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5 Benefits of Buying Equipment at Auction
We have all probably purchased items on eBay or some other consumer auction site, but did you know there are several Industrial Auction companies and platforms?
Buying equipment and machinery at an industrial auction have several benefits that businesses can capitalize on when looking to expand their machinery inventory. Sometimes there are even complete production lines – which can be purchased, match-marked, dismantled, shipped, reinstalled, and running in weeks.
Example of some auction companies:
- Heritage Global Partners
- Hilco Industrial
- Integra Asset Solutions
- Liquidity Services
- New Mill Capital
- Terra Point
There are Industrial Auction companies worldwide, and they handle an array of equipment pieces, machines, vehicles, and supplies. The auction items can run the gamut across several different industries from pharmaceutical equipment, meat processing & packaging equipment, fracking equipment . . .
Some time auction companies will have Real Estate available. Example: 98,000 SqFt 3 Building Facility.
Here are 5 BENEFITS of buying equipment at auction:
- Price - Typically, sellers want to sell a large amount of inventory in a short amount of time so you can get some great bargains. The difference between "New" and "Almost New" can be a savings of 30 to 70%. In some instances, the equipment has barely been used or is brand new, so it is a great way to save a substantial amount of money.
- Less Depreciation - Depreciation of used equipment is very similar to the depreciation of an automobile. As you know, a significant % of devaluation happens in 12 months or the first few years. When you pick-up the equipment at auction, you bypass the years with a substantial % of depreciation. After the initial drop of 20-40% in value of equipment or machinery, prices stabilize. Equipment and machinery that has maintained its value typically remains the same for at least 5 years.
- Speed - The speed at which you can get the equipment into your facility is critical. When the asset is up for auction, there is no manufacturing lag time or inconsistency due to OEM not having certain parts or materials on hand. As a result, you can get it immediately and start using it long before you could make the new equipment. Due to plant closures and companies changing their business mission, you can sometimes pick up equipment that has hardly been used. Purchase to installation is usually 2 to 3 weeks, where when buying NEW, you could be waiting 6 months or longer. The additional revenue achieved by being in production faster can have a significant impact on your bottom-line. The ability to acquire ready-to-use assets today or tomorrow at auction is a huge benefit.
- Environmental Aspect - Repurposing assets help keep them from being turned into scrap or ending up in landfills.
- Online Auctions - This offers you the chance to bid wherever you are.
Before you start to submit your bid, make sure you have done the following -
Educate - Educate yourself on the buying processes and understand all the factors: how to place a bid, bid amount, payment method, and equipment retrieval. RESEARCH the auction company to make sure they have a good reputation.
Determine your Bid - Before going online to bid on a piece of equipment, make sure you have a threshold of what you are willing to BID. You can figure this out with the help of a bank or an auctioneer. REVIEW the condition of the equipment to make sure your bid it appropriate.
Differentiate between "New" and comparable "Used" products.
Calculate Extra Costs - When figuring out your bid, make sure you take into account shipping charges. Also, account for maintenance & repair, buyer premiums, and removal costs.
World Innovators works with several auction companies and we constantly stress the concept of Educating and Giving out un-gated information versus the regular sales oriented marketing campaigns. Today it is all about building a strong foundation that will create relationships. Gone are the days of one-off marketing promotions, now you must implement a cohesive marketing strategy that will reach your IDEAL customer. You want to give these IDEAL prospects all the information they need to decide on their own that they need your service or product.
At this point you might be thinking why did I write this post all about the benefits of buying in an auction setting when World Innovators is a marketing company. There are several purposes why this blog came to be:
- I wanted to make more companies aware of the Auction space.
- To be a good marketer you have to totally understand the industry you are trying to help.
- Stress the importance of Educating and Branding that will increase the # of leads you receive in the future.
If you work in a specific industry and would like to discuss your marketing strategy for the future, please feel free to contact me directly.
Donna A. Peterson