Two years after it acquired a company with expertise for building online auctions and nearly six months after the launch of a new digital marketplace for buyers and sellers of heavy construction equipment, Ritchie Bros. Auctioneers Inc. is beginning to see a global return on its investment in B2B e-commerce.
That’s the conclusion of CEO Ravi Saligram and executives such as Matt Ackley, senior vice president of digital marketing and product management. A big turning point for the company came in May, when Ritchie Bros. completed its $758.5 million acquisition of IronPlanet, an online marketplace for heavy equipment like bulldozers, farm tractors and road-paving equipment.
Using IronPlanet’s online marketplace and e-commerce assets, technology and expertise as a base, Ritchie Bros. in March launched Marketplace-E, a new B2B e-commerce and marketplace site that, among other features, enables sellers to list equipment online, receive offers from potential buyers and negotiate final purchase agreements.
Vancouver, Canada-based Ritchie Bros has expanded Marketplace-E in Canada and internationally, including in Brazil and Europe. “This is a major step in our e-commerce evolution,” Ackley says. The company also credits a more diversified e-commerce strategy and the launch of Marketplace-E for driving bigger and better results for the online portion of its business.
For the six months ended June 30, Ritchie Bros. reported that the value of combined gross e-commerce transaction volume on its digital auction and marketplace sites—including IronPlanet.com, GovPlanet.com, TruckPlanet.com and Marketplace-E, among a few others—increased about 162% to $411.6 million from $157.2 million in the first six months of 2017. Including its offline auctions, total gross transaction volume grew 20% year over year to $2.58 billion from $2.15 billion. E-commerce accounted for 16% of all gross transaction volume in the first half of the year, compared with just 7% in the first six months of 2017.
“Marketplace-E is growing fast in the international region, given that it’s particularly suited to some international markets where, historically, there has not been an auction culture,” CEO Saligram told Wall Street analysts on the company’s recent second quarter earnings call, according to a transcript from Seeking Alpha.com.
This week the company signed a multi-year agreement with PowerChina Trade Solution Group Ltd., a Beijing-based construction company with worldwide operations. Ritchie Bros. will sell equipment left over from completed PowerChina projects, says Karl Werner, president of the auction company’s international operations.
Companies and independent contractors in the construction, transportation, agricultural, materials handling, mining, forestry, petroleum, and marine industries have historically relied on live auctions, phones, paper and face-to-face negotiations to locate, buy and sell heavy equipment that can range in price from $100,000 to $2 million, Ackley says.
Buying a $650,000 trencher on a mobile app
But increasingly there are growing numbers of heavy equipment buyers and sellers that want to conduct business online in the U.S. and overseas. “They are in the field, they are mobile and they need what they need sooner rather than later,” he says. “The majority of our web traffic is mobile and we just had a buyer last week use our app to buy a $650,000 big trencher.”
A trencher is a piece of construction equipment used to dig trenches, especially for laying pipes or electrical cables, for installing drainage, or in preparation for trench warfare. Trenchers may range in size from walk-behind models, to attachments for a skid loader or tractor, to heavy equipment that operate on tracked wheels.
Ritchie Bros. launched Marketplace-E as a marketplace modeled somewhat after eBay, but with specialized web features that give heavy equipment buyers and sellers access to detailed product information and a secure e-commerce infrastructure for finding, researching and evaluating bid opportunities for large and expensive machinery.
For example, Marketplace-E lets buyers list equipment online at a fixed, buy-it-now price; once the item is purchased, the listing is closed. Each listing page also includes a detailed inspection report and warranty information.
“We have many customers who, for a variety of reasons, need more control over the selling price and process of their assets,” Saligram says. “With Marketplace-E they will get the control they need while still benefiting from Ritchie Bros.’s marketing and expansive global buyer network.”
On any given day as many as 60,000 pieces of heavy equipment may be available for sale online or at a traditional live auction, the company says.
Making auctions easier online than offline
One purpose of Marketplace-E—and a key part of the auction company’s emerging e-commerce strategy—is giving global buyers and sellers of heavy equipment new ways to make a purchase that’s easier and more convenient online than traditional auctions and from multiple countries.
Last month in Latin America, Ritchie Bros. teamed with two Caterpillar dealers in Brazil to hold a multiple-day auction event featuring excavators, motor graders, wheel loaders, dozers, soil stabilizers, rollers and related equipment that attracted bidders from 23 countries. The auction on Marketplace-E generated more than 1,440 bids from buyers in Brazil, the United States, Colombia, The Netherlands, Spain, Australia and the United Arab Emirates. The sales included a $100,000 soil stabilizer and $132,000 reclaimer item that sold to a buyer in Uruguay, a small bulldozer to a buyer in Brazil for $100,000 and a $68,000 motorized grader to a purchaser from Turkey.
Ritchie conducts about 350 traditional live auctions per year, but initiatives such as Marketplace-E will let the company use e-commerce to build a bigger international base, particularly where a live auction might not be possible, Saligram told analysts. “We immediately began leveraging our online capabilities with our weekly featured auction and Marketplace-E as beachheads to enter several key markets internationally where live auction culture was not widely embraced,” he told analysts.
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