Pandemic changes to auction business may become permanent
Auction sales have long been a staple of rural life.
In recent decades, the business expanded far beyond traditional sales of livestock, farm equipment, land and household goods.
The pandemic has accelerated changes in the industry, forcing many sales to go online only. Some of the changes are unlikely to be reversed once COVID fears diminish.
Firms that initially worried about online-only sales report that they have never had better results, says Ken McGregor of the Auction Association of Ontario.
The ability to size up desired items with a few clicks of a computer mouse makes it easy for busy people to bid on multiple items in many locations without the hours of travel that can be involved in getting to some in-person sales, he said.
What follows are reflections by industry veterans in Archibald, Ohio; Breslau, Ontario; Hatfield, Pennsylvania; and Winkler, Manitoba.
Kevin Frey sees a much brighter 2021 compared to last year. “I wouldn’t say (2020 was) a lost year, but close to that, and it seems we are making up for it this spring,” he said.
Frey and his brother Mark operate Ohio-based Frey & Sons. The company, a third-generation family firm, sells throughout the US Midwest, mostly in Wisconsin, Illinois, Indiana, Michigan, Ohio, Kentucky, and Pennsylvania.
Their grandfather, Elias Frey, and his brother-in-law started Yoder & Frey in the 1940s as a farm equipment firm. Kevin and Mark’s father Bob started Frey & Sons in the early 1960s.
Frey & Sons was better placed to deal with the shutdowns than some firms, as they had done some online-only sales for over a decade.
Last year involved a combination of online only and hybrid sales where people who showed up were bidding against others tuned in to a simulcast.
Some auctions that had to be converted to online only “worked out just fine.” In other cases, sales where sellers preferred to have a crowd were delayed or put off for an entire year.
Frey & Sons specializes in heavy, large equipment. “Most people, they like to go look at something, and see it and touch it,” but others are content to buy based on photos of the backhoes, graders, pavers excavators and crushing machines the firm auctions, Kevin said.
Mark Frey takes up to 75 photos of piece of machinery and does a video of it in operation for people who prefer not to attend pre-sale inspection days. Kevin specializes in sales and finance, meeting clients and doing most of the auctioneering, with Mark focusing on website updates, information technology needs and catalogues.
Changes in the auction industry are coming “seemingly faster and faster all the time,” Kevin said.
The Freys work to keep up by being at the forefront of technology. “You’re always investing in the future,” he said.
Like Frey & Sons, Breslau-based MR Jutzi focuses on the commercial and industrial market, serving a 100-mile radius around Ontario’s Waterloo Region, selling cars and trucks, tractors, and loaders. “As my wife says, anything that has grease in it or on it, we sell,” Cal Jutzi quipped.
Jutzi found the province of Ontario lockdown this spring challenging, as it only partially applied to his business. “We are locked down, but we are not. Because we are a car dealer licensed, we can still be open, but lots of different rules.”
Cal’s late father Merlin started MR Jutzi in 1962.
Merlin was originally in the saw sharpening business and got into auctioneering after a bad experience when he went to an auction to buy equipment. “He didn’t think the auctioneer was that honest,” and thought there should be a better way to do business, Cal recalls.
Cal Jutzi sold used police cruisers and detective cars for 17 years, and still auctions used high-end police bicycles for several municipalities. Bike auctions have slowed as municipalities have had difficulty buying new replacement bikes during the pandemic. “Everybody wants new bikes.”
Taxi companies used to buy a lot of used police cars, but the carbon tax and environmental concerns have led many of those firms to operate with smaller, hybrid vehicles, he said.
MR Jutzi does not use the fast, sometimes hard to understand, bid-a-bom chant that some auctioneers favor. “Father thought the auctioneer chant was sometimes because he could, rather than actually (focusing on) selling the item.”
Jutzi prefers to focus on words to explain and sell the product. “Everything we say in our chant means something to me as the seller, and to the buyer, to get the right price.”
He is not a fan of online auctions. “I prefer to look people in the face,’’ he said.
When selling by webcast, he cannot always tell if a bidder is done or not. “If I see your face, I know if you are done.”
“We find that a lot of our older bidders have no idea how to bid (online).”
Online auctions also take longer, both the advance preparation of photographing items, and the sale process itself, he said. A sale of 60 items took over three hours online (timed auctions are shorter), whereas doing that same sale in-person would take less than 2.5 hours, he said.
Many Old Order Mennonites who come to Jutzi’s tool sales struggle. “Unless they’ve got a friend with a computer… it’s tougher for them to bid on stuff.”
Jutzi’s daughter does advertising and inputs information into a computer for online sales but has no interest in taking the microphone from her father to run sales.
Jutzi hopes live auctions will be viable in Ontario again by October once everyone has had their vaccines. “Even then, we’ll probably still ask people to wear masks (until at least Christmas).”
Going online only during the pandemic has provided both business benefits and challenges, says Sherry Russell, CEO of Pennsylvania-based Alderfer Auctions.
All-virtual sales have greatly increased participation by younger buyers. “In the past, when we had auctions, it was mainly dealers there,” she said.
Brent Souder, the firm’s head auctioneer, told a US publication that virtual auctions have increased the number of buyers in the 25 to 45-year-old age group fivefold, as it allows them to take part “on their personal devices and on their own time.”
Alderfer has had a mobile app that allows people to bid from their phones since 2017, when Russell purchased the firm from the second generation of the Alderfer family.
Going all online resulted in over 5,000 new buyers. Average auction attendance increased from around 200 to between 600 and 1,000 bidders per sale.
Prices that goods were sold for increased, but so did labor costs and processing time. Alderfer used to have 1,200 lots per sale. Curbside pickup and the need for storage cut that to only 300 lots.
The firm’s 10,000-square-foot auction building in rural Hatfield didn’t have room for all the product intended for upcoming sales. Storage times of a week or two pre-pandemic stretched to between six and 12 weeks.
Alderfer has coped with the changed circumstances by returning to the practice of doing online sales from clients’ homes. In-person sales at clients’ houses was common before Alderfer built its auction facility in 1988.
Russel can’t see Alderfer returning to hybrid live and online auctions as a common practice, even when health conditions allow. The firm will be “very selective in the types of auctions” that have an in-person option, she said.
It will take a while before their facility, currently filled with racks and tables of goods, has space for in-person buyers.
Higher-priced fine art and sports memorabilia, which make up 25 percent of Alderfer’s business, will eventually be in person again. Some sales will happen from people’s homes, with the balance of sales remaining online only, with bidding closing at 8 pm, a prime closing time.
Bill Klassen did his first auction in 1968, when he was 17 years old.
His Manitoba hockey team needed money to buy pads and nets. He came up with the idea of doing a pie social with an auction. Success at that event led him to approach a neighbor who was selling his farm to ask if he could do that auction. When that went well, he attended auction school in Kansas City and never looked back.
Klassen has done farm auctions across Manitoba and Northwestern Ontario and is the only Canadian in the Minnesota Auction Association hall of fame.
His style was influenced by New York state auctioneers, who tended to “talk slow (and) sell fast.”
He has done online, timed sales since March 2020, and has noticed a wider geographic range of bidders than was the case with in-person sales. He recalls selling an electric fender to someone who lives 4.5 hours away from the sale site, a buyer who would never have driven to an in-person event.
Virtual auctions are here to stay, he said. With larger farms, people don’t have time to stand around at an auction. “It’s business.”
“It’s a bit too bad for the people who like to buy coffee and a hot dog and visit with their friends every year.”
A next-generation champion auctioneer
When Morgan Hopson went to Texas Christian University on a music scholarship, she planned a career in the entertainment industry.
Having played the violin since she was old enough to hold it, she dreamed of moving to Nashville to do studio work.
When she graduated with degrees in music and business, a family friend approached her about doing marketing for his Oklahoma City auction firm.
Hopson was intrigued by the offer. She went to auction school to learn about the business, and “caught the bug, just fell in love” with the sector.
Auctioneering has many parallels with the music industry, she soon realized. “You’re having to get in front of a crowd and engage with them and evoke emotion out of your audience.”
Hopson has done marketing and auctioneering for United Country Buford Resources Real Estate & Auction across Oklahoma and Texas since 2011. “I never imagined in a million years that I’d be in the auction industry, but that’s exactly where I’m supposed to be. I have the opportunity every day to help people, regardless of their asset class.”
“We carry a lot of weight for our clients, doing the best we can, helping them meet their goals,” she said.
Six years ago, she started competing in the Texas state and International Auction Association championships.
In May 2019, she won the Texas competition, just before winning the women’s division of the International Auctioneer’s Association bid calling championship.
Competitors are ranked on their presentation, poise, voice control, clarity, speed of chant, eye contact with audience and body language.
Hopson now acts as an ambassador for the industry across the US and is running for a seat on the National Auction Association board. “I’m ready to step up and serve at the next level.”
“As a first-generation auctioneer, I’ve had so many people pour into me. I’ve had so much help along the way. I’m just looking forward to beginning to serve and just give back.”
She has seen a steady increase in the number of women auctioneers. “There are a lot of women that have broken into the auto auction industry and really made a name for themselves.”
Hopson splits her time between Texas and Oklahoma, staying in both states every week.
The Internet broadens the firm’s reach, helping it attract clients from across the United States. Hopson regularly invests money in search engine optimization so that they reach more buyers by showing up on page one or two in Google search results.
Auctioneering by the numbers
In the early days of the pandemic, auctions across the US saw a nearly three-way tie between zero cancellations, some cancellations, and 100 percent cancellations, the National Auction Association noted in a 2020 state of the industry and COVID report.
“The industry, which includes real estate, fundraising, personal and commercial assets, automobiles, and much more, has seen an unprecedented number of event cancellations since the outbreak of COVID-19 in the United States, some of which were self-imposed for the safety of buyers and sellers.”
Here are some statistics on the state of the industry in mid-2020
About one quarter of NAA membership was under age 50.
Among members who responded to a question about how long they had been in the business, 29% were first generation auctioneers; nine per cent second generation; three percent third generation; and one per cent fourth generation.
Auctioneering continues to be a male-dominated profession. Only 16 per cent of NAA members are female. Among the women in the business, 30 per cent are under age 50.
The NAA is partnering with Future Farmers of America to create high school curriculum based around the auction industry, as well as lesson plans and curriculum for elementary and middle schools.
Many paths, skills needed in industry – lawyer, photographer, web designer, graphic designer, says Oklahoma auctioneer Morgan Hopson. “We need all these professions to do what we do. There’s so much more to being an auctioneer than just being behind the microphone.”