The difference between an auction house and a retail shop.
Here at Global Auctioneers we often get mistaken for being a retail outlet and not an auction house. Granted, it’s not everyday, but people sometimes register with us and expect to get the same experience as wandering into a shop on the high street as they would bidding at one of our auctions. But, we’re not the same…
So, what are the differences?
In an ordinary retail store like your normal high street clothing, tech, or furniture shop for instance, you walk in, see what you like and pay a fixed price at the tills. Usually the item is brand new (i.e. unless you visit a second hand shop of course) and once you’ve paid you go on your way. With an auction house it’s very different. At an auction there is no fixed price and the price can be driven up. Another huge difference is the quality of goods. At auction buyers are able to bid on brand new goods, graded stock, end of line items or even customer returns so the quality of goods can differ each time. Here at Global Auctioneers most of our stock is Grade A and brand new but from time to time we will have slightly damaged goods or customer returns and this is where people can sometimes get confused (read more about this below). Experienced bidders know this is the nature of an auction house but if you are new to the game then it is something you need to be aware of. Pricing is a factor too and in the auction world there is an “auction value” and a “market value.” And you will have more success if you know the differences (both from a buyer and sellers perspective).
Market value is the price something is retailing at in the current marketplace. For example, if you went to your local shop to look at TV’s, they’d have the price tag on them indicating their market value (how much they are currently worth). Auction value, however, is different because it’s the price an item is being auctioned for… so if a TV in the shop is selling at £2,000 its auction value might be more or less, depending on different factors.
Generally, market value is determined by supply and demand. When the public wants to buy an item but there’s not a lot of supply, then the price rises. And the exact opposite happens when the public wants to buy something that there’s a lot of. The more rare an item is (in general) the higher the price both market value and auction value wise.
For those who attend auctions, most bidders do their homework beforehand. They want to know the market value of items as well as the potential auction value, too. Essentially, bidders want to get a good deal, paying less than market value. So, if a second hand TV is £2,000 at a local shop, but a person could get a similar one at auction for £1,500 (its auction value), then they feel pretty good about the deal.
Another huge difference is you don’t always buy brand new goods at an auction house as we mentioned earlier. When you go to a retail store (let’s assume you’re at a shop that sells brand new goods) all the goods are brand new and unused when you purchase them at a fixed price. At an auction it’s very different. We can of course sell brand new high value goods and often do but we also sell graded stock and customer returns too. These could include things like a washing machine that could have a dent in it for example, or a box of clothing that has stitching defaults as another example and that is the nature of an auction house. Not everything there will be brand new stock, and this is something to be aware of as a buyer. Another difference is auction houses charge both the seller and buyer a commission on top of what they won the item for. So again just be aware of this when using auction houses.
Buying at Auction can be a great experience when used right and just knowing the differences between a ‘normal’ retail shop and auction house can be the difference between grabbing yourself some bargains or receiving goods you didn’t expect or even require. Global Auctioneers do our best to make sure all our customers have the best experience they possibly can and we provide appraisals on goods, video guides, blog posts and advice on how to be successful at auction. If you are ever unsure about what goods we have in our auctions then please get in touch and we’d be more than happy to talk you through them.
We hope this post has provided enough of an insight in to the main differences between retail and auction for you, and you now get all the goods you want at the right price each and every time!
Until next time stay safe and take care.
Team Global x