Two San Francisco guys with vision and passion initiate a startup and 13 years later sell it to one of the largest companies in their field. Google? Facebook? Apple? No, I am talking about Bring a Trailer, or “BaT” to the collector car community.
In 2007 Randy Nonnenberg and Gentry Underwood started a digital auto sales website, with the catchy name of Bring a Trailer, a reference to the process of dragging home an automotive carcass…or maybe a concours trailer-queen. The site originally offered potential buyers and sellers the opportunity to negotiate the terms of a sale and acquire the vehicle. Over the years BaT began to facilitate the transactions by offering a digital marketplace-an online auction. It has now evolved into a significant player in the online automotive sales market, rivaling eBay Motors, Facebook Marketplace, and others.
And their secret sauce? They invite the collector car community to comment on the offerings. Most are accurate, with many offering nuanced knowledge and great “I used to own the same vehicle” stories. Additionally, BaT carefully curates the offerings. If you want to buy a 5-year-old Honda Accord for your college-bound daughter, head to Craigslist or eBay. But if you yearn for a nicely restored Little British Car for weekend outings, BaT is the go-to site.
In June of 2020, Hearst Auto, publisher of Car & Driver, Road & Track, and Autoweek paid an undisclosed amount to bring BaT into their organization. Clearly, one of the nation’s most successful publishers finds BaT’s content, and business model, compelling and attractive. With over 400,000 active viewers and a database of nearly 200,000 registered buyers, there is considerable underlying value. And with about 200 cars, trucks, and motorcycles in live auctions at any time, just run the numbers…lots of cash flow here.
Speaking personally, I find the site a daily trip down memory lane for cars we should have kept and those that were only aspirational. Who knew the ’59 TR3 I sold for $400 would fetch over $35,000 five decades later!! Or that ’67 Big Healey, just beyond my financial reach, would now go for $75,000, still out of my fiscal grasp…
As with any auction, bringing together buyers and sellers is fundamental. In the case of BaT, their business model provides a marketplace, essentially a digital classified listing, for collector cars and monetizing it with fees paid by both buyers and sellers. To list a car, the owner is charged a modest $99 once the staff agrees it is an appropriate vehicle for the community. The buyer is charged a commission on top of the sales price, at least $250, or 5% of the sales price capped at $5000.
This fee structure is considerably less than typical on-site auctions in which both the buyers and sellers are charged a commission, as much as 10 percent each!! Somebody must pay for the elaborate staging areas and beautiful catalogs of a live-event auction like Barrett-Jackson, RM Sotheby’s, Mecum, or Bonham’s.
In addition, BaT does not participate in the settlement of the transaction. At the conclusion of the auction, buyers and sellers are united by email so the funds transfer and shipping, if required, can be sorted out. This is markedly different than the big, live televised auctions where the organizers like Barrett-Jackson collect funds from the buyers and distribute, less the commissions, to the sellers.
Finally, let discuss the dreaded “R” word…reserve. Sellers want the guaranteed price a reserve insures; BaT wants to sell vehicles, so a commission is generated. It is a cat and mouse game for the sellers and BaT coming to terms. Most BaT auction vehicles have a reserve, usually, they are met. And of course, a no-reserve auction always finds a buyer. BaT strongly urges sellers not to reveal when the reserve is met as it tends to stall the progress of the auction and thwarts the compelling last-minute bidding frenzy as the auction nears its timed conclusion.
BaT demands that all their auctions are exclusive listings. The seller must have no other listings, like eBay, Craigslist, Facebook Marketplace, or any other classified advertising during the auction period. And should the BaT auction not result in a successful sale, it will not again accept the car. BaT claims this lets the buyers be confident the site offers fresh, exclusive listings of accurately described vehicles.
To summarize, Bring a Trailer offers huge exposure to a wide variety of collector cars that only a robust online platform can provide. For people seeking a specific year, make and model, BaT provides kid-in-a-candy store appeal. And for sellers wanting wide exposure to a knowledgeable and vetted pool of buyers, BaT seems to be in the sweet spot. Their growth since 2007, even pre-COVID, is impressive; seems Hearst Publishing did their homework in acquiring the brand.
In Part Two (coming next week), we can see how a BaT auction worked out for the owner of a beautifully restored 1967 MGB, achieving a remarkable selling price.