There are three main formats for running an online auction.
- There’s the traditional live auction, where lots are run consecutively from the first to the last lot, with no fixed closing time for specific items. The auction takes place at a physical location, and remote bidders join via an online stream. The action is still about the podium and an auctioneer who knows how to slow down on Lot 37 because two bidders have begun to take it personally. The stream is simply a supplement, there to bring in more eyeballs and incremental bidders.
- Then there’s the live online-only auction. It’s the same sequential “calling lots” format, except the auctioneer is performing into a camera and the entire bidder pool is remote.
- And then there’s the timed auction, the one that feels most like the Internet. Lots are available for bidding over a fixed window. Bidders don’t have to show up at a particular moment, they can bid at 9 am, 2 pm, or 2 am, and the only real drama happens at the end, when the timer starts extending because someone bid with thirty seconds to go. Unlike the other two formats, timed auctions are about throughput, not theatre.
Value capture differs across the former and latter two formats. In a traditional live auction, which is usually prevalent in high-ticket and rare auctions for the buzz, the online platform doesn’t “own” the sale, but gets a commission should the sale happen to go through a remote bidder.
But for years, the auction industry has been drifting away from the traditional live format and toward live online-only and timed auctions, partly because they’re more cost-efficient for auctioneers, and partly because of the network effects that a two-sided marketplace offers. Live online-only keeps the cadence of the traditional auction but strips out the physical overhead, while timed auctions go a step further by removing the human bottleneck entirely, letting auctions run at scale with far less labour. This shift is particularly relevant for small- and medium-sized auction houses in a highly fragmented landscape, where overhead matters and scale is hard to manufacture. Most of these action houses don’t have the budget, headcount, or competence to build a credible online bidder experience on their own, and even if they did, they still wouldn’t have the most important ingredient: a large enough pool of incremental bidders to consistently deliver strong hammer prices. Consignors, in turn, are ruthlessly indifferent to the auctioneer’s tech stack or brand identity. They care only about the outcome, and the only outcome that matters is price, so the ability to tap into a wide and right bidder pool is vital. Bidders, on the other hand, care mostly about security, credibility, and a clean transaction experience.
All of this points to scale being a real barrier to entry in the online auction business.