Chris Reddick (President and CEO of Clarity Ventures) and Ron Halversen (Vice-President of Sales and Marketing at Clarity) discuss what governance is and how important it is for eAuctions.

Part 2 of a 7-part series (Return to Part 1)

CHRIS: Fundamentally, I think a lot of what we're dealing with is more complex auctions or scaled eAuction sites that are going to have some level of fidelity, either at scale or because of the nature of the auction itself. The governance is, frankly, probably the most important aspect of the business itself and how the business is going to operate. 

If you're looking to have your auction site actually automate and self-service, the governance has to be locked in. If it's not, then basically you're going to be manually operating the business forever. And that's probably the plight of a lot of the listeners, is they are manually operating some aspects of their business, maybe not all of them. 

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CHRIS: We would encourage you to really think about the governance for this. What are you able to do that other folks in the industry are doing? There are best practices, and this is always changing. Fundamentally, with payments, when it comes down to the payments themselves—such as ACH payments after ACH integration—like you were saying, Ron, being able to concisely articulate, usually in a visual way. Showing icons, having filters for different types of eAuctions and the rules governing those auctions, that's really helpful for the buyers.  

Whenever a seller is listing, making sure that the payment type and the terms and the nuances of whether or not there's a reserve, or if someone has to meet some form of pre-qualification, or if they're going to have to go through a detailed escrow and fulfillment process that has multiple approval workflows. Whatever it is, the seller needs to be aware of this as well. This is essentially the credibility of your auction marketplace on the line. And every time a buyer and seller meet, you're the one facilitating that (or your site is). And the governance is what drives that.

With regards to payments, some of the big things are, like you said, Ron, this concept of presenting it. But then we also have enforcing it. So whenever somebody actually does go through and make a bid, one of the most successful ways to enforce something is to just give a friendly reminder. So when a seller is listing an item, we want them to have this governance visible and in their face and really just as a friendly reminder. 

Think of it like guardrails. Or like in the bowling lane, you're putting up the little bumpers on the sides to keep the ball from going into the gutter. And that's how you want to think about your governance. You're trying to make sure everyone stays on track with the auction software

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CHRIS: And fundamentally, whenever it comes to a purchase for a buyer of an online auction, well, where do they actually begin the engagement? It's when they make a bid. So whenever they're bidding, we want to remind them. And if we see a pattern develop within the system itself, where maybe there are more issues with this type of bid or this size of a deal, maybe it's a larger auction value, et cetera, then we want to go ahead and put some extra workflow steps in there to pre-qualify or verify with the buyer that they actually understand what they're committing to. 

These are really, really helpful governance steps that can help. And then, of course, once everything is done, once we have a winning bidder and we're going to be taking it offline to complete the transaction, it's helpful to have a sequence that's going to go out in an automated form that's intelligent, that matches each of the different payment processes and sets of rules.  

This is rather a non-technical [explanation], but this is what makes or breaks these processes, having little reminders that go to the buyers and sellers on an auction website. Think about what they're dealing with. If you put yourself in their shoes, they're operating their own business, they may not have as many resources, or this particular person working as the seller may not have as many resources within their role to be able to completely focus on this. So we need to be able to concisely and clearly articulate to them, hey, you have a buyer, they bought your thing, now you need these steps to fulfill it. And, by the way, as a friendly reminder. Normally, if you respond and you confirm within an hour to 4 hours, that's going to leave the buyer feeling more satisfied. This is data that we've analyzed.” 

That's just how it goes. The faster you respond and confirm that their process after an eAuction takes place, their purchase is being processed and moved into fulfillment, they're going to feel a sense of relief at knowing that and seeing that progression. Then, if you can provide the tracking info for their shipment within this time period, it's going to depend on your industry and how your particular space works and some of the nuances. Obviously, if it's an intermodal shipment, it's going to be somewhat challenging to get tracking information right away.  

But the bottom line is, if you can coach—essentially with your governance—and send a sequence to the buyer and seller of what to expect once that payment process is started, that's also going to be extremely helpful.  

I'll briefly touch on this and see if you want to chime in here. Then we have all the back-office systems too. So the buyer and seller engage. We send these automated steps, and they're completing the process depending on how complex the purchase is. It may be a multi-step process, including an escrow approval, et cetera. But then we also have the back-office side of it for the seller, dealing with that and dealing with taxes, maybe there are customs and duties, or just even if it's just all in the U.S., there are different taxes for different counties and different states. Sometimes it's just state tax, sometimes it's county specific.  

This can get rather detailed for the seller. They're probably not going to have time to deal with all this. So we need to be able to deal with all of this in that payment process and try to automate this. And that's where having a robust eAuction platform really makes a difference, doesn't it? 

RON: It's definitely something we've dealt with a million times with international [transactions]. I mean, things like GDPR, VAT, GST. When do you do that? Here in the U.S., [we have clients that] do a lot of business in quote-unquote, North America. And so now all of a sudden they've got purchases that are being done in Canada in Canadian dollars, but they're here fulfilling in the U.S. They're shipping across country lines, and they don't want us to take those transactions in Canadian dollars in their ERP. So we're integrating live multicurrency conversion APIs midstream, where we're literally passing events, auctions, sales, parsing that, converting into U.S. dollars before pumping it into the ERP. So that accounting here in the U.S. can deal with it just in American dollars. They know exactly what they actually collected, because it was collected originally in Canadian dollars, thanks to the eAuction software.

But obviously the purchaser wanted to be able to see it in Canadian dollars because that's what they do every day. I dealt with this last week. I bought—and I think I told you this earlier today when we were talking—I’m big into the classic rock vinyl records, right? So I went out and I bid on three records last week. I won two of them. And within an hour of winning the auction, I already had an email saying, “Okay, you have 24 hours to pay for that.” And then when I paid for it, there's another notification that goes to the seller that says, “You now have 72 hours to ship this.” And so, like you just said, the online auction software literally walked through the reminders, and I experienced that last week. 

Continue to Part 3 to learn about different payment types.