– Eric Overby, a former senior manager with Arthur Andersen and KPMG, is finalizing a study of physical versus online auction environments as part of his doctoral thesis at the Goizueta Business School at Emory University in Atlanta. Sandy Jap, Caldwell research fellow and associate professor of marketing at Emory, also participated in the study.
Overby presented the study during the recent National Auto Auction Association’s annual mid-year meeting. Overby’s research looks at the shift businesses and consumers are making from purchasing items in the physical world to purchasing them through electronic or other virtual means.
The study examined 17,536 vehicle records from 103 sales events at auctions around the country between Nov. 2003 and Jan. 2005. These particular sales events had a combination of vehicles physically run down the lane and vehicles presented electronically as photographs, “cinema-style.”
Overby and Jap found significant differences in both sales rates and vehicle prices depending on how the vehicle was presented, the condition of the vehicle, and how the dealer was “attending” the sale, though some of those effects have diminished over time.
The study verified what has become generally accepted in auction industry. A relatively large number of vehicles being offered and the “late” run number of a vehicle decrease the chances that any one vehicle will be sold.
Other discoveries include:
Vehicles offered for sale with just a digital photo were not only less likely to sell, they also brought less money, especially from dealers who physically attended the auction.
Internet buyers paid 3.2 percent less than in-lane dealers for average or below-condition vehicles run live through a lane. Those Internet buyers paid 12.7 percent less for such vehicles shown “cinema-style.”
Internet buyers paid the same amount as their in-lane counterparts for an above-average vehicle run through the lane. In-lane and Internet dealers paid 2.3 percent and 1.7 percent less, respectively, for above average vehicles shown cinema-style.
Over time, Overby found that retention values have converged between physical and Webcast sales for vehicles run live through the auction, regardless of their condition.