EBlock’s acquisition earlier this month of the Houston Auto Auction provides another milestone in the company’s pursuit of a unified auto marketplace that combines real places in real time with a virtual presence.

Known as the land-meets-tech strategy, EBlock is snapping up auction locations to grow its dealer-to-dealer digital transactions among vehicle buyers and sellers.

Growing Into U.S. Regions

Houston Auto Auction, an independent auction marketplace that specializes in commercial sales, is the fourth major purchase for Toronto, Canada-based EBlock, which has acquired auction sites and facilities in New Orleans, Louisiana, Mt. Morris, Michigan, and a network of 10 vehicle holding facilities throughout California to store vehicles acquired online, CEO and founder Jason McClenahan said in an interview.

EBlock’s goal is to create one marketplace bringing land and technology together to provide customers with “one convenient, consistent, and connected experience,” the company said.

McClenahan was looking at the Texas auto market to complement the EBlock operation in New Orleans and enable the company to focus on the fleet consignment and vehicle dealer segments. John Brasher, the executive vice president of EBlock, knew the owner of Houston Auto Action and helped spark the purchase.

“This deal gives us a nice footprint to connect with Louisiana and when we roll out our new product connecting buyer bases into one platform,” McClenahan said. “Once our live lanes product is installed, all physical auctions will be in one place online.”

The new platform builds on EBlock’s dealer-to-dealer platform, and McClenahan said it’s the first time digital and physical auctions will be in one place via simulcast.

EBlock Operates as Digital Native

EBlock, which was founded in 2016 starting with dealer-to-dealer digital-only auctions, has amassed a major share of the Canadian digital auction market. The company raised an IPO in late 2021 in the U.S. and invested it into scaling operations to meet industry demand here.

“The way we originally built our platform was to replicate all the great things we’ve seen in physical auctions — that urgency and energy in selling vehicles in 60 seconds,” McClenahan said.

Early on, EBlock’s strategy in the U.S. centered on blending physical and digital selling options. “Our Canadian model was always built around plant and infrastructure,” he said. “Even though it wasn't as big as 100-acre facilities and physical blocks from the auctioneers, we still use the land and logistics to support digital transactions for better customer experiences and for more revenue opportunities. That helps get cars off dealer lots more efficiently.”

EBlock focuses mainly on the Midwest, the Gulf States, and the West Coast, where the company has physical facilities, he said.

“There's no question more cars in the future will sell more often digitally than they do today,” he said. “That's inevitable. But it doesn't mean physical auctions are going anywhere. I believe what needs to happen is a single platform should power local experiences. And that's what we've been building for a few years.” This will empower digital buyers who purchase a vehicle on a lot from a physical auction with a live auctioneer, as well as offsite dealer-to-dealer auctions, he added.

“A single platform connects the fragmented independent auction ecosystem and allows these auctions to reach customers that they couldn't reach before,” MClenahan said. “We all know there's a capacity limit with a brick-and-mortar auction. You can only run so many cars through the auction, and you've only got so many auctioneers, drivers, and land. When you bring in tech, there's really no limit.”

EBlock doesn’t need as many physical locations and auctions as do the big competitors in this space, McClenahan said. “But I believe in catering to the changing needs of the customer, instead of forcing them to do it a particular way. Our approach slowly lets them evolve and adapt to how they want to buy and sell the car.”

Tracking and Balancing Customer Choices

The EBlock vision remains to provide one platform that powers simulcasts of physical auction events, as well as continuous digital access to offsite inventory that does not go through an in-lane auction, McClenahan said.

“That will continue to be a big share of the market in the future and a growing share,” he said. “But it's in one ecosystem. You can have an auctioneer with dedicated lanes that is streamed live on the block platform, as well as having the same user interface that guides a car dealer to dealer that isn't a physical option.”

EBlock also is investing time and money in developing quality condition reports backed by consistent policies and procedures that work in physical and digital auction settings, he said. “It comes down to the policies and building a trustworthy and transparent platform that can support your customers when problems arise.”

The company has rolled out its own assurance products for buyers who cannot test drive all the vehicles being sold, whether in digital or physical settings.

McClenahan is banking on blockchain vehicle transactions evolving with the technology to compete. “COVID gave all these digital platforms a shot in the arm, and now what we’re seeing across other ecommerce businesses is that the digital adoptions are back to the gradual pre-COVID pace.” Digital auctions are destined to gain more market share due to tight land availability for creating large central vehicle hubs and lots, especially in urban areas, he said.

“Last year, I had the experience of visiting an auction and they had the vehicles that they were selling that day on the lot,” McClenahan recalled. “But then everybody stood in the lanes. They didn't bring the vehicles through the lanes and they were all on flat screen. So when you're involved with an in-lane auction, the only difference is that the vehicles are in other places and you're streaming them to people standing in the lanes in front of screens.”

McClenahan observes that more of the independent auctions have stayed true to driving cars through the lanes.

“They're the ones who are down the least this year (in revenue). I still think there is an element of touching and feeling the car as it drives through. Is that going to be long term? No, but the independents are very healthy. And I think a lot of it comes down to the experience. They're not just trying to save expenses for drivers. They’re trying to just provide the experience that customers still want today, although I think it’s short term.”