Taking construction equipment sales online
Can confidence in e-commerce extend to large pieces of heavy equipment?
There’s no denying the importance of online trading. From fashion to food and flights, and everything in between, the internet has become the place to be for consumers and retailers alike. However, despite the explosion of e-commerce over the last decade, online trading platforms have been used only in moderation by industry. Conservative by nature, construction has been notably cautious about embracing the internet.
This is now starting to change, and as acceptance increases in the sector, internet-based services are cropping up in a bid to meet the huge untapped demand that the construction equipment industry undoubtedly presents. So how can the original bricks-and-mortar business use e-commerce and social media to enhance trade in the modern era?
Acceptance takes time
Although online giants like eBay, Alibaba and Amazon may now be wildly successful, that wasn’t always the case. In their infancies, even the biggest names in online trading struggled to gain acceptance – and the critical mass of users that is essential for the marketplace concept to work. Financial losses were par for the course for Amazon and eBay when they were starting up in the mid-1990s. Today, these sites provide users with an invaluable platform – a virtual marketplace so vast and so varied it is now integral to our day-to-day existence.
Now, for example, eBay has over 100 million users and around 300 million items for sale at any one time. Chinese equivalent Alibaba boasts over 600 million users, and it is estimated that in 2016 the site will be worth $150 billion. With figures such as these, it’s easy to see how the internet can provide other industries with a model on which to base successful online trade.
Take books. Amazon was created in 1994 as a simple online bookstore. Despite a growing user base and the capacity to sell a variety of products, the site didn’t turn a profit for six years. Online auction site eBay was slightly quicker at creating revenue. After launching in 1995, its initial success came after a phony PR scheme claimed the site was developed to help founder Pierre Omidyar’s fiancée trade Pez candy dispensers – a story that seemed far more interesting than the more mundane truth of the matter.
From these modest beginnings, sites like these have earned users’ trust and become giants of online commerce. Because they are trusted by buyers and sellers, they provide an ideal solution for quick and easy global trading of almost anything. The concept is now being refined and embedded, and it’s only a question of when – not if – the construction equipment industry embraces it.
Safety in numbers
Although industry professionals are uncertain how online trade can be conducted effectively when it comes to large pieces of capital equipment, internet innovations are emerging to meet their new needs.
In the ‘old days’ (of a decade ago!) classified advertising was king when buying or selling used equipment, supported by the rolodex and old-fashioned address books. With the development of online platforms for buying, selling and renting, magazines such as Machinery Trader are expanding online. Moving classified ads online has proved beneficial, giving professionals a larger scope for sourcing equipment and getting their machinery seen by a broad geographical audience.
Going, going…
Taking internet trading one step further than simple adverts, auction houses were next to harness the power of the web for the construction industry. Physical auctions have incorporated an online bidding process that allows more people to source exactly the right machines for their job.
Ritchie Bros. is arguably the best-known equipment auction company to have embraced the power of the internet. Previously hosting only physical auctions, they opened their business up to the web in 2002. By 2008, the company was reporting revenues of $1 billion a quarter. Recent statistics show that almost 40% of Ritchie Bros.’ gross auction proceeds come from online buyers, and 60% of all bidder registrations are online users.
Online auction site Iron Planet takes the concept one step further, offering a similar service to that of Ritchie Bros., but without the physical auction aspect. For reassurance that what is being bid on matches the seller’s description – but without the need to visit the machine in person – it provides the added incentive of an inspection undertaken by their staff, offering an impartial report that is available to view prior to auction.
Sites such as these demonstrate that although the construction industry has a reputation for being conservative when it comes to taking business online, the success of auction and listing sites shows an underlying willingness to embrace online commerce and trade.
Social mobility
However, while the business potential of online trade is increasingly being accepted, the social aspect of the web has yet to be embraced. Websites dedicated to industry news go some way toward communicating with industry professionals, but these news sites and online magazines are, once again, a throwback to traditional media – one-way communication tools that, although useful, do not allow two-way interaction. In short, the world of social media has passed the industry by.
But perhaps the industry can learn something from these platforms, and from the plethora of niche social networks that have sprung up. Combine the traditional model, based on machine listings, with the focus of a niche social network and the trading power of Amazon and eBay, and maybe there’s an opportunity for an all-embracing, relevant market for construction equipment.
Build it and they will come
This new approach is what 20-year industry veteran Mark Turner envisioned when he launched Indoogoo, the social network for heavy industry. As founder of the site, Turner has created a mix between LinkedIn and Amazon that aims to bring industry professionals together to buy, sell and rent heavy equipment, and lets them talk about it at the same time.
Indoogoo gives users the benefits of a listing site with the added bonus of a social network tailored to their specific industry needs. Guarding against spam and unhelpful friend requests, all users’ contacts are kept hidden, and unlimited listings ensure that users sell, buy or rent exactly the equipment needed. The addition of Yard Talk, a discussion forum, gives users the opportunity to discuss industry news and developments, adding a social element to the traditional trading model.
According to Turner, the development of online trading platforms has brought the world of heavy equipment into a new era. By combining the best bits of traditional trade with the spread and scope of social media, the industry now has the tools it needs to move equipment procurement fully into the internet age.
“Unlike other industries, e-commerce cannot completely change the way heavy equipment is traded,” Turner explains. “Inspecting machines in person, getting your hands dirty and interacting with the equipment is part of the job. What the internet can offer industry professionals, however, is a way to make finding equipment and making new trading contacts easier. Buyer and seller are brought together like never before, and connections and networks created by social media will enhance business prospects and industry relations.”
Keeping in mind the humble origins of online trading giants like eBay and Amazon, it is clear that the construction equipment industry is not about to change its trading practices overnight. But the emergence of sites such as Indoogoo will help ensure that the construction industry does embrace modern trading techniques and social networking developments.
The power of online trading sites has already been proven, and the potential of e-commerce in the construction equipment industry is undoubtedly huge. The only remaining question is the speed of adaptation.
