Jason Nielsen, Proxibid's VP of Risk Management (seated center, with head hanging down)
Proxibid is at it again - this time, with a ploy aimed at sewing up as large a chunk of the market as they can before sour notes heard in public at the National Auctioneers Association Conference & Show in Spokane matriculate throughout the industry to all their potential Auctioneer clients.
Lets have a run over the basics quickly, and then I'll see if I can tease out some meaning, and insight as to the possible reasons for the decisions they are making. Finally, I'm going to see if I can make a couple of targeted predictions as to their next course corrections and possible avenues of action.
As I'm typing this, there is a fairly lively discussion regarding the announcement on Facebook, once again in the Auctioneers forum/group there - it hasn't reached the dizzying heights of the last big blowup - no one has as of my last F5 been termed a face eater or user of bath salts, but the night is still young.
So, why am I bothering to type up another diatribe? What's got me bothered this time? Lets set the not-so-wayback machine for 3 weeks ago. A sizable contingent of the entirety of the NAA had gathered in Spokane for the C&S. While in attendance, many of us sat in for a panel discussion regarding online bidding platforms - specifically relating to "Best Practices". During this panel, my father asked a question (at 7:08 in the video linked, specifically). He asked the following question.
"Given that some online platforms have decided to allow non-auctioneers to access their marketplace, can you tell us if you own your data, and if you do own your data, does that mean that we, as auctioneers do not own the data, and furthermore, do you plan on allowing non-auctioneers to use your platform, to use that data, to sell goods?"
There were 8 people on the panel, representing CUS, Wavebid, AuctionServices.com, Proxibid, AuctionFlex, Bidspotter, LuJohn's, and RealtimeBid. 7 of those 8, in some form or fashion, answered that question with a "No". One answered "Yes". And in a sane, and rational universe, that would well and truly be the end of the discussion, the Death Star would fall out of the sky, and there would be happy little Ewoks dancing all over the place as the Empire was defeated. Unfortunately, much like Lucas releasing a never-ending wave of special editions and director's cuts, in our industry we have our own "Lucas" to contend with, and once again they have brought forth a new "special edition" deal-of-a-lifetime that is almost certainly too good to be true.
Fast forward to yesterday, August 8th. A post from Dana Kaufman on the Auctioneers group on Facebook brought to many NAA members attention, a new "Preferred Partner" program being rolled out by Proxibid. What does being a Preferred Partner do, you ask? Well, most importantly (to Proxibid) it locks you into an exclusive contract with Proxibid, during which you will not be allowed to utilize any other online bidding platforms. But it does soooooooo much more! I'm going to list the things they said it does, followed by my interpretation of what we as auctioneers can infer and expect from those bullet points. Here we go! (Their words = italics, my words = Red Text)
1. Special Rates For The Term Of Your Contract: Proxibid event fees and Internet Buyer's Premiums will be "frozen" for the length of your contract. With new products and services being launched regularly, this is a terrific opportunity to lock in pricing for up to three years!
There are a couple of things to notice here, first of all, "freezing" rates and fee structures for a period of "up to three years" implies VERY heavily that the average contract length will be a 3 year period of time, and that Proxibid FULLY intends to raise their pricing/fee structure within that period of time. This first point just, really reminds me of SOOO MANY POLITICIANS. This might as well be a giant neon sign flashing "WE WANT TO CHARGE YOU MORE!" According to Tim Kryszak, the actual contracts will run from 1-5 years. In fact, on a recent Facebook post in relation to the Preferred Partner program, he stated that the program does not require a 3-5 year commitment, simply an exclusive contract with a period of 1 to 5 years. Which is, in almost every measurable sense, the same thing. The only concession there is the length of time, and I will bet dollars to doughnuts, that the average Auctioneer signing up with this deal, will end up locked into a 3 year exclusive contract.
2. Access To Capital: Preferred Partners will gain immediate access to our capital fund to be used to help you secure consignments that were previously beyond reach. This is a unique opportunity that no other provider can offer. Each opportunity will be reviewed and negotiated separately with no guarantees. We will provide marketing materials to help you effectively communicate to your consignors the ways an asset can move through the Proxibid marketplace.
WARNING. WARNING. DANGER WILL ROBINSON! If the previous paragraph did not ring klaxons and alarms throughout your psyche as an auctioneer, or for that matter, as a business owner, you need to look at it more closely. Let's delve into this one, folks. So, they want to give all their preferred partners access to their capital fund, in order to procure consignments they could not otherwise procure. How, exactly, does that work? Is Proxibid under the impression that every auctioneer is selling items they have directly gone out into the world and purchased themselves? Or is this magical mystery fund intended to be used as a means of impressing potential clients? Am I confused, or is Proxibid offering to "Pimp my ride" so to speak? As far as I'm able to tell, what they are basically offering here is to fund an auctioneer's marketing campaign for a specific sale, or even to go so far as to loan funds to an individual auctioneer or auction company in order for them to outright purchase property (real or personal) which will then be brought to market via Proxibid.
I'm going to be perfectly blunt on this point. Back in 2009, when we had our big comic book auction, we did not have the initial capital to pull the sale off. That being said, we located private investors who helped fund the expenses which were necessary to make that auction happen (if you are curious, we ended up spending roughly $70,000 to fully market and run an auction of comic books which sold for a total of $1,072,000). Had we been "Preferred Partners" we would have been limited to running the auction solely through Proxibid. As it was, we held that sale on both Proxibid and iCollector - and of those two platforms, iCollector had more sales that Proxibid did.
Other factors which warrant much more in depth answers from Proxibid's management as it relates to this new "feature" include - what if the items purchased using Proxibid's capital sell through Proxibid for less than they were purchased for initially? Who would be on the hook for the difference? What kind of repayment is expected for these loans? What kind of APR is going to be given? Are these being treated as traditional loans? When Proxibid is determining what kind of investment it is willing to negotiate as far as loaning capital to an auctioneer for a specific target asset purchase or marketing plan, what kind of assessment of the potential market value of the item or items in question is being done? What kind of credential(s) does the property appraiser on Proxibid's staff hold? Will all the appraisal work being done by Proxibid torwards these potential loans be USPAP certified? SO MANY QUESTIONS.
3. Inclusion in Proxibid's new publication, Proxibid Iron: Proxibid will soon introduce a premier publication aimed specifically at equipment buyers. No other publisher in the industry has the ability to reach the level of buyer we are able to reach with Proxibid Iron. Because we pay close attention to online buying habits, we have been able to target our audience to ensure only the most sophisticated buyers receive Proxibid Iron. Our audience is comprised of C-level individuals and key decision-makers who regularly purchase heavy equipment and machinery and spend millions of dollars each year in the Proxibid Marketplace. Proxibid Iron will cover important industry news and will report on key industry trends and important market data that will keep C-level executives coming back monthly. Preferred Partners will have the opportunity to secure advertising spaces in this publication at reduced costs. Additionally, Proxibid Iron will be prominently featured on Proxibid.com, providing you with unprecedented exposure to the Proxibid marketplace with each advertisement placed. You simply cannot find this level of exposure to the most important buyers through any other advertising source today.
Okay, I've heard of "believing your own press" but this is getting silly. Everywhere you turn, there is a resounding cry - it is the death knell of the printed medium. Proxibid's brilliant new strategy to market (specifically to market high end rolling iron and machinery)? A magazine. Right.
Understand this - I'm not denying that they probably have a very healthy contact list of movers and shakers in the buying side of this segment of the industry - we as auctioneers HELPED THEM BUILD THAT LIST. However, to believe prior to the first issue of this publication coming into existence, that it will be impossible as a Proxibid client to "find this level of exposure to the most important buyers through any other advertising source today" is ludicrous and idiotic at best. Hey, Proxibid - there is this fantastic thing called the internet, where instead of using dead trees, we can beam information into people's eye sockets using photons (yes really - that is nerd jargon-ese for what is happening AS YOU READ THIS SENTENCE!). I'm being overly sarcastic here, but really, this magazine pitch seems almost like a joke to me. And don't misunderstand me, I do believe that there is still a place for print media in the advertising of auctions - just not to the point where launching a magazine is the kind of thing requiring the singing of praises.
The key thing to take away from this bullet point from their announcement, is that they once again are making business decisions based on a single vector of their marketplace - machinery and heavy equipment. I guess I'm still underestimating how much the management team at Proxibid is afraid/worried about the marketing and auction sales figures over at Machinery Trader. Word is out that the current management team at Proxibid has an eye on their competition at Machinery Trader (their neighbors over in Lincoln, Nebraska), who have begun allowing individuals who are not auctioneers to list items for public sale/auction on their site. Fearing a drop in their market share, this precipitated nearly all the changes coming down the pipe from Proxibid as of late. This emphasis on heavy equipment and machinery sales is directly evident from this bullet point.
4. Referral Revenue: Preferred Partners will receive a share of revenue for assets or referrals brought to the marketplace. If you bring an opportunity but cannot facilitate the sale, you will still be rewarded for your commitment to the success of the marketplace.
Hey Kids! Do you want to be a Big Successful Auction Firm, but are still too tiny to compete for the really big jobs? Then come on down to Proxibid, where we will take opportunities and assets from auctioneers and auction companies who we deem inadequate to the task, and give them out to those companies or individual auctioneer's who are in favor with us according to whatever criteria we decide as a company to use to determine fitness as an auctioneer or company to perform the sale or sales. But don't worry about losing those opportunities to distinguish yourself or your company - branding is for the Big Boys - and at Proxibid, we like you just the way you are*! (*stuck in our pocket, unable to choose an alternative, locked into an exclusive contract where we can option your sales for our larger clients who benefit us more than you do, you peasant)
5. Access to Assets: Access to inventory and consignments obtained through Proxibid
...if you meet our requirements. Anyone who has been following the discussion relating to Proxibid recently, knows that one of their recent developments was the "Badge" system,
which I still maintain is directly aimed at imitating eBay's "Power Seller" features, in an attempt to woo venture capital from outside the industry in order to secure financing for Proxibid going forward as they rather unintentionally alienate and wean themselves off their base clientele of auctioneers and auction firms. If you think for a second that those badges won't be brought up again when deciding which company or individual receives assets procured from Proxibid's clients to sell - in other words which company or individual Proxibid decides to play favorites with, you are in for a rude awakening. Remember, some sample requirements of these badges include shipping all items weighing less than 200 pounds in 2-3 business days of the end of a sale, charging a buyer's premium that is among the lowest 5% within their primary category. Both of these badges, as well as the Top Seller badge, are heavily weighted towards large auction companies with more employees and established business systems for shipping, etc. I fully expect the doling out of assets to be sold to function as a very sturdy leash in Proxibid's hands.
6. Access to Proxibid's Strategic Creative Services: Preferred Partners will have access to strategic services provided by our in house advertising and marketing agency. Staffed with industry experts,
this team is positioned to develop strategic brand management campaigns, custom advertising and more to protect the integrity of your company. Because of the size and scope of the Proxibid marketplace, our team is able to secure advertising at reduced rates you won’t be able to access
anywhere else. Strategic services provided by our agency include:
a. Brand assessment: We will review your brand image, make recommendations and provide logos, Web site design and sales collateral to help you attract more consignments. This service is provided for an up-front fee, which partners will have the opportunity to earn back throughout the length of the contract through discounted advertising and marketing opportunities.
b. Event marketing: We will work with your team to develop an advertising campaign specifically for an upcoming sale. The campaign will be tailored to meet your needs and will encompass advertising opportunities in national and international print publications, Web advertising and more to increase the number of buyers and your bottom line.
c. Custom advertising campaigns: We will work with your team to create a custom advertising campaign to generate awareness for your business. We will develop a strategic media plan along with media buying and registration on your behalf.
d. Advertising available:
• Rich Media Banner
• Google AdWords Management
• OpenX Banner Advertising
• Internet
• Television
• Radio
• Social Media
• SEO and Link Building
• Direct Mail and Custom List Generation
e. Inclusion in Proxibid advertising: Inclusion in advertising for the Proxibid marketplace (based on availability).
I have no doubt that Proxibid will work with their Preferred Partners to develop advertising specifically aimed at selling the goods they loaned those partners the money to buy...likewise, I have no doubt that the regulations and intentions of the teams developing these marketing campaigns will have a heavy focus on raising the branding and marketing direction of any and all campaigns undertaken on behalf of their "Partners" to spread word of Proxibid first and foremost. Don't kid yourself. Their primary goal is not going to be to talk about "Joe's Auction Service" who is now working with Proxibid as a Preferred Partner. While I don't see this being as large a problem when dealing with individual campaigns for specific assets (although, you should really talk to Robert Mayo about that) section A under this bullet point is the one giving me cold chills. Brand assessment. So, this company who I will once again point out is trying everything they can possibly do to minimize the role of the Auctioneer on their platform and maximize their own growth towards a more eBay style marketplace, open to all and inclusive to none (when it comes to sellers) - is going to "help you" develop your brand? I'm sure they have my companies best interest in heart, and will in no way shape or form use this to further their own goals first followed by my own when its convenient for them! Oh, and read it carefully - this service is provided for an up front fee which you CAN EARN THE OPPORTUNITY TO GET PAID BACK VIA DISCOUNTED ADVERTISING AND MARKETING THROUGH PROXIBID. Wow...what a deal - you pay them an up front fee to change your branding for your to better mesh with their platform, and in turn you can get a refund on some branded advertising you have to purchase through them at an unspecified amount and unspecified date in the future during your exclusive contract, which you cannot sell with anyone else for its duration. *SARCASM MODE ENGAGED* This sounds like the wave of the future to me, where do I sign up.
7. Special deals on Proxibid’s Premier Services, including catalog and clerking tools, inspection services and Web site development.
Nebulous special deals on unspecified goods and or services to be negotiated at a later date. Oh, also, this is more stuff you guys who don't buy in and who don't sign up for an exclusive contract will have to pay extra for, I'm sure.
8. Increased Functionality: Enhanced reporting tools to access year-end sale data by category, showcasing sale price for all items sold in the Proxibid marketplace, at a reduced fee.
***COMING SOON***
So, if you pay more you can have access to your sale data? WOW, LOOK AT EVERYBODY WINNING ALL OVER THE PLACE WITH THIS GREAT PLAN EVERYBODY! BECAUSE IF YOU DON'T OWN THE DATA, THEY SURE AS HELL WON'T MIND SELLING YOUR OWN DATA BACK TO YOU AT INFLATED PRICES, AM I RIGHT?
9. Increased Security through MarketGuard: Preferred Partners will never pay for MarketGuard under the current contract.
Okay, pet peeve time. I'm going to use a hypothetical situation to better illustrate why this pisses me off.
Lets say that there was a fictitious company, Hill Town Auctions, who had a big baseball card auction, which they chose to hold as a live simulcast sale through an online provider, who we will call SchmoxieBid. And suppose that online platform did not bother doing even rudimentary checks to ensure that the bidders who registered through their platform were in fact, not totally bogus and fake, using fake names, fake addresses, and/or stolen credit cards. Lets say that one of these fake bidders then won a baseball card at this auction for $40,000. When Hill Town Auctions finally got into contact with this fictitious bidder, he simply emailed them and told them that he had been ambushed by a group of people, had his money stolen, and wouldn't be paying for the item. Hill Town contacted SchmoxieBid, to see if there was a way to track this jerk down & either get restitution, criminally prosecute (it was a rather large fake bid) sue for damages, etc. Unfortunately, at the time this bidder registered and this auction took place, SchmoxieBid had no systems in place for detecting felonious credit card activity. This unfortunate situation was remedied by actions taken by SchmoxieBid to pay for the difference in amount after holding a secondary auction for the item with the phony bidder.
My point here is that charging more money (to non-preferred partners) for as basic a service as MAKING SURE THE BIDDERS AREN'T SOME 12 YEAR OLD KID WITH A STOLEN CREDIT CARD is BULLSHIT. This should be an expected industry standard service provided by all online bidding platforms. Credit Card registration validation should be a granted at this stage in the game, not some kind of privilege for special members only, which is an extra fee to non-partners.
10. Free Event Consulting Opportunities: Proxibid will provide free consulting for your event – including logistics, IT needs and sales management – to ensure your opportunity is maximized. Our team of professionals has years of experience with bringing even the most challenging events online to ensure success so you can rest easy on sale day.
You will get sales calls from people at Proxibid attempting to up-sell you on extra special bonus marketing plans, in order to ensure their bottom line is maximized.
11. Dedicated Consultants: Beginning September 1, only partners will have direct access to a Client Services Manager available during regular business hours. Non-partner accounts will have access to our Client Services Professionals during regular business hours, for an additional fee.
Anybody else noticing a trend here? Either sign up for an exclusive contract, or you will have to pay a fee for ANY AND ALL INTERACTIONS WITH PROXIBID AT ALL. Imagine any other business attempting to operate in this fashion. Imagine you walked into your local grocery store, and if you weren't an exclusive club member (who could only shop at this chain, and your membership card would expire if you shopped at a competitor's store) you would have to pay to come inside, pay to rent a cart, pay extra for the cashier, and pay for the bags they put your groceries in. I'm guessing you wouldn't shop there, right?
They end this wonderful announcement by stating that there is currently no fee to becoming a Preferred Partner, but that you should hurry, because later they might change that and make it have a fee. I would believe it, they've basically added fees for everything else, why should joining up be any different.
I really can't stress enough how disturbing these changes from a company I used to admire are.
Going forward, there are a few moves and changes I expect to see. The most obvious one, is an upcoming announcement about an increase in rates and fees - they've telegraphed the hell out of that move just in this announcement alone - let alone the fact that I fully expect to see their subscription numbers drop as portions of their clientele wise up to the changes and abandon ship. With a drop in the total number of auctioneers using their services, moves like the "Preferred Partners" program are explicitly being designed to counteract any such drops in revenue. A two pronged response - focused on locking existing clients into contracts and seeking new investors is what I fully expect to see - a total and complete drive to sign up as many auctioneers and auction companies as they can to exclusive contracts, as well as a push to make their company as investor friendly as possible, with the end goal being to secure funding to last until they make a full transition into the slide 4 version of their new Proxibid marketplace. The end result being a complete opening of the marketplace to the general public - allowing any non-auctioneer to list and sell items in the marketplace in the same vein as an eBay style listing, without the direct involvement of any auctioneer. Of course, these items will be marketed to the buying public already populating Proxibid's marketplace - a conglomeration of bidders comprised of the former and current customers of all the assorted auctioneers and auction companies who have ever listed sales with Proxibid.
They have provided us with all the information we need to fully gauge and anticipate their upcoming movements. Now is the time for us to make decisions regarding where we want our industry to go in the future.
