“Barriers to Entry” – In economics, obstacles that make it difficult for a firm to enter a given market. They may arise naturally because of the characteristics of the market, or they may be artificially imposed by firms already operating in the market or by the government. – Brittanica
When conducting a typical private treaty transaction, you only need 2 people to execute a deal; a buyer and a seller. Auctions, on the other hand, are a unique and much different form of commerce. Its sole existence is dependent on multiple potential buyers where every transaction has a winner and one or more losers. That competition is what generates our special marketplaces and the potentially infinite price ceiling for an asset.
Each auction and each auction company must establish criteria that balances the desire for as much participation as possible with a reasonable amount of assurance that any auction contract will be consummated to completion so the seller (and in turn, the auction company) will get paid.
So how does this academic concept apply to abandoned vehicle sales?
Here’s the concept at its basic core as it applies to the abandoned vehicle market:
If your auction vendor has a HIGH barrier to entry, there will be FEWER participants in your auction, which will yield LESS revenue, but have the potential for a higher collection rate.
If your auction vendor has a LOW barrier to entry, there will be MORE participants in your auction, which will yield MORE revenue, but may result in a slightly lower collection rate.
How does Peak Auto Auctions handle barriers to entry?
At Peak Auto Auctions, we have a unique philosophy when it comes to entry barriers. We use a combination of computer-based and human intelligence to allow as many people as possible to enter an auction, but then apply aggressive strategies to restrict or expel persons that are not likely to complete a transaction successfully.
What’s the bottom line impact?
Peak uses advanced online fraud technology, credit card verification, and professional customer service and collections departments to constantly monitor potential and winning bidders to turn electronic bids into completed sales.
Why does Peak adopt this hybrid strategy?
Peak Auto Auctions was born out of a need for the tow industry to have abandoned vehicles sold confidently and accurately. We recognize that our clients have finite space requirements, and need the speed and surety associated with as-is auction sales. We measure our success not only on the price point obtained for our clients, but also the rate of sold vehicles that are promptly paid and picked up.
For more information about Peak Auto Auctions and its abandoned vehicle marketing program, please visit: Sell With Us
https://peakautoauctions.com/wp-content/uploads/2024/01/Barrier.png109450Darron Reidhttps://peakautoauctions.com/wp-content/uploads/2022/03/PeakLogoTrans.pngDarron Reid2022-12-08 16:17:032024-01-03 17:56:22Barriers To Entry
As a seller of abandoned and impounded property, retail buyers will always look at each vehicle purchase with a healthy dose of skepticism. However, if you want your abandoned vehicle program to maximize long-term revenues, a major key to accomplishing this is by maximizing your program’s credibility.
What are some easy and tangible steps that can be taken to maintain trust and credibility with your repeat buyers?
Make your vehicles easy to preview. This is especially important for not only online auctions, but live auctions too. Provide designated hours for buyers to preview. Make keys available for check out. Have yard staff available and visible to answer questions and supervise vehicles for tampering.
Give as much information as you may know about the vehicle to answer as many common questions as possible. Did the engine knock or smoke when it started? Did you see (or hear) any missing catalytic converters?
Check your tow file and DMV record search for any branded titles. Your state probably requires disclosure of title brands when known.
Make sure your photographs can answer all common questions. Are there any missing wheels? Are any airbags deployed? What kind of transmission does it have (photograph of gear shift or pedals)? Is any glass damage or missing?
Have a set policy for most common challenges and problems. When there is a serious mistake in your item listing, how do you rectify it? The more reasonable your policies, the more credibility you will have with your buyers. However, you should develop a consistent set of policies for common occurrences and STICK TO THEM. Your auctioneer or liquidation professional should have a series of “best practices” and be available for advice and counsel. If you do not have a sales and marketing expert that knows the abandoned vehicle marketplace, consider hiring one.
Sometimes, you just are going to have to earn your money twice. Buyers will default. Disputes will arise. Credit Card Chargebacks can be minimized but will occasionally occur. Checks will bounce. Vehicles will get tampered with. People will buy that RV and then disappear.
There can be challenges when developing a liquidation program. How you handle these challenges is what will keep your repeat buyers engaged and actively participating in all of your sales events.
Good Luck!
https://peakautoauctions.com/wp-content/uploads/2022/08/Truth-Trust-scaled-e1660065150540.jpeg11262560Darron Reidhttps://peakautoauctions.com/wp-content/uploads/2022/03/PeakLogoTrans.pngDarron Reid2022-08-09 17:31:002022-08-09 21:37:55Trust and Credibility
Junk car prices rose 55% on average across the U.S. in 2021 and the demand continues into 2022.
Scarce new and used vehicle supplies, along with strong used parts demand, were the major factors in the average price of junk cars increasing by 55% in the U.S. in 2021. The average price of a junk car increased by $170.85 between the start and end of 2021. The average price of a junk car started 2021 at $311.87 and finished $482.72.
U.S. junk car prices can vary regionally. Local supply and demand as well as variations in vehicle make, model, condition and content reflect in the prices.
What caused junk car prices to rise so much in 2021?
Microchip Shortage…
One major contributor to these high junk car prices was the COVID-19 pandemic-related microchip shortage, which caused the loss of millions of units of new car production. Many buyers who could not find new cars on dealer lots then entered the used-car market, where increased demand there pushed up used car prices to very high levels.
Many price-conscious buyers had to settle for older, higher-mileage used cars that required more maintenance. Under normal circumstances, many of these bottom-level used cars would have been junked or parted out. Many would-be buyers who were priced out of the market decided to hold onto their cars, keeping them out of the used-car market, while many drivers who might have junked their cars decided to fix them up and drive them longer or just let them sit.
Meanwhile, the reduced supplies and the increased demand for used car parts pushed up the values of junk cars. These cars were now being purchased not by junk dealers for their scrap value, but by auto recyclers who would be selling them for parts. This made junk cars much more valuable and brought higher prices. And, this is where we are today.
https://peakautoauctions.com/wp-content/uploads/2022/07/Supply-Chain.jpg13172560Darron Reidhttps://peakautoauctions.com/wp-content/uploads/2022/03/PeakLogoTrans.pngDarron Reid2022-07-06 20:45:442022-07-07 15:04:43Feeling the Supply Chain Pinch!
Don’t forget that the vast majority of communication is non-verbal. In 1967, UCLA Professor Albert Mehrabian and colleagues performed groundbreaking research on interpersonal communication. Out of this research came, arguably, the best-known set of numbers within the teaching and communication disciplines: the idea that the total meaning in a message is “7 percent verbal, 38 percent vocal, and 55 percent facial.”
I cannot stress the importance or impact of visual appeal on your auction’s bottom line. These quick and easy tips will have a significant impact on your results.
TAKE PHOTOS in LANDSCAPE (horizontal) MODE. Peak’s auction software works best when photos are taken in this manner. Portrait (vertical) pics should only be used on extremely tall units such as semi tractors.
BACK UP and ELIMINATE VISUAL OBSTRUCTIONS – Remove all vegetation or debris around the unit and provide plenty of empty space in the photo frame so the vehicle doesn’t get chopped off. We are able to crop excess white space if needed. You may need to move your unit to a staging area to get the best photos.
AVOID SUN SPOTS – If possible, take photos on a cloudy day, or orient the cars to take photographs while facing North or South.
TAKE PLENTY of PHOTOS. Our minimum standard is 6 photos (4 corners, front seat including steering wheel, and engine compartment). The higher the value of the vehicle, the more critical it is to take additional photos such as tire wear, instrument panel, vin plate, etc..
AVOID USING PHOTOS FROM the INITIAL TOW. These types of photos are visually unappealing and can be an inaccurate representation of the condition of the vehicle. Most of these photos are taken at night which makes them unusable for the auction process.
https://peakautoauctions.com/wp-content/uploads/2022/07/Picture-with-phone-scaled.jpg17072560Darron Reidhttps://peakautoauctions.com/wp-content/uploads/2022/03/PeakLogoTrans.pngDarron Reid2022-07-06 20:02:302022-08-09 18:31:00The ABC’s of Taking Pictures of Auction Vehicles
