Millions added to used equipment values with the move to timed online auctions
When the pandemic struck the UK in 2020 and the first lockdown put in place, the UK operation of global used equipment specialist Ritchie Bros switched all its auctions to online only.
Ritchie Bros made the swift change possible thanks to previous investments the business had made in their timed auction system to sell smaller lots like hand tools and accessories.
This system now works across the whole business through its website or mobile app, automating the online auction process. It’s simple to use and once a buyer has completed the registration process, they can start bidding.
Just like a traditional auction, the unreserved lots close at staggered times. There are no minimum bids or reserve prices, meaning every item with at least one bid will sell. The key difference is that if a bidder places a bid in the last 30 seconds, the system will auto extend the lot due to close, giving other bidders the chance to secure the item.
This function has led to over £2m in value added to equipment sold in 2021 by Ritchie Bros. in the UK alone, a 10.4% increase from using the more traditional method. It has also meant buyers have been able to secure the equipment they need at a boom time for the UK plant sector.
To find out more about the continued changes in the market and the investment made in its new UK Maltby facility, I caught up with Sales Director, Rupert Craven:
Rupert: “Right now, the UK used equipment market is like nothing I have ever seen in my ten years at Ritchie Bros. Demand is huge, whilst supply is stretched, causing the perfect storm for the industry. In Q1 of this year, we saw an increase of 30% in equipment sales, according to a report from the UK’s Construction Equipment Association. And there is not a week that goes by without another big deal announced.
This market demand is due to several factors, including the UK governments support for the construction sector, the ‘shovels on the ground’ at our biggest infrastructure project in a generation, High Speed Two rail and a boom in housing. Not to mention the Super Deduction scheme from the government which offers a 130% deduction on capital allowance for firms investing in plant.
Put all of this together, with the reduced supply of new equipment due to factory shutdowns. You can see how important it is to allow buyers and sellers to secure the plant they need and the capital they require to reinvest by selling at a good price.
Interestingly, when we started talking to all our customers in March 2020, quite a few people didn’t realise we went online back in 2000. And when we look at our figures from the last two decades, in recent years around 70% of our business was generated from online buyers.
However, what we did do, was adopt our tried and tested timed auction system for all lots that only sells when the market is finished bidding by extending bidding times. This has allowed us to capture a lot more bids from the market. Whether you look at overseas bidders or local buyers, who may only buy one machine every few years, it really caters for all users. This move has meant we have been able to increase bidder numbers which surprised us dramatically.
We broke records in 2020
We had record auctions in 2020, with June and September particularly large. Talking to customers over the last 12 months, one of the key drivers in selling in 2020 was actually sustainability and carbon emissions. This is becoming a big factor as fleets change over to more fuel efficient Stage V machines.
When we conducted a recent survey and looked at results from our auctions across Europe, we got further insights on the market which make for interesting reading.
Our survey showed that UK plant equipment owners have held onto most of their fleet in 2020, with 39% claiming to have sold no machines last year. This compares against a total European survey average of 25%. In addition, 58% of UK respondents said they also expected to rent more equipment, highlighting a ‘top-up’ approach to plant equipment fleets.
“From our data, since going online, we have seen continued growth in registered buyers, engagement and volume of bids. Our website traffic has been up 13% over the year with more than 140,500,000 visits, online bidder registrations up 77% to 1.2 million bidders, and accepted bids are increasing by 65% to 15 million.
“This increase in bidders has been supported by our team adding more information, imagery and videos for auction lots listed for sale. This has given bidders more confidence to buy online, and partly because of this, we have attracted more businesses and individuals to our platform, changing the mix of buyers dramatically.”
Rupert adds: This has led to some great customer interactions. For example, I had a conversation recently with a buyer who had bought a roller at the last auction. And he was sitting in his machine on a break when he bought it!
That’s the kind of thing I want to hear as it shows that by making the online experience user friendly, this time through our app, that buyer had virtually no downtime in his business. He said to me, I knew the machine that I wanted. I bid for it on my phone, bought it, transacted the deal and didn’t have to drive to the auction, which would have been a six hour round trip.
Sellers want to release capital more quickly
Rupert: “In the last 18 months, we have been expanding our ‘Sell to Us’ service. This is where customers can realise asset values within a matter of days by selling directly to Ritchie Bros. through our territory managers.
With the size of our Maltby facility, we can store equipment until the next auction or use our MarketPlace-E ‘always on’ platform to sell it directly from the yard, as we do for customers already using this method. With MarketPlace-E we take offers on equipment, and our team negotiate a deal with the customer and buyer. This is particular beneficial for very large assets which can’t be moved from their work site.
“For example, the latest equipment to be put on the platform was four huge 1997 O&K RH 120C Front Shovels from Banks, who has sold all of its mining equipment with us in this way as production has closed down onsite. This type of equipment is too big to move to our site in Maltby, but other units like a recent Bomag compactor were sent to us for storage before being sold to a customer in France.
Going online hasn’t stopped our Maltby transformation
Rupert: “Thanks to some great contractors who have worked hard throughout the last 18 months, we are now in the final stages of transforming our Maltby site to a state-of-the-art facility. With a new customer and event space now open, we are now completing a new workshop and machine preparation facility This will allow us to perform work on machines for both buyers and sellers, adding more value.”
The future is all about data.
Rupert concludes: “The growth of online equipment sales has also led to an explosion of data In parallel, the equipment owners are looking for heavy equipment data to base fleet management decisions on. Fresh market insights, equipment price performance and the ability to identify high-demand regions enable us to help the equipment owner mitigate risks and bring clarity in fleet management.
“We are even in the process of using much more sophisticated data-led services, following the recent global purchase of data intelligence and performance benchmarking specialist Rouse Services in December 2020. This will allow us to use data models and tools to predict what the market is doing for particular asset groups and adjust the customer’s selling strategy accordingly to optimise returns.
“Data will be important moving forward, but what we mustn’t forget is the importance of having the option to see the equipment and kick the tyres. We know buyers from the UK, in particular, have always seen a benefit in visiting and seeing the equipment in person before placing bids.
“This is why we have also worked hard to keep our yard in Maltby open and COVID-safe for visitors, not just as a storage facility. I can safely say that the last 15 months has seen a huge timed auction led change in the market, which is here to stay, with our next auction in November 2021.”