The internet is getting smarter. There was a time when a used machinery broker could come online with a good website and charge a 30% commission and be successful because the actual owners of the equipment were nowhere to be found on the internet. Those days are over. Today, everybody has a website. It is becoming easier and easier to find owners and cut a better deal than one can get on a broker’s site.
No one knows that better than David Berman and Eric Taubman. Both of them have decades of experience in the used machinery marketplace. Their experience has led them to believe that many of the most successful used machinery marketplaces are built on an obsolete business model.
“You simply can no longer charge a big commission for a machinery deal and be confident that the buyer and seller will not go around you,” said Berman. “Improved websites and improved search engines have made it too easy for buyer and seller to find each other.”
BuyMachineryNow.com is built on the theory that it is necessary to keep the commission low enough that there is simply no incentive for the buyers and sellers to waste time finding one another. “They can go around us,” said Berman. “They can go around any marketplace. But, in our case, what would they save? Our commission is only 5%. And if they buy on our site, they can bid whatever they are comfortable with and not be pressured by a salesmen.”
Being able to bid on the equipment is what Berman believes is the key feature of a machinery marketplace.
“At the previous marketplace that I designed, where the buyer and seller commissions totaled 20%, we found that, in many cases, bidders actually knew who the seller was but they still came to us. One would think that they could have gone straight to seller and saved the 20%.” But people prefer to be able to make an offer and they feel more comfortable about doing on a marketplace site than making an offer to the seller’s face.
“You can make an offer on a machine on a bidding site and there is no salesman or equipment owner who is going to be insulted by it,” said Berman.