Though as much as 75% of all the farm machinery sold today happens at dealerships, the auction market represents 10% of machinery purchases. And, a lot of new technology is entering the auction sector, changing how machinery and equipment changes hands.
The farm machinery sales sector is not exempt from the tidal wave of digital and interactive tools shaping how people communicate and conduct business today, and the emerging online sector is proof of that. In a time when farmers are watching machinery spending closely as profit margins remain tight, the efficiency of buying online can keep initial costs low, though local dealer service should not be overlooked in the big picture.
Online farm machinery auctions, which have “evolved greatly” in the last few years, offer sellers access to an expanded pool of potential buyers not bound by geography and buyers the opportunity to bid on machinery they wouldn’t at a traditional auction. Since the first online auctions in the early 2000s, many farmers have grown to embrace this new way of buying and selling machinery, all the while discovering new efficiencies the process offers as part of a bigger, more technology-savvy approach to managing a farm and its machinery lineup.
“Last year, we surveyed farmers by age, and with farmers 70 and older, there was a 10% jump in how much they were searching equipment on their phones,” says Greg “Machinery Pete” Peterson, who operates Machinerypete.com, a site dedicated to tracking farm machinery auction sale prices around the world. “That data shows that now, a lot of farmers, even in that generation, are looking at machinery prices on their smartphone. That’s causing big changes for the auction sector.”
Peterson, who’s tracked farm machinery auction prices for around 20 years, says today, farmers see online auctions as simply part of the process of buying some equipment, but one that is best utilized as part of a broader machinery ownership and maintenance strategy.
“If I can find a piece of equipment 5 states away that’s exactly what I need, I feel confident in buying it sight-unseen and it’s a good value. That can add efficiency to the process for me. And, any little efficiency I can gain right now is good,” Peterson says. “A lot of farmers are strapped for cash, so if they can take advantage of deals farther away from them than they would look with traditional auctions, it can save money.”
Farm machinery auction prices have historically been higher online versus live auctions, but Peterson says that’s changing. Prices are falling as more auction companies adopt online platforms, in some cases, to levels identical to live auctions. That adds to the importance of establishing trust with bidders for online auction companies, as that trust is typically not as strong when farmers are bidding from being a computer screen versus when attending a live auction.
The local service component
Buying machinery via an online auction, especially if the purchased item is geographically far away from the buyer, has one big caveat. Many farmers rely on local dealerships not just for purchasing equipment, but for service and maintenance through the life of that equipment. And, when that purchase comes from a dealer with whom a buyer may not be familiar or have the relationship he or she does with a local dealer, things like service history and understanding of previous ownership may be incomplete or missing altogether.
In recognition of new sales mechanisms like online auctions, Peterson says especially in the last 12 to 18 months, dealers have ramped up local service offerings to “become closer partners” with farmers in an effort to provide more on a local level even if machinery is purchased from afar.
“In the last year, I’ve seen more dealers doing things to make farmers more efficient. They’re doing it with an eye toward the future,” Peterson says, adding many dealers acknowledge online auctions as a sales tool that can be both an asset and a competitor for dealer sales. “I really think in the near future, we’ll see closer farmer-dealer relationships, and it’s going to drive tremendous value to farm operations.”
Future online auction advancement
The advancement of online machinery auctions doesn’t show signs of slowing down, Peterson says. More auction houses that have traditionally held only live auctions are entering the online space, and seeing both participant numbers and online platform sophistication increasing.
“Online auctions that are very successful hit it hard, hit it often and have a ton of promotion,” he says. “One thing the really successful online auction companies have done a nice job of is in the number of photos and videos they share on each piece of equipment up for sale. That’s becoming a big piece of the online auction puzzle.”
And though dealerships may not always be involved in the sales of machinery at online auctions, they will continue to follow the arc of technology that’s driving the trend, only with local service the end goal.
“Dealers are working to become closer partners with farmers,” Peterson says. “They will continue investing in personnel and training to bring farmers the latest tools to keep up. I've been seeing dealers really investing in the technology expertise side of their business, with an eye towards really helping their local farmer customers find added efficiencies and higher yields.”