As lockdown boredom continues I have registered for a number of auctions this month, as I’m sure many others have too.

This has brought into focus the level of fees that are being charged by the traditional auction houses at a time when, due to lockdown, they offer no additional value to buyers over and above that offered by the online only platforms.

In order to analyse the market I completed the following tasks;

  • Collated the fees charged by the different operators in the market
  • Turned to academic research to discover the value of a traditional auction
  • Developed a theoretical Value Proposition for both buyers and sellers


Most of the traditional auction houses publish their rates either on their website or on documentation within their website. All of the below figures were correct as of 16/11/2020.

The sellers listing fees are relevant but difficult to compare on a like-for-like basis as different levels of service are included with each one (valeting or photography for example) so I’ll park those to one side for now.

More importantly, the median deal take from sales 19%. Two thirds of this is typically being paid by the buyer.

By comparison to online platforms fees are:

The deal take across the board for online platforms is a maximum of 6% with either the buyer or seller paying the entire amount. Due to the caps applied by The Market and Collecting Cars the effective fees can be much lower for higher priced cars.

Service Level – Offline Auction

What’s on offer for 19% of the deal? In the same way that a newspaper has two customers to please, readers and advertisers, auctions also have two groups of customers to serve in the shape of buyers and sellers.

For consigners they offer a straightforward way to sell; by writing the advert, taking the pictures, providing guidance as to value, removing the need to deal with buyers, storing the car and completing the financial transaction the auction house makes it as pain free as possible for an individual to sell their car.

For buyers there is the opportunity to purchase a car at a lower level than may otherwise be achieved, however there is an inherent risk to this as there exists no warranty for anything that is purchased.

It is assumed that cost is a driving factor in purchasing from auction as given a situation where two identical cars were available via an auction or via a dealer at the same price it would perhaps be surprising to dismiss the added security of buying from a dealer. Additionally, buyers may be able to access rare or obscure cars via an auction that sellers would find difficult to price via a private sale. They also benefit from the financial transaction being dealt with via the auction house.

In my opinion the buyer is securing the most value out of the current situation – and most importantly the auction house is acting as their appointed agent. For example Bonhams states in the conditions of sale:

The Seller has authorised Bonhams to sell the Lot as its agent on its behalf and, save where we expressly make it clear to the contrary, Bonhams acts only as agent for the Seller

Bonhams : Conditions of Sale relating to car auctions (

Despite the auction house acting on behalf of the seller the buyer is paying two thirds of the deal take. That’s similar to buying a house and having to pay 2/3 of the sellers estate agent fees.

Designing a Value Proposition

Ostelwalder et al (2015) set out way in which to design a customer value proposition which I have often used for my day job – a light version in this scenario would require thinking out a basic customer profiles for both the buyer and seller relating to auctions.

Customer Jobs1. Buy a car at a favourable price
2. Access rare cars
1. Sell a car with little effort
2. Obtain the best price
Pains1. Risk of buying a bad car
2. Transaction fees
3. Waiting for a lot to come up
1. Transaction fees
Gains1. Cost savings
2. Entertainment of auction environment
1. ‘Hands off’ sale
2. Minimal financial risk

Online vs. Offline

In a world where physical auctions are closed to the public a traditional auctions house offers little more to either party – the main elements are that there is an auctioneer conducting the sale and the ability to bid by phone.

The value attached to the ability to bid by phone at an auction I believe is a generational one. In a Guardian article it was reported that while 75% of the UK own a smartphone, 25% of these don’t use the phone for calls. The writer goes further and suggests that some in their twenties and thirties “would rather suck Donald Trump’s toe than make or receive a call”.

Anecdotally I would suggest that of those auctions I have been to pre-covid the majority of buyers aren’t in fact millennials, so for now it would likely be of use to some buyers. However, over time this will change. Collectible car buyers tend to enter the market in their 50s and exit in their 70s, as I suggested in a different article based upon the research in my dissertation, and as younger blood comes into the sector I doubt telephone bidding will still be a desirable attribute to the sales process.

Therefore, the main differentiator is the live auctioneer. Is this a live auctioneer worth the premium over an online auction? The academic literature that I have read thus far doesn’t offer a conclusive answer either way in comparing a live auctioneer to a computer based one but there is a little research completed on the subject of online vs. offline auctions.

Some benefits of online auctions were offered amongst the research;

“For buyers, online auctions provide access to a wide variety of items—some common and ordinary, some rare and unique—without investing considerable time, effort, and expense”

Hou & Blodgett (2010)

“In an offline auctions the sale must wait until a suitable auction is scheduled, bringing costs of delay for the seller [and] bidders incur travel costs and other costs of participating; the seller bears these costs indirectly via lower bids and fewer bidders”

Kazumori & McMillan (2005)

Kazumori & McMillan (2005) was the best paper that I could find in regards to online vs. offline auctions;

“Bidders do better online, even though they are relatively uninformed about the item’s true value, because their competitors are equally uninformed and so, from fear of the winner’s curse, the bidding competition is less fierce. Sellers, also, in some cases do better online because of the saving in transaction costs.

Kazumori & McMillan (2005)

In this quote the authors refer to purely online auctions vs. offline auction with live bidding; the argument being that if the situation arises that an in person viewing has been achieved by live bidders, but not available to those bidding online, then those online bidders are at a disadvantage. In the case of online platforms every buyer is in the same situation as there is no live auction to attend in person.

The viewing element is an interesting one. In normal times this would be a large part of a traditional offline sale, but is it actually valued by buyers? Back in May 2020 I asked Ed Callow of Collecting Cars on Twitter how popular viewings were;

This level of demand for viewings is supported by H&H in their description of their new live online sales;

“Viewings can be conducted at your location or a storage facility. However, so far less than 5% of buyers have availed themselves of this facility”


If the viewings at traditional auction houses are not valued by buyers then why bother? Additionally, if auctioneers offer little benefit to either buyer to seller then there seems to make little point in paying the premium.

Within the research literature there is greater importance placed on the type of auction rather than online v. offline – hard closing auctions that finish at a fixed time, such as eBay, yield a lower sales price than those of soft closing auctions that do not have a fixed end. Whilst this is the manner in which a traditional auction acts, it can be mimicked by the use of an automatic extension as used by all three of the online platforms as explained in the Collecting Cars FAQ “any bid received within the last two minutes will automatically trigger an extra two minutes to be added”.

Additionally in art auctions it was found that a lack of price anchoring boosted the sale price, an area that had a greater impact on the price achieved;

“Realized prices were maximized in the face of no anchoring information (no minimum or reserve mentioned)”

Dass et al (2014)

Designing a Value Proposition

Using the table above with assumed jobs, pains and gains for buyers and sellers on the market it is possible to create an assumed Value Proposition. With a blank piece of paper I would design a proposition around the following three areas.

  1. Transaction Fees

While the online platforms have drastically reduced the deal take from auctions there exists an all or nothing approach in regard to fees, i.e. either the buyer or seller pays.

One of the areas in which two of the platforms may fall short of traditional auction houses is the lack of dealing with the full financial transaction. Both Collecting Cars and The Market remove their commission from the relevant party and leave the buyer and seller to complete the remaining transaction. To some, this may be a deterrent.

Car & Classic however has “an escrow payment function which holds funds in a secure third-party account until both buyer and seller confirm they are happy with the sale”. Due to this it would theoretically be easier for C&C to deploy this difference as there would be minimal increase in administration, however for both Collecting Cars and the The Market it would mean an increase on their existing administrative load.

Providing consignors with the ability to list and sell their car without fee no doubt makes it easier to procure cars to list, however unless it has been tested and rejected, it could theoretically be as successful to list cars with a zero listing fee and 3% buyer / 3% seller fee spread. There still exists no barrier to list for consignors and reduced buying fees may encourage higher sale prices.

The Market’s decision to charge only the seller makes sense theoretically as the seller is the party on whom the administrative cost is being lavished. Phone calls, creating the advert, and the emails back and forth required to get a listen live are administrative costs associated with the sellers wants and demands, not the buyers, so it seems fair that the costs are apportioned accordingly. In practice however it could be that this is too much of a deterrent to secure some consignments.

2. Risk of Buying a Bad Car

In my opinion the long term success of the online platforms will be secured around trust and brand, areas that I plan on exploring in further depth in a future article.

In essence, with the exception of a seller with dubious morals, there exists no winners in a situation whereby someone buys a pup from an online platform. The Market provide a ‘concierge’ option for £250+VAT that means that they will photograph the car, store it and conduct viewings.

I think that this proposition could be further boosted by offering a £350/£400+VAT option in which they have an independent inspection completed by the same garage every time who produce a report on the car, similar to the way that inspections are completed in Japan.

From a buyer perspective I think this would negate some remaining concerns around buying unseen, and provide a signal to the buying public that The Market is a trustworthy platform.

3. Turnkey Selling

Reduced administrative load is no doubt some of the reason that sellers turn to auctions. What is interesting in the current market is that whether a platform does or does not store a car is touted as a benefit in both instances.

For those that don’t “the car remains in your possession until the sale is complete” is pushed, whereas those that do are sure to promote the fact that sellers don’t have to complete what little viewings that exist. I think the simplest approach would be to adopt a budget airline model and let the seller decide, in the way that The Market does. Default is that the car stays with the seller, however the option for storage exists.

4. Entertainment

The draw of an auction as a form of entertainment can not be replicated by the online platforms, but to be honest I’m not sure that younger generations will want to be in that environment anyway. Drive two hours, spend three hours waiting for your lot to come up while you drink instant coffee in a plastic cup, watch your lot open above the estimate on commission bids then drive two hours home.

For some that’s a good day out, for others it’s an inconvenience. By using a set auction end time with ongoing two-minute extensions there is no longer the need to keep checking in on the auction to see how far your desired lot is.

Moving Forward

The existence of the traditional auction house model I think is safe in the short term. However, in the medium-to-long term as Baby Boomers withdraw from the market I don’t think the level of interest from younger generations will be matched.

Auction houses will no doubt try to protect their fees by stating that they have more overheads, staff and facilities. Essentially, the market doesn’t care and will vote with its feet and move to lighter, more nimble operators. Time in the market doesn’t earn the right to continue to exist as London taxi drivers, Blockbuster and hotel chains would attest to.

For Blue Chip cars the theatre of a live auction will probably remain for a longer period. For those selling more day-t0-day vehicles I think buyers will move online, especially whilst they are being asked to pick up the tab for the auction house to act on behalf of the seller.

Currently, the service on offer between online and offline auction providers is essentially indistinguishable except for the fact that one charges three times as much.


OSTERWALDER, A., PIGNEUR, Y., BERNARDA, G., & SMITH, A. (2015). Value Proposition Design How to Create Products and Services Customers Want. Value Proposition Design. Hoboken, Wiley.

KAZUMORI, E., & McMILLAN, J. (2005). Selling Online versus Live. The Journal of Industrial Economics, 53(4), 543-569

WU, C., CHENG, F., YEN, D., (2014) The Influence of Seller, Auctioneer, and Bidder Factors on Trust in Online Auctions, Journal of Organizational Computing and Electronic Commerce, 24:1, 36-57

HOU, J., BLODGETT, J. (201) Market structure and quality uncertainty: a theoretical framework for online auction research. Electron Markets 20, 21–32

DASS, M., REDDY, S., IACOBUCCI, D., (2014) A Network Bidder Behavior Model in Online Auctions: A Case of Fine Art Auctions. Journal of Retailing,Volume 90, Issue 4, pages 445-462,

Bonhams, Conditions of Sale relating to car auctions

Published by Mark Tofts

Freelance consultant working on business concept design and research projects with an interest in all thing automotive.

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