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Taking Advantage of Online Storage Auctions: How They Work, Benefits and Choosing a Platform

Online auctions have become increasingly popular in the self-storage industry, and for good reason. Here’s a look at how they work, the benefits to facility operators, and tips for choosing a platform that’s right for your business.

February 2, 2015

5 Min Read
Taking Advantage of Online Storage Auctions: How They Work, Benefits and Choosing a Platform

By Leonard Pecker

Online auctions have become increasingly popular in the self-storage industry, and for good reason. They not only meet the ever-growing public interest in lien sales, they provide many benefits for facility operators. Online platforms have evolved over the past few years and now drive thousands of buyers to auctions without the drawbacks of onsite events.

The increase in industry awareness driven by TV shows like “Storage Wars” is generating a wave of online-auction platforms that offer different benefits, price points and opportunities. Sellers and buyers can now choose a provider based on their own priorities. Here’s a look at how online auctions work, the benefits to storage operators, and tips for choosing a platform that’s right for your business.

How They Work

Most auction websites explain in detail, through text and video, how simple it is for sellers and bidders to open their account. Essentially, these online platforms use an eBay-style format in which storage operators can post pictures and videos of units available for auction. Each auction listing must contain the unit number and size, a description of the contents, start and end dates/times for the sale, the starting bid, and the facility’s contact information.

Potential buyers can bid on these units via their computer, tablet or smartphone. The system allows them to participate in auctions outside their immediate area and pick up the items in the days following the sale. When an auction closes, the seller and winning bidder receive a written confirmation.

Dependent on state legislation, the auctions only take place after all legal notifications to delinquent tenants have been completed via newspaper, e-mail and registered letters. Many state lien laws specify that a public sale must take place at the storage facility. The online auction satisfies this requirement, as the physical transaction takes place at your site. It’s still highly recommended that you review the online-auction process with your legal counsel and state self-storage association before proceeding.

Benefits

Online auctions offer many benefits to storage operators. First, they come with none of the headaches that often accompany onsite auctions. For example, you might get a crowd of people at an onsite sale when, realistically, only a few regulars will bid on units. Some tenants complain about the crowds or not being able to find parking. In addition, there’s an increase in noise and garbage, and operators often find themselves in need of extra staff or security. An online auction makes all of these problems disappear.

Storage operators who sell online benefit from decreased costs compared to using auctioneers, who typically charge 15 percent to 25 percent. The process is also much faster. With onsite auctions, operators sometimes have to wait months before they have enough units to justify an event. The cost to hold those delinquent units adds bad debt directly to the bottom line. The bad debts continue to grow, eroding the profitability of the storage business. With an online platform, operators can list a single unit at any time. For example, you could list a unit today, empty it by next weekend and rent it to a new customer by the following week.

Storage operators also benefit from having their logo visible on an online-auction site 24 hours a day for several days to a week, which promotes the facility, draws traffic and is less expensive than newspaper advertisements. Partnering with an online-auction company actually complements a facility’s marketing efforts in a high-visibility, strong impact manner. Many bidders rent from facilities they discover through online listings.

Bidders benefit from online auctions as well. They can participate from the comfort and convenience of their home, office or anywhere they have an Internet connection. They can bid simultaneously on more than one unit, at several locations, without any travel. Severe weather, which normally would deter a strong onsite turnout, has no effect on online auctions.

The convenience of bidding online can also attract more buyers than an onsite auction. In fact, those who’ve never attended an auction are less intimidated by the online platform. They can remain anonymous, their personal information is confidential, and they can bid when it’s suitable for them.

Choosing a Platform

Now the fun begins. As with any purchase of a product or service, you must find a provider that meets your needs. What’s most important to you? Consider these aspects:

  • Price: There are various pricing strategies among providers. Some charge sellers a percentage of the unit selling price or a fixed monthly fee. Others are free for sellers, with fees and percentages paid by bidders.

  • Efficiency: A self-managed platform that allows sellers to enter their own data versus one where the provider enters all the information is faster and more efficient, and gives sellers more control over their listings.

  • Customer service: The quality of customer service is critical. Look for a provider who provides service seven days per week, with fast response time to messages and e-mails.

  • Technical support: You’ll receive more knowledgeable, better quality and faster support if you choose a provider that has an in-house technical-support team as opposed to contracted support.

  • Confidentiality: Some sellers prefer to mask unit numbers during each online auction to reduce the risk of theft. Choose a provider that features this option.

  • Privacy: After the auction is over, the physical transaction still takes place at the storage facility. To ensure bidder privacy and prevent collusion among bidders, choose an auction website that employs usernames to maintain user anonymity.

  • Security: The auction provider’s website should be fully secure, with information encrypted and HTTPS secured.

  • Reputation: Pay attention to the provider’s length of time in business as well as the reputation of the storage operators who use the auction website. Feedback from other sellers is also a great resource to help you choose.

  • Ease of access: The auction platform should be easy to use and understand. The site’s navigation is an important factor in your final decision.

McDonald’s, Wendy’s and Burger King all serve burgers. The product may be prepared differently and taste unique, but they’re all burgers. When you think about partnering with an online-auction provider, look at what the company brings to the table. Compare it with your business needs, and then make it happen.

Leonard Pecker is the director of customer service for iBid4Storage.com, an online storage-auction marketplace where sellers and buyers in North America can benefit and prosper. For more information, call 855.402.4243; e-mail [email protected]; visit www.ibid4storage.com.

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