So Who is Considered the Real Customer in Auctions??

dragon

Some discussion in another thread makes me think about this question, who is considered the REAL client in an auction, the consignor, the buyer, or both?

Although the buyer bids on and pays the auction company for the lot(s), I think the consignor is considered to be the primary client and who the auction firm represents, has a contract with, and has a fiduciary duty to, not the bidders.

What do you think?

dragon

kranky

I think the "real" client is the consignor, especially with respect to fiduciary duty. But since the buyer only has contact with the auction house, making payment to and receiving the coins from same, the buyer probably feels like he/she is the customer of the auction house.

coinguy1

As I mentioned in that other thread, (edited to add: I believe) both the consignor and the buyer are customers.

In some instances the consignor might be the bigger/more important customer to the auction company, and in other cases, the buyer might be more important to the auction house.

The trade-off between representing both consignors/sellers and bidders/buyers at the same time can be a very difficult one. And, it is inevitable that (sometimes) one group benefits at the expense of the other.

fountainheadgold

Whose interest should the Auction house look out for, The Buyer or the sellers??? How can they possible do both. On one hand they need to get the most money for the seller, and on the other hand If a buyer leaves a bid, The Auction house should try to get it for him at less than his Bid, instead of falsely inflating his bid

CarlWohlforth

Auction houses need to service both consignors as well as bidders. Both are customers. The house provides a service to both groups for a fee. That is one reason why it is tough to be in the middle. The auction service must strike a delicate balance. That is why I think they should not be in any other aspect of the biz, they should not have a retail coin sales outlet for example.

UncleJoe

I think of this like Real Estate. You may buy your house from a Real Estate Agent (not talking about seller's agent for this example) but the agent actually represents and is responsible to the seller not the buyer.

Joe.

ziggy29

I'll just copy and paste my comments on the 18th about this subject in the quarrel between BIGDAVE and Heritage:

Quite so. And the awkward part of it is that both the bidders AND the consignors are their customers...so you have a situation where accommodating one customer will screw another. Most good businesses which cultivate long term business relationships don't like to screw their customers, especially when the customer who would get screwed is completely innocent.

Something like that can't be taken lightly, and has to be done on a case by case basis. If the business need is compelling enough -- if both customers are that important to your long-term bottom line -- then maybe you accommodate both of them and eat the cost yourself, just to keep them both happy.

But that decision requires knowing the business importance of these two customers relative to the cost of sticking your own neck out and taking the hit. You don't want to be a total hardliner and say "tough luck" to a valued, profitable long-term customer...but it's also not easy to allow other innocent parties to get hurt (in the form of possibly lower sale prices to the consignor). No one ever said business or customer service was easy.

The bottom line is, sometimes you have to say "sorry, too bad" and sometimes you have to do what it takes to keep the customer happy. And here, only Heritage is in the position of knowing whether or not this customer is important enough to their profitability to determine whether or not they're willing to bite the bullet and bend the rules. And finally, as for the "money grubbing" claim, the last time I checked, Heritage was a for-profit business, so of course they are concerned with their bottom line. That requires not allowing yourself to get jerked around by unreasonable customers who add little to your income statement, all the while being willing to bend for others who are important to your business.

MICHAELDIXON

Putting on small auctions once a month, we consider the end user the customer. When we accept a consignment, we have a legal obligation to the
consignor to acquire the most for their coins we can. We let the consignor know we work for them, we will show their coins at upcoming shows (if there is time), we will advertise them on the internet and we will work to get them the most money we can. We are an agent for the consignor and the buyer is my customer, as well as, the consignor's.

Shamika

The buyer is the customer.

The seller is the supplier.

BillJones

I think that big consignors get MUCH better treatment than any bidder. Some consignors get a NEGATIVE auction commission (kick back) while the damn buyers' fess get higher and higher.

Pistareen

Hi all:

Here's a few of my opinions:

Auction companies are in a unique position in the numismatic field -- we serve two different clienteles with goals that appear to be at odds which each other. Our consignors seek the most money for their items, while the bidders want the lowest price possible, right?

The two groups have more in common than not. The auction company owes both parties things like correct opinions on authenticity, accuracy in cataloguing, fair practices, etc. Revenue comes from both parties, and auction companies spend money to serve both constituencies. Certainly all the auction firms spend a lot of time offering individual service to both consignors and to bidders.

The only conclusion is that a well done auction will have three happy groups: consignors, bidders, and an auction house. They're equal partners in a complicated transaction.

John K.

topstuf

Without a consignor, there IS no auction.

"Buyer Premiums" suck.

Many consignors pay NO fees. But their consignments draw the "full retail" consignors.

Fiduciary responsibility is to the consignor. The buyer is simply someone who is supposed to honor a commitment to pay.

sliderider

I would have to say that the consignor is the real customer of the auction house with the buyer being the customer of the consignor. When I worked in the baseball card store, we did consignment sales for our customers and we got paid a percentage of whatever the item sold for, so it was in our interest to squeeze the buyer for as much as we could to pump up our commission on the sale. I like the real estate agent analogy. When you walk into the Century 21 office looking to buy a house they are listing, the agent is working for the seller because they get paid a commission and higher sale price= higher commission. There is such a thing as a buyers agent, where you hire an agent to do some leg work for you to find you the best house for the best price and then to viciously negotiate terms for you, but most agents work for the seller.

coinguy1

<< <i>Without a consignor, there IS no auction

"Buyer Premiums" suck.

Many consignors pay NO fees. But their consignments draw the "full retail" consignors.

Fiduciary responsibility is to the consignor. The buyer is simply someone who is supposed to honor a commitment to pay."
>>

Topstuff, without bidders/buyers, there is no auction/sale either.

All consignors/sellers (other than the auction houses themselves) pay fees, though they are labeled as "buyer's premiums" - those buyer's premiums/fees come out of the sellers' pockets in the form of lower/reduced hammer prices, upon which the seller is paid.

Fiduciary responsibility applies to those (consignors AND bidders) who deal with and rely upon the representations of the auction house.

Steve27

I believe Mark Feld has it right, "both the consignor and the buyer are customers;" however the fiduciary responsibility goes only to the consignor. And interestingly, if the buyers aren't treated well, then the auction firm is actually violating that fiduciary responsibility.

BillJones

It seems like auction bidders treat the 15% or 17.5% buyers' fee like a throw away. I wish that my customers would treat a 15% mark-up for me like a throw away. They never do, however.

topstuf

Mark, I agree that a fiduciary responsibility exists between the house and the buyers, but to a lesser degree. Maybe semantics. Not worth an argument. My opinion only.

But, I disagree with the statement that ALL consignors pay fees as I have been offered "no commission" sales by houses that do not charge a buyers fee. (Abdul's Auctions, for instance.....kidding)

And I suppose an argument could be made that without a buyer, there is also no auction, but in a "pure" auction (with no minimum) that would (or should) be a really rare case.

We better all head for the hills when "no minimum" auctions for ANYTHING are not attended.

I've always wondered at some of eBay's policies that seem to favor buyers.
Maybe not in coins only, but in general merchandise.

????????

coinguy1

<< <i>But, I disagree with the statement that ALL consignors pay fees as I have been offered "no commission" sales by houses that do not charge a buyers fee. (Abdul's Auctions, for instance.....kidding) >>

Topstuff, you got me on that one - I admit defeat.

majorbigtime

<< <i>As I mentioned in that other thread, (edited to add: I believe) both the consignor and the buyer are customers.

>>



I agree wholehartedly!