Thursday, March 28, 2024

Online auctions see massive growth

Neal Wallace
By 2020, internet company AuctionsPlus aims to be handling 20% of Australia’s livestock sales.
Reading Time: 2 minutes

It now handled 3% of the national cattle market (about 400,000 head) and 7.5% of sheep traded (2.5 million head), chief executive Anna Speer said.

But she believed her 2020 goal was achievable given current growth.

“It’s a massive growth trend. We expect to be handling 20% of the market by 2020,” she said.

March was the biggest month ever for AuctionsPlus with 50,000 cattle listed, well up on the previous monthly record of 39,000 cattle. The number of farmers registering with the company was growing at 30% a year.

Stock, predominantly store, was listed from throughout Australia and sold at auctions each week, which allowed AuctionsPlus to set its own market level, Speer said.

It was 20c to 30c/kg liveweight above the physical market. She attributed that to the quality of the offering and competition among buyers.

Just how disruptive AuctionsPlus could be to a market was illustrated in 2015 when the price of Australian wagyu cattle rose after the internet auction company provided competition in what was a closed market.

Speer said previously the beef was sold direct between grower and user with little price transparency, though believed to be about $A3.80/kg liveweight.

Within three weeks of AuctionsPlus becoming involved and disrupting, the price rose to $4.20/kg then $6.20/kg a few weeks later.

Sellers had to be accredited as an approved assessor, having attended a course and met criteria in objectively measuring and describing the stock.

Speer said AuctionsPlus had 950 accredited sellers and there was strict observance of how stock weights were quoted and criteria of how stock were objectively measured and described.

“We operate a tight tolerance and have sharp penalties such as not being able to sell on the platform again.”

An independent arbitration panel resolved disputes.

“We train our assessors to consider ‘what will the buyer think when the animals come off the truck’.”

Vendors were moving from providing still photographs of stock to video footage.

Speer said reduced transportation, keeping stock onfarm until sold and choosing when to sell were major benefits along with the cost.

It cost about A$16 to sell a cattle beast through saleyards compared to $6.80 through AuctionsPlus. Sheep were $2 compared to 70c online.

Buyers paid for and arranged transport and by creating a nationwide market, the buyer pool had also become nationwide, meaning stock was trucked all over the country.

Most transactions were between farmers in the eastern states but cattle had been bought in Western Australia and trucked to the eastern states cheaper than if they were bought on the east coast.

AuctionsPlus was a joint venture between rural servicing companies Elders, Landmark and Ruralco but Speer said development of the auction system had been largely “learn as we go”.

United States-based Superior Livestock was the only other company operating similarly. The big difference was the AuctionsPlus system required one person to run an auction while Superior Livestock used 40 people. The US firm handles 1.5m cattle a year.

Speer said she had eight people working in technology development and new systems and their inspiration and ideas came from companies like Uber, Airbnb and Amazon.

The biggest challenge for AuctionsPlus was to find a system that developed relationships between buyer and seller.

The company was originally formed in 1986 as an electronic exchange and after several machinations became an internet auction platform in 2011.

While it sold mainly store stock, it also sold stud stock complete with inspection days before the sale, small numbers of horses, dogs and some wool.

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