Expanding Online Auction Opportunities
December 21, 2005 — Recent news that the largest rental company in the world had decided to sell its used equipment online through mega Internet auction house eBay should not have come as a big surprise to the industry when you really look at the numbers. Heavy investments made by United Rentals, Inc. (URI),
Guy Ramsey
It's no secret that Internet commerce continues to explode. Sure, the exponential growth we keep hearing about most often relates to the retail segment. But it stands to reason that the market potential is just as great for construction and industrial goods. To put the potential into perspective, take a look at just one stat. There are 16 million items currently listed on eBay —of which 222,000 are classified as industrial/ commercial (where you would find URI's equipment). I recently asked my eBay-savvy son to check out how many URI pieces were currently found in this mix. He could only uncover two listings — which leads me to believe the surface is only being scratched.
eBay has also been working hard to expand its industrial traffic. This became quite evident when it went out and hired Ben Hanna as senior manager for the construction category. Hanna is credited with putting Iron Planet on the Web map.
Another consideration that must have weighed heavily in URI's decision process is the relatively low cost eBay charges it sellers. The percentage of the selling price collected by eBay after the transaction is less than what a traditional auction might charge, and the percentage decreases as the equipment costs increase. Typically, an auction company would charge on average 10% commission. However, eBay's cut is typically 1.6% for equipment that sells for more than $1,000 — and I would imagine a potential client the size of URI would warrant an even lower fee.
Online sales are not new for heavy construction equipment. Internet sales have fueled the market growth for all types of lifting equipment. Many Web sites have been established, and there are some highly successful brokers that do a phenomenal job with used lift equipment sales. Go to www.NLEQ.com to see an example. However, none of these are targeted toward mainstream consumers like eBay.
I have to believe that as more and more buyers turn to online sourcing, the need to find specific makes models and vintages will drive them to more lift-specific sites. What does this mean to the used lift market? It gives this type of equipment a lot more exposure and attracts a whole new set of buyers. But remember, a whole new world of buyers brings with it a whole new set of issues. Although this is a bold and exciting step for the industry, it's also a daring move — and one URI has taken alone.
Reaching outside the bounds of traditional distribution opens up a whole new can or worms. Of these, the most critical evolves around the ANSI A92 standards and the specific requirement it places on the dealers or those that sell lift equipment. I had the opportunity to interview Mike Kneeland, United's executive vice president of operations, recently. As you can imagine, Mike and the entire URI team are quite high on this initiative. When asked how URI would deal with the ANSI standards, Kneeland conveyed that it would treat the sale of any piece of equipment on eBay no differently than it does a traditional sale to one of its established customers. “We will do whatever the standards set forth,” he said.
As the largest owner of lifting equipment in the world, URI's venture into this program will potentially lead to the sale of hundreds — if not thousands — of machines online. Great care must be taken to ensure that the new breed of buyers it attracts are not only aware of the special requirements that come with this type of equipment but also diligent in its compliance with the standards clear mandate that holds them solely responsible for the proper level of training specified. Accomplishing this will be the true key to the success of this intriguing program.
