As the number of lots to be put up for auction at Ritchie Bros. 2018 Orlando auction kept rising higher and higher, company leadership grew cautiously optimistic that this could be the year they break the huge annual event’s sales record set in 2012 of just more than $200 million.
“As late as quarter four we didn’t have a vision that we’d be where we are (with this year’s event),” said Jeff Jeter, Ritchie’s president of U.S. sales, during a February 20 meeting. “We knew that particularly this year we had seen very strong demand and good pricing, and sellers have wanted to be a part of that.”
“This event is a hockey stick in how it builds in the last 30 days,” explained Jake Lawson, the company’s senior vice president for the southern U.S. region. “A lot of decisions by customers get made on very short fuses.”
But after the dust kicked up by more than 12,800 trucks and heavy machines cleared, the 2018 Orlando auction, didn’t just break the 2012 sales mark. It smashed it.
According to a Ritchie Bros. release, the auction sold $278 million worth of equipment over the course of the six-day event—now the largest in the company’s 60-year history. The auction drew more than 13,350 bidders, 8,600 of which bid online. More than 1,050 sellers placed machines on the block this year.
More than just breaking every conceivable sales record there is for what the company calls its “premier” auction, the 2018 event also signals a big change not only for the Orlando auction, but for Ritchie Bros. as a whole, moving forward.
Technology is changing the face of Ritchie Bros. live auctions
The 2018 Orlando auction’s record sales mark represents a 24-percent increase from the 2017 auction. Perhaps more importantly, that figure includes $123 million in online sales—the most ever generated during a Ritchie Bros. event and a 71-percent increase over 2017.
Though the massive Orlando event draws thousands of buyers, equipment geeks and gawkers through its gates each year, 64 percent of all 2018 bidders made their offers online and accounted for 44 percent of the event’s sales.
Ritchie Bros. is not surprised by these numbers. The company long ago saw and embraced the shift to online equipment sales, realizing that rather than representing a threat to its ability to sell equipment during live auction events, technology could greatly expand the company’s ability to include more bidders during these events.
This line of thinking ultimately culminated in the company’s 2016 acquisition of former competitor Iron Planet. Because the deal didn’t close until June 2017, this year’s Orlando auction was the first since Iron Planet’s integration into Ritchie Bros. has been completed. The result were some new “special features” at this year’s event that blur the line in a big way between on-site and online auctions.
The first of these new Orlando features was a virtual consignment option. This allowed sellers who couldn’t justify the cost of transporting a machine to Orlando to still sell their items at the event. To ease the minds of sellers bidding on items they could not inspect in person, Ritchie Bros. and Iron Planet performed inspections of these machines and offered their IronClad Assurance guarantee on their condition. These assets were then integrated in with all of the rest of the items up for bid in the auction.
“The only reason we are able to do this was Iron Planet and what they did with IronClad Assurance inspections,” Jeter said. “(Bidders) don’t have to be here physically to see that equipment but they can be assured of its condition.”
But the 2018 Orlando event didn’t just accommodate remote sellers. In auctions on both the big ramp and in the new “virtual auction ring,” online bids were taken for the first time in real time alongside those of attendees making their bids in person.
The way Ritchie Bros. does this is with online auction clerks who sit in during the live auction and signal to the auctioneer whenever an online bid is placed. These bids along with the location of the online bidder are then displayed on the big screen so everyone at the auction in person can see them as well.
The company is also encouraging more bidders to try placing their bids within the Ritchie Bros. mobile app. The app accounted for between 5 and 10 percent of all online bids placed in 2017. On the first day of the Orlando auction last week, 6 percent of all online bids came through the app.
Backlogs, virtual bidders led to record-breaking auction
When asked what he thought the massive numbers coming from the Orlando event might portend for heavy equipment sales, Jeter, Lawson and Ritchie Bros. CEO Ravi Saligram all say that the success of this year’s auction says more about how the company has responded to shifts in demand rather than highlighting a dramatic shift for the industry.
Saligram in particular noted his belief that the integration of Iron Planet and expanding on-site auctions to virtual bidders has allowed the company to access previously untapped sales potential at its live events.
“We created history last week,” Saligram said in a statement. “We consider this to be a barometer of both end user demand as well as superb execution of our sales, marketing and operations teams. Despite continued tightness of supply, which we expect to persist, our teams leveraged existing customer relationships, and penetrated new accounts. The auction results showcase the potential power of the Ritchie Bros. Auctioneers and IronPlanet combination and that the innovations we implemented in Orlando significantly enhanced the customer experience for sellers and buyers”
Jeter said he doesn’t consider this record-breaking Orlando auction to be reflective of the overall market.
“I think you have to be careful how you look at this as a predictor for the balance of the year. It’s really a unique week and a unique auction and if you’ve got equipment to sell you want to be a part of this event. This year in particular is very different from prior years,” Jeter explained, adding that the company has seen constrained supply and high demand for equipment as contractors across the country face backlogs and the potential for more work coming all the time.
“The level of activity is driving demand. Any market you go to today it’s blowing and going. And with OEM lead time, they can’t build new equipment fast enough. When you’ve got high utilization and a lot of work and tight new equipment flow into the marketplace that creates a huge demand for used equipment.”
Construction equipment accounted for 33 percent of all assets up for sale at the 2018 auction with 4,285 machines available. That represents an 80 percent increase in machines over the 2017 auction and a 105-percent increase over the 2016 event.
Jeter called construction equipment “a huge part of our business,” and Lawson added that there is huge potential moving forward in both construction equipment and crane sales due to increased bridge projects and the Trump administration’s focus on increasing infrastructure spending.
The 2018 auction sold the following equipment:
- 765+ excavators
- 520+ compactors
- 475+ skid steers
- 380+ loaders
- 300+ dozers
- 165+ articulated dump trucks
- 155 cranes
- 380+ aerial work platforms
- 430+ truck tractors
- 195+ dump trucks