Going, going, going online

Auctioning veteran Pickles Auctions was confronted with competition from keen online rivals. Instead of being swamped by the new force, principal Tim Pickles tells AMITA TANDUKAR and JAMES THOMSON how the firm has taken the web into its stride to win grea

By Amita Tandukar and James Thomson

Auctioning veteran Pickles Auctions was confronted with competition from keen online rivals. Instead of being swamped by the new force, principal Tim Pickles tells how the firm has taken the web into its stride to win greater market share.

When the Pickles family started Pickles Auctions in 1964, the founder of eBay, Pierre Omidyar wasn’t even born. But the explosion in e-commerce and the growth of online auction sites such as eBay has forced Pickles Auctions to embrace the web and build a thriving online business.

Pickles Auctions, which started life as a stock and station agent in the NSW country town of Moree, is one of Australia’s biggest auction houses, specialising in the sales and disposal of used and damaged cars and machinery.

The company has grown quickly since 1999 under the leadership of Tim Pickles (pictured), the son of founder Peter. Interstate acquisitions allowed Pickles to win national customers such as insurance companies, the Federal Government, Defence Department and corporations such as Telstra. The company now has auction facilities in all capital cities and the regional centres of Newcastle, Townsville, Alice Springs, Dubbo and Tamworth.

While the national expansion of the business has helped Pickles increase the value of goods sold at its auctions to around $1 billion a year, it also created a number of challenges.

Tim Pickles says the overall business strategy relies on offering a range of disposal options to consumers. As online sites such as eBay grew in popularity, the push from sellers for online options also grew.

But buyers also wanted to go online. “As our buyer base became more national, they really wanted a way to purchase nationally without having to put a spotter on the floor or fly around themselves,” director of marketing Bev Cameron says.

Four years ago, the company launched Pickles Live, a web portal to allow bidders to participate in a traditional auction through the internet. Online bidders require a small piece of software downloaded to their computer and a $500 credit card deposit before participating in an auction.

The only difference compared to a live auction is that bidders are only asked for a deposit after a unit is won. Registered trade buyers have a larger credit limit and greater options to manage bids in multiple auctions, which may be held simultaneously around the country.

Cameron says traditional customers who attend auctions week in, week out, have become very used to the online bidding system, although a few changes were made to the auction process when Pickles Live was introduced, including slowing down the auctions slightly to accommodate the small time lag with online bids, and communicating the auction status via a large screen on the auction room floor.

About 60,000 units have been sold through the live website since 2004 and currently 25% of all auctions are won by internet bidders.

That sort of success has seen the internet move from a side issue to the top of the executive agenda – new ways to use the internet are now discussed by the whole executive team at a monthly innovation meeting. “The internet is a core component of our business today and in the future. We are reliant on the internet for both business-to-business and business-to-customer [interactions],” Tim Pickles says.

He credits the success of the internet strategy to the company’s decision to integrate IT into general business planning, rather than give responsibility to a separate division. The company invested significant resources after deciding to develop its own online platforms because auction platforms were difficult to buy. Currently the company employs 30 IT staff in a total of 450.

In late August 2008, the company launched a new channel, Pickles Online, for auctions conducted completely online. This second option was created to attract buyers who were nervous about the live auction process and wanted more control.

The site is pitched at the retail consumer segment, competing against eBay Motors and classifieds websites Carsales.com.au, Drive.com.au and Trading Post. Competition is fierce for an early advantage in the emerging market, particularly since rivals Drive.com.au and eBay Motors decided to join forces by striking a content sharing deal in April.

Pickles Auctions is hoping its status as a trusted brand will win over customers. Cameron says: “We know where our stock is coming from, there is a lot more security in the transaction. In an eBay transaction you don’t know who you are buying from. We are backing the whole process so you are going to get the product you bought.”

Read more about online auctions