Continue reading »]]> As of late, the buzz words in the auction industry, and many industries, are “social networking.”  However, the implementation thus far within the auction industry has been spotty at best, and when implemented most get it all wrong.

I’ve written about social networking on two separate occasions in the past both in May of 2008: Jumping into the social conversation without drowning; and Connecting via social networks.  There is some good information that is still pertinent to conversations about social networking, especially in the jumping without drowning post.

In fact, in the jumping without drowning post, I review an article about 12 tips for success in social media.  The last 6 tips focus on “diving into social media” and are: 7. Engage Your Audience; 8. Engage Your Employees; 9. Engage Your Customers; 10. Be Honest and Authentic; 11. Define Metrics According to Business Objectives; and 12. Fail Quickly. Fail Cheaply.

As I look at that short list two things jump out.  First: engage, engage, engage; and second: honest and authentic.  This is where most auction companies get it wrong.  For the most part auction companies understand honest and authentic.  But it’s the engage, engage, engage part where the mark is completely missed.

Auction companies broadcast market events.  They mail hundreds and sometimes thousands of brochures, run multitudes of display ads, and run minutes or more of commercials on radio.  Often, this is just the beginning of the marketing campaign.  However, did you notice one thing these methods all have in common?  Broadcast, broadcast, broadcast.

A primary tenant of social networking is to engage honestly and authentically.  Yet, my experience has been auction companies are so trapped in broadcast mode that they fail to engage.  Rather, they fall back on the old reliable method of broadcast marketing.

What does this mean?  It means almost all the auction companies I follow broadcast links to auctions.  That’s not engaging.  Where is the insider information and tips?  What about links to resources you find, or articles you found interesting?  What about writing informational articles, and then passing that information along via Twitter or Facebook in the form of a link?

What if auction companies engaged their customers?  Companies could promote resources for buyers and for sellers, pass along industry information, provide behind-the-scenes information about upcoming auctions, and so much more.  What about actually interacting and having conversations with customers via Facebook and Twitter?  When it comes time for a customer to use an auctioneer, who are they going to look to first?  The company that merely blasts information, or the company that engages and interacts?  The company that provides useful resources and information to the consumer or the company that merely broadcasts notice about their next auction?

Now, our company is just as guilty of broadcasting, or I should say was just as guilty.  In fact, initially, we set up our website to automatically broadcast every new auction, real estate listing, and update to our Facebook page.  However, we recently turned that feature off.  At the same time, we added our company to Twitter (@SAuctioneers).  We did turn on a feature that will automatically tweet anytime we add a new listing, auction, or update to our website.  However, we’re determined to share links and information to our followers on Facebook and Twitter.  In fact, we’ve incorporated a section called “We’re all a Twitter” to the front page of our website which displays our two most recent tweets.  Consumers will be able to follow us on Twitter, Facebook or the front page of our website for engaging, honest, and authentic information.  They’ll be able to interact with us, learn from us, and teach us.  We’ll be able to share with them, and them with us.  It will be social and relational.

In the end, what are you doing to be social?  Are you broadcasting at the top of your lungs, or are you setting out to engage honestly and authentically those that come in contact with your company?  Given the choice, I know with which person I’d want to hang out!

Continue reading »]]> It’s becoming increasingly common for auction companies to offer online bidding at their auctions. There are a multitude of types of auctions with online bidding. However, I’d like to focus on live auctions that have an online bidding component (i.e. pre-bidding, live bidding, or a combination thereof). In particular, I’d like to examine the registration requirements of two fictitious bidders at an auction with live online bidding. Let’s call the bidders Online Guy, and Onsite Gal. The auction can be of any asset class you’d like, for arguments sake it doesn’t matter.

Online Guy and Onsite Gal both come across an auction that they’d like to attend. They both notice it has online bidding. Onsite Gal has an entire day to spend at the auction. Online Guy on the other hand is taking care of his two toddlers, and finds it more convenient to stay at home than go to the auction with the two toddlers. Online Guy still wants to participate so he decides he’ll bid live online from his home.

Let’s examine the registration process for each bidder.

Onsite Gal
Onsite Gal shows up about twenty minutes before the auction is to begin. She heads over to the clerking trailer and asks for a bidding number. In most cases, the cashier asks for a picture ID. In exchange for the information on the ID, and verification that Onsite Gal is really who she says she is, Onsite Gal is given a bidding number. When Onsite Gal makes a purchase and is ready to leave she is asked to stop and make payment with the cashier. Payment can be in the form of cash, check, or credit card, and once payment is made, she can take her purchases home. However, there is nothing stopping Onsite Gal from leaving the auction with her purchases and not paying.

Online Guy
Online Guy registers a few days before the auction is to begin. He logs in online, and is asked for his address, multiple phone numbers, credit card information, and in some instances is required to provide a bank letter of credit. In exchange for this information, the auction company issues a bidding number. When Online Guy makes a purchase, he is emailed an invoice, and his credit card is typically processed for the purchase (in some instances alternative arrangements are made). Only once payment has been secured and verified as in the account of the auctioneer is Online Guy allowed his purchases. In addition, every transaction that Online Guy makes is tallied and tracked. His complete purchasing history and payment history is logged in a database.

Something Doesn’t Add Up
Somewhere along the line, because we can look a buyer in the face, we’ll give them a credit card (i.e. bidder’s number) with no credit limit, allow them to take their purchase home prior to verification that the funds are good (i.e. bounced check). However, in instances where we can not look a buyer in the face, we require additional safeguards, and in actuality have more historical data about the online buyer (i.e. purchase and payment history) than the onsite buyer. Somehow that just doesn’t add up, and in fact seems backwards.

Auction companies need to apply the same set of registration terms to both online and onsite bidders. In fact, approving an online bidder to participate in your auction that has a history of purchasing and paying for items is safer than handing bidding numbers out to anyone that produces a valid photo ID in person. By overly restricting online buyers, auctioneers are dampening the impact online buyers will have on the bottom line of an auction, and are not serving the seller’s best interest.

Continue reading »]]> This is a hot topic in the State of Minnesota. As recently as a few years ago, the Minnesota Department of Revenue began to audit auction companies for compliance with sales tax laws. The audits were not completed uniformly, and different standards were applied. As a result, the Minnesota State Auctioneers Association has had numerous seminars on the topic. Even today, it continues to be a often discussed topic. The question above was most recently addressed to me in an email.

I understand that if selling for a business that would have charged tax, I need to collect on their items. However, it is unclear if I am selling for people downsizing, left over estate items for the deceased or someone just cleaning house…

I am under the understanding from the MSAA that tax MUST be collected on this type of sale. Yet the first response I recieved from the state tells me I do not have to collect sales tax.

There are two other auction houses within 30 miles of mine and they are not collecting tax. I am and this is creating a conflict with my customers.

Minnesota has rules governing the collection of sales tax. The particular area that applies to auctions of personal property is: Minnesota Administrative Rules 8130.5800 ISOLATED OR OCCASIONAL SALES AND SALES OF PERSONAL PROPERTY USED IN TRADE OR BUSINESS.

The answer from the state is correct – but only to a point. They are correct that tax is generally not collected in instances where you are selling for that seller and only that seller (an auction by their definition) not at consignment auction. However, regularly scheduled consignments auctions are not considered auctions (I know it sounds crazy – but that’s the law – see Rules 8130.5800 Subp. 10 B.), and are instead considered consignment auctions. As a result, Subp 10 applies.

Subp. 10. Consignment sales and consignment auctions.
A. For purposes of this part, consignment sales are sales in which a retailer maintains a place of business where tangible personal property owned by others is sold by the retailer in the normal course of business. The retailer may also sell property owned by the retailer. A consignment sale is not an auction, as defined in subpart 8.

B. Consignment auctions are events that are regularly scheduled, are open to members of the public to sell their items, and are held at the same location. Consignment auctions are not selling events, as provided under Minnesota Statutes, section 297A.87. Consignment auctions are not auctions, as defined in subpart 8.

C. The sale of items held in inventory, taxable services, and property primarily used in a trade or business is generally subject to tax, as provided in Minnesota Statutes, section 297A.68, subdivision 25.

D. Consignment sales and consignment auctions are exempt from tax if:

(1) the title to the property passes directly from the owner to the buyer;

(2) the payment does not pass through any accounts of the retailer or auctioneer;

(3) the retailer or auctioneer does not carry insurance on the property; and

(4) the rights to accept or reject any offer are retained by the owner.

If all four of the exceptions apply at consignment auction, you are not required to charge tax. If an auctioneer fails to meet any of the four, tax is required to be collected. Of course, there are exemptions that the buyer can have – and most require them to have a tax id number, and all require them to complete an exemption form.

To answer your question, if it’s a regularly scheduled consignment auction, tax should be charged. If is a stand alone auction for a seller, tax is not required to be charged if it meets the exemption explained in the correspondence from the state. In fact, our company has taken the collection one step farther, and collect sales tax on all consignment auctions. We have found the term regularly scheduled to be unevenly applied, and find it financially prudent to charge tax on all consignment auctions rather than risk an audit, and assessment of unpaid sales tax.