Webinar eAuction Chap 2: Logistics, Shipping, Escrow Payments

eauction-chapter-2-logistics-shipping-escrow-payments

Chris Reddick (Clarity CEO and President) and Ron Halversen (Vice-President of Sales and Marketing) continue their discussion of eAuctions, talking about logistics, shipping, and escrow payments.

Part 2 of a 3-part series

RON HALVERSEN: Hi and welcome. Today we're going to start diving into the eCommerce software features. The last video, we talked about the overview and talked about the basic core features and now in the rest of the series, we're going to really dive deep. So I'm going to start really leaning on our resident rocket scientist. Hey Chris. How are you today?

CHRIS REDDICK: Hi, Ron. Doing great. Excited to talk with you today about the eAuction software.

RON: Well, that's great because I'm going to really lean on you today because today we're going to start doing the real deep dive into some of the logistically crazy and critical features on the backend that make the eAuction software necessary to handle the complex options. So I'm going to let you kind of dive into some of those complex ones and then we're going to back up a little bit. We'll talk about some of the ones that are really important and critical to the end-users and that'll kind of be the second half of the webinar today and maybe I'll talk a few of those and then get your opinion on those.

CHRIS: Okay. Thanks, Ron, and to answer why we want to get into some of the features for eAuction software ... whenever you're operating your business and you're working to scale your business and make it so that it's more customer-centric, you're supporting customers in their ability to self-service, which is what they want. They don't really necessarily want to have to interact with anyone if they don't have to and make your platform more powerful so that you're actually increasing dramatically your customer set as you scale up. So we're going to dive into how we're able to deliver that in partnership with you through some of the logistical kind of necessities as you execute on that strategy. So really one of the biggest things that we kind of recommend is evaluating for central features that are core at this kind of idea of being able to scale and deliver better self-service and better quality.

First of all, just fundamentally with eAuctions software, is shipping. Being able to logistically execute once an order is complete, once someone's won an auction. There's a lot of nuance to the logistics. This really starts with the relationship with the seller. Whenever you're operating an auction eCommerce platform, you're engaging with both the buyers and the sellers, both ends of the spectrum. Whenever you're working with sellers, you really want to set the tone with them when they start working with your platform that they need to meet a certain standard. They need to be able to provide a certain level of service and support when they're working with your platform. Now if you're providing options where you're completing the logistical fulfillment internally, that can be a different story. But ultimately the point is that whether it's internal or external, there needs to be a standard with which everyone executes whenever an auction is won.

Now, you start by setting the standard. Then you have to report on it and validate that different sellers are actually executing on it properly and that they're delivering and their mechanisms for the buyer to be able to provide feedback and notify your team, notify the seller of course, and just be able to interact in a way that kind of, again, focuses on self-service. If they're not getting the kind of response that they would expect, if they're not getting the shipment fulfilled is expected, the one bid, this is a huge problem for the auction platform. It can create basically a satisfaction issue that it can really drive the trust level down within your auction platform. So it's absolutely critical that we focus on kind of the communication and the expectations and the standards. Then you also have the actual logistics of being able to coordinate for different types of auction sales.

Now, a lot of eAuction sales are physical items. Some of them can also be digital. Some can be such significant physical items that they require special shipping and handling. And this is really what we're going to dive into briefly on the shipping side of things is if you have drop shipping, if you have large shipping, maybe intermodal shipping or possibly the need to deal with very expensive items, we are able to deliver an integration. If it's physically possible to do, we can help you execute on automating and integrating that shipping process into your eAuction software. So that's really the high level.

The bottom line is, during your discovery process when you're going into your project and planning it, think of the architecture or the blueprint of a custom home that you're building. When you're going into that process, you really want to be able to think about three to five years from now, where do you expect things to go with your platform? So we're going to help you kind of draw on our experiences, draw on all of the different scenarios that we've engaged in, and a lot of this is looking at partners that can deliver unique solutions that you may not be aware of. So if you choose a partner that has a lot of experience with the shipping side of things and advanced logistics and fulfillment, they're probably, like Clarity, going to be able to bring a lot of value to the conversation.

Another key area is escrow and basically verifying that the buyer actually has the means to execute on the full purchase amount. This is particularly necessary whenever you're dealing in regions that may not have a high level of integrity with purchasing. There may not be kind of like a social scoring system or some form of credit score that is reliable or that's respected. So whenever somebody's making a purchase, they may not actually pay for the full amount, even though they won the bid. That can be really problematic at scale.

So the other scenario is if it's a very large purchase, we're going to want someone to put up earnest money or some form of escrow or deposit to prove their intention. And so this can happen in different phases, but basically in order to even participate in an eAuction, they may need to put out an escrow or a deposit or some form of root funds that are on hand within the auction software and can be used to remedy basically an unfulfilled bid payment, an unfulfilled auction payment, that they're supposed to complete. So this is really, really important if you look at different high value items and if you're working in different regions that maybe have just a lower commitment level from the buyer to complete the purchase.

RON: I remember when we did goAfrica a few years ago, that was one of the biggest things that they had because it'd be like the country of Kenya is going to buy three million dollars worth of combines from Komatsu in Japan and the logistics of that was crazy. So I remember you guys putting stuff together. Why don't you tell the team just a little bit about that?

CHRIS: Yeah. Absolutely. So that's right, Ron. We actually combined the logistical pieces with the escrow portion and made it so that whenever a purchaser made a commitment, they actually had to make the payment, but the payment went into escrow. Because the sellers weren't necessarily completely trusted depending on the size of the deal, either on the logistics front or on the actual fulfillment—the quality of the fulfillment—the funds would go into escrow. Then the seller would be able to fulfill the item. If it wasn't already in stock, in inventory, they could then begin fulfilling the item.

Then, once they fulfilled and shipped the item, we would track that shipment and provide updates. And then once the item was delivered on site, the buyer would actually verify the quality of the item. And there was an arbitration process built into the payment and the shipping process. So the escrow was not released until both the seller and the buyer had essentially signed off that everything was kind of met commitment wise.

So a great example and certainly something that we're very comfortable incorporating. And that particular project also included customs and duties and really a lot of nuance. So this is really what we do all day and we encourage you, whether you work with Clarity or work with another vendor, look for a software development company that has completed these type of projects and can show you examples and talk through the business logic in addition to the features and the functionality. And really that kind of gets to really coordination and scheduling for buyers. There's a lot of nuance to some of the different types of eCommerce auctions that are going to occur. This can be things like purchasing properties, purchasing expensive jewelry or art. This can be digital purchases with NFTs, for example.

The concept of the coordinating and scheduling also really ties into promoting and making sure that there's a healthy kind of level of traffic and a healthy amount of bids for an item or for items that are for sale within eAuction that are really worth a lot. So we want to make sure that the seller of the item is getting their full value from the auction marketplace. And we also want to make sure that the buyers are aware of really good deals, really good opportunities that are a good fit for them. We have a separate video that talks about basically notifying and making folks aware of, essentially like a scout and you can kind of brand this however you like, but basically notifying them of bids. So we could call it an auction scout or a bid scout or a house scouter, whatever you might want to call it.

But the idea is that we can actually enable the search features and notification within the platform so that when inventory comes into the auction software that matches certain search criteria area and the user can have multiple searches going at any time, then they'll be notified and they can be notified via different mediums. So email, text message, through the application itself, all three and at different frequencies. So immediately or once a day or once a week, they can receive these notifications. The idea is that we need to bring the buyers and sellers together so that we're getting enough traffic so that we're actually taking advantage of the auction and really delivering value for both ends of the spectrum. So with that Ron, I'll turn it over to you to talk about basically some of the other eCommerce features and information about how to run an online auction.

RON: That makes sense. Well thanks, Chris. I appreciate you diving into those. Yeah. And you're right about that. It's kind of funny. Sometimes people think like, "Well, if I just build the site, it's going to bring the buyers or the sellers are just going to come and show up and use our B2B payments platform and we're going to make all this money," but they kind of forget sometimes that when you build the platform, it's literally your responsibility to bring both parties, right? It's not just like I'm going to stand a website and become the next eBay. If I build an auction site, I have to worry about SEO. I have to worry about CRO. Is the auction easy? I don't know if you've ever used Craigslist, but every time I'm forced to use Craigslist I think, "Good grief. This is like the least friendly, least automated self-service side I've ever used before."

And yet I've sold dozens of things on eBay and those sites don't even compare. And that's kind of how you have to think about when you build this site. It's not only the advertising kind of the SEO and bringing people, but you've got to have the site that when the buyers come, and I love the scout example you just gave. When a buyer comes and doesn't find something, do they leave and not come back forever? Or do you have this scouting availability where you can say, "Well today I can't see any sports memorabilia cards of a 9.8 and above. I'm looking for the perfect cards," or "I'm an investor in California and I love that Austin's market is heating up. So I want to look for all properties, 2000 to 2,400 square feet on at least a quarter acre between 400 and 500 grand. If any properties pop up, I want to be notified so I can bid on those."

I mean, we're talking millions of dollars of business you could bring to your site with one simple scouting feature. So things like that are really important. I'm going to go back to the more basic type features, and obviously the first one is the ability to make a purchase, right? Just the fact that I can go in and buy something. So now I think it was, gosh, if I remember back maybe 2015 when I started in the analytics scene that phone purchases and mobile purchases online were surpassing desktop. So you think about that, your eCommerce auction platform obviously has to be mobile responsive so people can be, and you just brought it up about being notified via email or text or however. So you've got more than half your audience now easily on their phone, looking at your site, being notified, notified that their bids has been surpassed, potentially buying.

So now all of the sudden, purchasing may not be just as simple as credit card. You mentioned escrow payments, especially for dealing with eCommerce shipping internationally or significantly large purchases for equipment and jewelry and things like that and maybe real estate. So now all of the sudden we're dealing with escrow payments, credit card payments, PayPal payments, but then you've also got mobile. So now do we have to have Stripe? What about Apple Pay? What about Google Pay? What about all the other things that we might need to deal with? So just accepting payments can be very complex. So make sure when you're looking for a platform, that it allows for the different types of payments.

Chris was talking about shipping. I know when I used to buy on eBay a number of years back, it felt like all of them were just flat $6.95 shipping, but I also purchased an item from Japan and started purchasing some things internationally. I just picked up and had something from the UK shipped last month. So I'm constantly dealing with things internationally.

So as you start looking at the platform, shipping might have to be international. Now payments. Okay. So if your payments are international, they might be wanting to see what the price is in their local currency. So are you're going to offer purchases in the local currency and then are you going to have your platform, when you do this backend integration and Chris, I'm going to ping you here in a minute, let you start talking about some of this integration work that needs to be done on the backend for this. Not only the logistics like 3PL and escrow companies and LTL shipping companies, but maybe in some of these and some of these multi-currency eCommerce APIs so that someone could place an order.

Maybe they want to see the order in French and they might just be in Quebec. But they want to see the eAuction site in French, they want to pay in Canadian dollars, but our backend, let's say we're only using QuickBooks on the backend. Now we're integrated with QuickBooks. I don't want that order placed into QuickBooks in Canadian dollars. I need it in US currency. So where and how do you typically see these conversions, these currency conversions, take place?

CHRIS: Yeah. Great question. And this is a really big challenge as companies scale and grow that you want to be thinking about. And basically the answer is there is a great solution here. We typically will do, depending on the business itself, we'll typically kind of handle this in several different places. This can be handled with the payment hub solution, the B2B payment gateway. Some different payment gateways will allow us to have several different accounts for different currencies essentially. Most commonly it makes sense to actually show the conversion upfront to the user and then actually complete the conversion kind of before it's actually getting into the ERP, the CRM, or whatever back office system you're using. Hopefully it's an ERP. Once you get to scale it typically will be. But the idea would be that usually you're going to do that conversion kind of before it gets through B2B payment processing. We can show live conversion rates of the currency.

We have the ability to integrate, like we said, with the different payment gateways. In many different countries or for many different currencies, there are just a few payment gateways that really are the dominant payment gateways. A lot of the major payment gateways that folks are used to, they don't actually service all of the currencies or all of the regions. So there's a lot of nuance to that, that we essentially want you to know that we've dealt with this literally in dozens and dozens of different countries.

Some of our clients literally work in over 100 countries and we've helped them execute on the currency conversion, the actual language side of things, and there's a lot of nuance to it. I won't go into all the detail, but we absolutely are comfortable helping you with that and analyzing that process. A very good point, Ron, especially as we do drive around the analytics and the marketing, we're going to be working to help you scale and this is going to be a very good problem that we'll be able to help work on with you as you scale your business.

RON: I like that. Yeah. And I don't know if you're a car guy like I am, but I love to watch the South Bees and I've been out to Barrett Jackson and I've driven a car across the block. So I'm really into the car auctions, and if you've ever see them on TV, a lot of times as they're bidding, they have a lot of foam bidders that bid in and you look up on the screen and they'll have British Pounds, Euros, and [American] dollars all at the exact same time because they'll have literally people calling from Europe bidding on a custom Ferrari or something like that. So while somebody's in the audience raising their hand bidding in US dollars, you've got multiple people around the world on the phone bidding in different currencies all at the same time. And like you said, being able to have that conversion live on the screen allows them to all do that at the same time.

And so if your auction needs to do that, then you need to have live API integrations that can pull those conversion rates on the screen so that the guy in Canada can be looking at it in Canadian dollars while I'm down here in Texas looking in US dollars and somebody's over in the EU looking at it in Euros, and they're all bidding on that auction. So again, it depends on your reach.

So let's kind of move into the catalog because that's really where all that features exposed. So within that catalog, it's got to be robust, right? It's got to be able to handle. And we talked about this in the overview, but if you didn't attend the overview webinar, go back. It's a great opening webinar. We covered a lot of information in there, but one of the things we were really talking about distinguishing between were if you had like a real estate property versus sports memorabilia, right?

The attributes and the information that I would be looking at would be completely different for the property. You'd have to be thinking like Zillow. If I'm looking at a property and I'm moving my family to Austin, Texas, I want to know about the schools and about property tax and is it within walking distance of a park? Is there a pool nearby? All that kind of stuff. But if I'm looking at sports memorabilia, really all I want to know is it PSA rated and what's the condition and then some really good pictures and that's all I really care about. And so we were talking about, in that robust catalog, having the ability to have different product or, at that time we called it different eAuction templates. So each type of auction might have a completely different layout, a completely different workflow, a completely different set of attributes.

So the catalog would have to be not only robust at the catalog level, but at the auction-creation level. So if I was a listing agent and I wanted to list a property up there, then obviously when I create that auction, I would have to have all of those attributes and all of those fields prompting me to put in the lat and long of the property. I mean, you've been to Zillow. There's like 40 pictures of every property, right? So it'd have to prompt me to put in all the relevant information that would help drive and create a successful real estate auction versus if I was uploading a Pokemon card, I probably need four or five pictures, a PSA rating condition, and a short description and I don't need anything else. How I want to ship the card, right?

Other than that, I really don't need anything. So that's a completely different type of eAuction solution that could be set up in just a matter of minutes compared to listing for real estate property, which might take me half an hour to fill out properly. So the catalog has to be robust in that way. The catalog, like we talked about a minute ago, about those scouts, the catalog's got to be able to have all kinds of different filters because if I go to Zillow, my filters are like, "Oh, I'm only looking for four bedroom, three bath, within this school district," and things like that. But if I'm looking for sports memorabilia, those filters are completely different. So it has to be robust enough that within a handful of clicks I can get into and find the appropriate options I'm looking for. So very intuitive and easy to use navigation. Great layout, great filters, both on page and within the category structure of the navigation. Make sure that you can have both dependent and non-dependent categories, dependent and non-dependent filters.

RON: What the heck does that even mean? Well if I'm looking for, and I'm just think came back to some of the sites that we've done, if I'm looking for a used appliance, but all of my appliance that I really don't care what brand they are, but they all have to be stainless. Okay. Well that stainless could be an attribute, but that attribute could be across Whirlpool, Maytag, Kenmore, any of the brands and any of the appliances. I just need stainless steel. So the dishwasher has to match the range has to match the fridge. I don't care if the brands are the same, but I need them all either in the black stainless, in the stainless, or in white. So that would be a non-dependent filter or attribute. So anyway. That is really important to look for a robust catalog, which kind of leads me into the next one, which is the search.

The search is really important. I remember, I don't know how many years ago it was, three or four years ago, we used to always call it grabbing the tiger by the tail. We built that site, if you're a member for Merck Pharmaceutical. And Merck was coming in and they were reviewing our platform and they loved everything about it, but do you remember the one comment they made about it? They said, "Rip out your search engine and put in elastic. You need to have an industry standard search engine." And we loved our search engine and used it hundreds of times and it worked perfectly, but we went out and evaluated Elastic and sure enough, we agreed and we ripped out our search engine and now we've got Elasticsearch in our platform, right? So why did we do that? That's probably one of, if not, the most important things for the buyers is to be able to come in and search and find things quickly.

So if your navigation can't find it and it's not an intuitive or the filter can't find it, if I'm going in looking for a 1962 Ferrari GTB four-cam, then that's an explicit search. I'm going to go in and type that, right? Or if I'm going in looking for a very specific foil Pokemon Charizard card, I'm going to go search for that. That's not something that the navigation handles or the filters handle very well. That's a very explicit search. So you want to be able to go in. I want you to dive in a little bit to search and some of the additional capabilities you can talk about, predictive and fuzzy logic and some of those other-

CHRIS: Absolutely.

RON: Extra features.

CHRIS: Yeah. Absolutely. It's a great point and this is really kind of the notion that you'll want to consider as you are scaling is like every aspect of your eAuction platform has a lot of fidelity to it that is going to impact your ability to scale and deliver great customer satisfaction. And that's exactly right, Ron. There's a lot of technical fidelity here. And the summary that I would say is the technical fidelity, which includes fuzzy logic and synonyms and being able to show, in the results, different types of results. So we could show products or we could show blog entries. We could show categories. We could show different types of bids in this case. So when they do a search, they get results showing different types of bids. Is it an English auction? Is it a Dutch auction? What kind of auction is it?

Is it a buy it now? And then fundamentally, they need to be able to find what they're actually looking for. So what kind of feedback loop is there? Great to have fuzzy logic, great to have synonyms, great to have misspelled words that still direct them to the right place, right? But then what kind of feedback loop we're getting? And this kind of ties into some of our integration and tracking, but the idea is that if we can learn what the user is actually staying on once they complete a search, that's going to differentiate us from all of the competitors out there. So we want to have a feedback loop and this is really built into the Clarity eCommerce platform that we're able to track and analyze and run analytics on what someone searches and then how long they stay on a product detail page, for example. How long they're looking at a bid for.

And then if they actually complete the checkout process, if they bid on the item. And this is great data. And so fundamentally, without going into all of the detail, these are things that you're going to want to ask about and you're going to want to make sure that you're at least considering. If you're not going to do these kind of higher end, higher fidelity items right away, at least consider them for your second, third, fourth, fifth year out from now with how you're going to improve your eAuction platform. And Ron, I'd love to turn it over to you to talk about the integration and tracking side of things.

RON: Yeah. I love that. Matter of fact, one of the features that I really love about our platform that you told me about one day was our AI directive where as people are searching through auctions, it can literally track me and look at the different types of auctions I'm looking at and start recommending what the top auctions or the top sellers or the top selling items are similar and it can actually start making business analytic decisions about I'm looking at all this different sports memorabilia so it comes up and can show me things like, "Well here's the top three auctions going on right now or the next X number of auctions that are going to end in an hour that you might be interested in," and really start driving and helping things through. I think we call it our machine learning module.

CHRIS: Yes, sir. That's right. That's exactly right.

RON: So yeah. Let's dive into the reporting and the advertising. So reporting we kind of covered in the overview and reporting is important, both on a buyer and a seller level. Right. I remember when I was buying back on eBay a few years ago and I would consistently get email reminders that I needed to go back and review any of my purchases, right? So they incentivized and penalized you if you did not review your purchases. And conversely, on the other side, you had to review your buyers. And so it was very heavily reliant on the fact that everybody had to review both their purchases and how people shipped and things like that. And that's how people gained that credibility and trust and that was exactly what I looked at. I started looking at the ratings and started diving into when I bought something from a seller, especially over in Japan that I'd never bought from, I had to look at their ratings.

Why they got hammered and got some one star reviews. Did they not ship? Was the item not as advertised? Did they ship it cheaply so it was damaged by the time it got there? Things like that. So reporting is really important, especially even for you as you're building the platform, you need to report on how many number of options do I have? Where are we making our money? Is the advertising working? Do we have a lot of people abandoning auctions and not purchasing on auctions? Chris talked a minute ago about people browsing and searching and finding, looking at the results of those. So the reporting is very important to make decisions. The advertising tracking is it's very similar to the reporting. We want to be able to advertise. We want to be able to monetize the platform.

Are we just making X percent as the buyer or seller? Like in car auctions, they charge anywhere from five to whatever percent for both the buyer and seller. For most online auctions, it's mostly just the seller that has to pay that percentage, right? So one of the ways that we can make additional funds to monetize this we can start selling advertising space. We have numerous sites that we've done before. That's what we've done. And when you advertise those spaces, you have to have a platform. And as I come online and look to advertise as a dealer, I might want to know which spaces cost how much and which spaces get how many impressions and which spaces have a higher conversion rate and which ones are premium locations to advertise, which ones might be cheaper if I want to dip my toe because I've never advertised with you before.

I want to know the rates of the smaller ones so that I can at least see what those conversion rates are. So paid advertising, having the ability to show where their skyscraper, their headers, their thumbnails, their right side bars, their footer advertisements, their rotating banners, the different options that are out there, the different costs, the different conversion rates. Being able to report on that and showcase that, I mean, that's really your salesman. You don't have a live salesman picking up the phone and trying to figure out what company around the world's going to advertise on my site. Your website becomes the salesperson. And so you have to have that reporting and that tracking information about your advertising to be able to showcase that because that is what's going to close those deals and sell those spots.

It's kind of like driving down the freeway and seeing the billboard that says, "Rent this billboard now," and a big, huge phone number, right? If you don't see that, nobody ever sees that billboard, they're never going to rent that billboard out because nobody knows unless somebody physically walks around to buildings and businesses around that billboard asking if they want to rent that space. So, that about covers what we're going to cover in today's. Is there anything you want to tie off on Chris?

CHRIS: I think that was great. I think the biggest thing would be at the end of the day, you can tell there's lot of detail and nuance to any of these areas that we're hitting on. And there really are core features that you really have to have baked in to the eAuction platform, to your auction eCommerce functionality kind of from the get go. And if you want to be able to take advantage of these in the long-term, it's really important that you at least are aware of them. So you can kind of ask and it's kind of in the DNA, if you will, of the software that you engage with and customize to meet your specific needs.

So we encourage you, whether it's with Clarity or with another vendor that you work with, really dig in. Do a detailed discovery. Kind of get a solid blueprint for your eAuction project. And we're happy to help you do that. As you can see here today, we have a lot of experience going into the details into the specific areas and we can adapt that to your business. So we can really focus on the areas that you need, the nuance and the detail, and then be able to kind of look past the areas that you don't really apply to your business. So with that, Ron, thanks again and thanks everyone for watching and we'll look forward to seeing you in the next video.

RON: Thanks everyone. And stay tuned. The next one's a great one. We're going to be covering multi-platform, multi-device, and we'll start diving into the back office integration. Thanks again for tuning in. Thanks Chris. See y'all.

CHRIS: Thanks Ron. Bye for now.

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