctioncompanies have lower overheads and thereforelower commission structures. Mr Jeter declined todescribe to AI the prices of IronPlanet's services.
The vast majority of its auctions are bi-weekly, “featured” ones, but it also conducts individualowner, private, and hosted (anonymously, foranother company) auctions.
Major sellers include Cat, Komatsu, and Volvo -the companies themselves, as well as their dealers- which sell trade-ins and returns. Sellers alsoinclude rental companies, and IronPlanet intendsto grow that business. “We are very interested inthe rental market,” says Mr Jeter. Current buyersare predominantly dealers and contractors.
As for the future, Mr Jeter says, “On-lineauctions don't have the geographical limitationsof a physical auction... we can sell equipmentanywhere.” The Internet seems to be shrinking theworld for auction buyers and sellers anywhere.