A US-based internet auction firm has ambitions for a global reach, with new sales starting in Europe.
With the downturn biting as hard as the cold north wind in Europe, there seems little reason to be cheerful. Every time you read the news, more projects are being cancelled, factories are closing and equipment is being repossessed.
There certainly doesn’t seem to be a lot of point in launching anything new in the PMV sector.
However, one man with a spring in his step is Tom Cornell. Previously an overseas manager for JCB, he has recently taken the position of European MD for an online auction company you may, or may not have heard of – a firm named Iron Planet.
This company was formed in 2000 to put US sellers in front of buyers from all over the world. Since then, it has enjoyed steady growth – until the last year or so where, along with the traditional auction houses, the company expanded rapidly, despite market struggles.
The company decided to expand into Europe and got its first EU sale in the last week of January.
One of the reasons for this was that it is difficult to bring machines into member countries that don’t have CE conformity markings, though machines already in the EU can be exported anywhere, with or without the CE mark.
We were interested to find out why it was that auctions seem, so far at least, to be performing while the rest of the market, particularly in Europe, is static.
Cornell cites three reasons, suggesting that buying online is no longer the preserve of the few. “The first and most important reason that this business model is gaining traction quickly is that people are comfortable with it and it is working. It is becoming a popular way of disposing of, and buying equipment” he said.
It isn’t all down to people being more comfortable with buying online, as Cornell concedes. “The second reason is that there is a lot of second hand equipment in the marketplace to be sold at present.”
This is certainly the case. Apart from the volumes of machines needing to be shifted out of Europe and the US through ‘natural causes’, such as plant managers deeming items too old to be profitable, the much publicised downturn is causing firms to review inventories and in some circumstances having to liquidate altogether.
There is another cause as well – environmental legislation, which bans many older machines from worksites. This is particularly noticeable on several city projects, such as the 2012 Olympic site in Stratford, where thanks to the introduction of a special ‘low emissions zone’ throughout London means many pieces of reasonably new equipment can’t be used unless retro-fitted with complex filter systems.
The end result is that these machines are offered on the open market, where somebody may well get a bargain. Of course, this volume of machinery will most likely be heading in the direction of the Middle East and Africa, where emission standards, if they exist at all, are not so strict.
The third reason for the firm’s recent success is due to changes in the internal structure, according to Cornell. “The message that, hopefully, you’ll be delivering to your readers will be the same as that from a team of salesmen, everywhere.”
This is true. In the past, most web-only companies have preferred to be just that, but with the opening of a new call centre in Ireland, Iron Planet boasts a multi-lingual team who call up companies that might be interested in the lots consigned in the sale, in the hope of drumming up more interest.
From this perspective, the global reach of a firm with an internet presence is very wide; “The total amount of bidders [registered on the system] numbers 435,000 in 65 countries” Cornell said, though of course it is inconceivable that all or even half would be watching the same auction.
Like physical auctions, Iron Planet offer several types of sale. “The first is a featured, unreserved auction. Any machine, any size, age or spec can be entered. This is the auction that we have week in, week out in America. Typically this auction will last fourteen days. The seller is very much in control” Cornell said.
The seller might be in control, but what about the buyer? Who would risk tens of thousands of dollars on a machine that they have never seen? Cornell suggests several reasons.
“Thirty five percent of all the equipment sold in America is bought outside of America. Now, this growth is due to the fact people are becoming comfortable with buying equipment online that they have not seen. This is because of our ‘Iron Clad’ guarantee. This means the equipment will be in exactly the same condition that it appeared in the inspection report – and we guarantee that.”
The guarantee that Cornell speaks of involves an engineer physically inspecting and photographing every aspect of every piece of equipment covered by it. The various aspects, such as track condition, tyre wear and so on are rated on a sliding scale. Each machine is guaranteed to be in the condition that it appears in the report – no better or worse.
The firm also offer private auctions for major firms. The best example of this is Caterpillar Private Finance in America, which only dealers participate in.
“Every machine that Cat Finance has, that has come off lease, or that it has repossessed, they have an auction. Anything that doesn’t sell can be entered into the main sale. We are becoming a disposition channel for the manufacturer.”
“The next auction is a one-owner auction, which would typically be a liquidation. In the current climate, sadly, I think we are going to see more” he said.
“The beauty of being on-line is that we have registered buyers, on tap all over the world” he added.
The company’s next auction is due to be held on February 24.