State Surplus Auctions Go High-Tech
States too are in the used goods business. And recently, more and more of them have been turning to the Internet to clear their attics of the excess wares -- such as Burger King stores, Rolex watches and dump trucks -- they come to possess through federal government hand-me-downs, police seizures, forgetful citizens and the routine replacement of state-owned vehicles and office furniture.
Typically, bargain-hunters have had to rummage around dusty government warehouses and then sit through daylong auctions in order to claim their prizes. The process is hard on buyers, but also tedious for the government employees who spend much of their time showing off items and organizing Saturday auctions. And while bargains are there for the taking, state governments often receive just pennies on the dollar for items worth much more.
But all of this is changing.
In an effort to reach a larger buying audience and reduce overhead, a number of states have jumped on the online auction bandwagon. Some, such as Michigan , have built their own online auction sites. Others, such as Oregon , have taken advantage of large commercial sites like Yahoo!, Amazon.com and eBay. But almost all the states are at least taking a look at where Internet technology is going and how it might enable them to more efficiently sell unwanted items.
Oregon was the first state to try online auctions and has become a trendsetter of sorts, providing information and advice to other states looking to move their auctions online. The state hasn't had a traditional auction since November 1999.
Oregon advised California as that state explored Internet-based auctions and will soon be showing-off its operations to Colorado officials. In addition, Oregon has struck-up a number of unusual relationships with other levels of government, including federal agencies, to help them move their goods.
The Federal Bureau of Land Management, an agency within the U.S. Department of the Interior, has been selling its surplus vehicles through the Oregon Department of Administrative Services since October 2000. It averages five or six vehicles sold per week, including pickup trucks, SUV's, fire trucks and bulldozers. BLM pays Oregon $200 per vehicle sold or 7 percent of the selling price on heavy equipment.
"We were the first federal agency to ever do anything like this," says Gwen Rush, spokesperson for BLM. "No other federal agency has ever contracted with a state agency for a service such as this."
BLM decided to go through Oregon after a poor experience with the federal government's sales agent, the General Services Administration. "We were selling through GSA and we weren't getting our proceeds and we weren't in control of the money," says Gwen Rush of BLM. "If things didn't go well with a sale, if there were complaints, GSA would just reimburse them."
"Oregon already had a site up. They had the clientele and the business and the expertise. They were already doing it anyway and let us jump on their bandwagon," says Rush.
BLM's experience with Oregon has been positive enough to draw the attention of other Interior officials. The entire department recently signed a memorandum of understanding with Oregon to sell its surplus goods through the state. It too cited efficiency as the reason it will now add Oregon to its list of vendors.
"Oregon insures payment to the office within 30 days of the sale," says Teresa Barry, property control officer for Interior. "Our expenditures for time and storage are significantly decreased."
These new clients have Oregon's coordinator for online sales, Nole Bullock, thinking about slowing things down a bit. "We're just trying to control growth right now," he says.
Oregon's first step into the online world was a cautious one. The state registered with eBay in December of 1998 and then ran online auction tests for six months.
What Oregon found as it conducted those tests was that most items fetched many times more than they would have at traditional auctions, some over 250 percent more. The reason? According to Bullock, the answer is simple -- eBay has over 30 million registered users and that kind of competition drives up prices.
Higher prices are good for the state, good for the agency and good for taxpayers, says Bullock. The only people they wouldn't appear to be so good for are the state's long-time customers used to getting great bargains through traditional auctions. But Bullock says even these people have come around.
"We have found that the people who originally complained the loudest are now the biggest advocates," says Bullock. "They don't have to wait two months for their products. They don't have to come out on a Saturday. They don't have to baby-sit the sale. And Oregonians still can enjoy a discount because they likely won't have to pay for shipping."
Oregon has become such a strong presence on eBay that many potential buyers have flagged the state's user names -- oregontrail2000 , oregonmotors2000 , oregonsurplus2000 and oregonprime2000 -- and receive instant notifications when the state puts new items up for bidding. These user names may seem strange or at least not very official, but Bullock claims they sounded cool when first conceived in 1998. He wouldn't mind changing them now, but his hands are tied because they have become the state's brand names.
Although Oregon is the only state to have ceased traditional auctions, a few other states may not be far behind. Texas has auctioned items through eBay, Yahoo! and Amazon, and is considering a totally cyberspace auction. Online auctions now account for roughly 10 percent of California's $1.5 million a year in surplus sales. And Georgia, Maine, Massachusetts, North Carolina, Pennsylvania and Virginia have been trading through online auctions as well.