We all knew it when they arrived, some did it quietly, and some arrived with a digital explosion.  Little did we dealers know how impactful this new, shiny object, “ONLINE AUCTIONS” would be to the everyday wholesale buyer.

What?  What do you mean I don’t have to go to the auction?  Huh?  Buy a car sight unseen from someone I don’t know?  If that ain’t crazy, it’ll do until crazy gets here!

In all seriousness, online auctions have been around our beloved car business for the better part of 20 years.  The major players, as we know, are OVE.com, Openlane, ACV Auctions, Smart Auction, Car Offer, and a host of other white label platforms to choose from.  Hertz, Enterprise, and Sixt Rent a Car all have their own websites to further expand our choices. 

OK, so we have known for a long time that there are nearly endless channels for which buyers can source inventory; but like any change, there are those that will and forever resist a disruption in their process.  That said, the Internet hasn’t gone away just yet, and may be around for just a bit longer.  So for that purpose, we may as well figure out how to adapt WITH the change.  Those that don’t have run the risk of being left in the dust.

So how do we adapt?  In the Automotive News’ 10/31/24 commentary titled “Best Practices for Online Auto Auctions- A Guide for Dealers” Phil Battista, President of Dealership Technologies at JD Power, presents a basic SOP for utilizing Online Auctions as a fruitful source for used inventory.

First, Battista lists the advantages of buying online:

1. Online auctions may provide early access to fresh inventory.

2. Online platforms may allow the buyer to set up saved searches and alerts when desired inventory is listed.

3. Comprehensive inspection reports and guarantees are available to the buyer

4. Often times vehicles are sold in the Buy it Now Category, allowing relative predictability in costs, often times removing the likelihood of a bidding war.

Those experienced with online buying already know these advantages- what the article doesn’t cover is the common problems with online buying:  

1. The fresh inventory in a lot of cases is plastered over numerous platforms, watering down the “exclusive” aspect

2.  Saved searches are only as good as the person setting them up- garbage in, garbage out.

3.  It’s common knowledge there are wild inconsistencies in the online inspection report (one of the many reasons why AAR.com was created).

4. When a vehicle is NOT in the BIN category, it can be difficult if not impossible to work a deal with the seller. Much of the time the bids are ignored or never shared with the seller.

All is not lost, however.  Battista lists the best practices dealers can use to make their online shopping easier and more profitable:

1. Diversify inventory sources- online auctions are another tool in the buyer’s arsenal when sourcing vehicles- in lane, trade ins, fleet, and street buying all must be considered for a healthy used inventory.

2.  Use watchlists for desired inventory- permits buyers the customer requested or hard to find units

3.  Evaluate the platform’s reputation and inspection standards- we would also add dig deeper into the quality of the seller and their offerings

4.  Establish a budget for online purchases- from our perspective at AAR.com, online auctions provide a more even pricing model- I.e., you might not steal cars based on being in lane at the right time, but online shopping largely doesn’t have the exuberance of an in lane sale, keeping pricing predictable.

5.  Online shopping often offers deals on floorpan costs, buy fee rebates, and included (and convenient) transportation costs and setup.  More importantly, floorpan companies may roll the transport costs into the financed amount- preserving cash flow for the dealer.

Overall, we at AAR.com would grade this article a B+- informative, concise, and useful.  The light criticism we may offer would be most of this is common knowledge to experienced buyers, but Battista does a good job of assembling this process into one article, and gives new-to-online dealers a basic road to success for online purchasing.

As a final note, AAR.com recently discovered Joe Neiman’s new startup, www.DealerClub.com.  If you read our previous articles, we outline Joe’s method for success in his new online marketplace.  If the past is any indicator, DealerClub will be a player in the crowded field of Online auctions.  What we believe will be the game changer is the reputation-based buying and selling, with clear, understandable pictures and descriptions available for buyers.  Lastly, if you’ve ever been frustrated about communication with the auction when there is a question or a problem, don’t worry- the seller (or buyer) is a mouse click away.  You deal directly with each other— novel concept, huh?

Look for AutoAuctionReview.com’s review of Dealer Club, coming next week.

Have a great weekend, everyone!

Cheers!