Shift from auctions to asset management platform transforms Ritchie Bros.

Back in 1958, three brothers who ran a furniture store in Kelowna, British Columbia, held an auction that turned out to be the start of a new venture that, in the years since, has turned into one of the world's largest heavy equipment auction businesses.

Moving from selling furniture to auctioneering is quite a shift, but it proved successful for the Ritchie Brothers. Today, the company that followed on from that first auction is making another business move: from an auction house to software and service provider targeted at equipment fleet owners and managers.

Ritchie Bros. has expanded from in-person unreserved auctions into more and more online spaces, and through a string of acquisitions it is growing its fleet management strengths to become a one-stop dashboard for tracking, managing and selling assets. The Burnaby, B.C.-headquartered company with more than 2,200 full-time employees has certainly come a long way from that first auction.

Auctions serve large used equipment market

Auctions are a key way for heavy equipment owners and buyers to dispose of and pick up assets at prices that make the most sense for them. Matt Ackley, Ritchie Bros. chief marketing officer, describes auctions as "the most efficient way to determine an asset value or to get the appropriate value for a particular asset."

For Ritchie Bros., heavy equipment auctions, held quarterly at specific locations, helped to bring supply and demand together and create an efficient marketplace. That worked very well for the company over many years, before the internet arrived and changed the auction game.

"As Ritchie Bros. looked at itself over the years, it asked ‘How do we adapt to this new paradigm where efficient markets can be made every day via the internet, via Google search, online where people can be reached around the world in an instant?'" Ackley described.

Ackley, an engineer with a career that saw him spend time in positions with major online companies such as eBay, Google and finally IronPlanet prior to its acquisition in 2017 by Ritchie Bros., pointed out that with the promise of the web, it was important for Ritchie Bros. to get on board - and online - early.

"Starting in the 1990s, Ritchie Bros. introduced online bidding to its live unreserved auctions, and then heading into the 2000s it really began to look at its model," he said.

The used equipment market worldwide is approximately $350 billion per year, but the auction segment is only a portion of those sales, an estimated $30 to $35 billion, Ackley said. "I think that over time, the internet and software has given people more and more ways to not only sell used equipment, but start to manage their fleets and their assets so they can maximize the return on that particular investment."

Ritchie Bros. started its move to explore those online opportunities in 2016, when it acquired Mascus, an online equipment listing service, and followed that up in 2017 with a big step into online auctions through the acquisition of IronPlanet. Founded in 1999, IronPlanet had developed a large audience for online equipment sales globally, and bringing it into the Ritchie Bros. fold gave the company an entirely new way to connect with buyers.

"Ritchie Bros. bought IronPlanet to focus on these periodic, weekly online auctions, as well as a new reserve platform, ‘make offer' and ‘buy now' types of formats, so that equipment owners could access the market daily," Ackley explained. "From a selling standpoint, we had a true multi-channel offering, listings, and marketplace formats in addition to the unreserved auctions."

More recently, Ritchie Bros. has added companies like Rouse and SmartEquip to its portfolio, accessing even more aspects of asset management. Rouse provides data intelligence and performance benchmarking services, allowing managers to determine their equipment values and rental benchmarks in various marketplaces. SmartEquip delves into the parts and service sector, providing real-time information about assets to owners, while also providing an electronic line to OEMs and dealers for procurement of parts.

Umbrella of asset management products and services

The result of these additions is a broad umbrella of products and services that are shifting Ritchie Bros. away from a sales focus and toward something more along the lines of a technology platform - one that offers asset managers all the tools that they need.

That shift has been reflected in the corporate leadership. CEO Ann Fandozzi, who joined Ritchie Bros. in 2020, is a computer engineer by training and has been involved in numerous technology efforts in previous roles. Other members of senior leadership also come from tech backgrounds. That growth in expertise has helped drive new offerings, Ackley said.

"We started to look at the opportunity here - not only do these tools become tools to sell assets, but they become tools to manage assets. They become tools to manage price or access pricing, they become tools to order inspections, or they become tools to improve workflow and sell items on your own website," he described. "And now, with the addition of some of our newer acquisitions, they become tools to, if you're in the rental business, to manage rental inventory and understand utilization, and get appraisals to help with my loan portfolio."

The ability to offer a unified, cloud-based system of asset management tools for customers is key in improving efficiency for Ritchie Bros. clients, Ackley noted.

"We have found that, as we work with our customers more and more, a lot of the tools they use are either fragmented or they're managing their inventory on a yellow legal pad or spreadsheet," he said. "Having the ability to offer a cloud-based system or dashboard is something we're incredibly interested in."

Inventory management system provides gateway to services

The core of Ritchie Bros. asset management offering is its inventory management system, which gives customers of all sizes and needs a base to operate from. Free for signup, the inventory management system tracks assets for sale, where those assets are being sold, and simplifies the process.

"It's a dashboard that allows them to manage their entire portfolio; it's got reporting tools, so you can see basic information - enter inventory, manage inventory and workflow to various sales channels," Ackley explained.

Through the system, customers can indicate if they're selling on their own or through Ritchie List, they can leverage a variety of Ritchie Bros. services such as financing, lien searches, and others, or connect with IronPlanet for online auctions or Marketplace-E for buy-now, make-offer sales.

"This is the gateway - once you have your inventory in here, you then have access to all these other services. Over time, we'll continue to build out," Ackley said.

Currently the key focus is on the resale aspect of the equipment life cycle, but the goal will be to add telematics functionality and other inputs over time, allowing asset managers to incorporate even more data into their equipment management strategy. In addition, the dashboard is capable of integration with a variety of existing enterprise resource management (ERP) and asset management software platforms.

The Rouse acquisition has made that integration easier, Ackley noted, by providing a baseline of information that connects the dots when it comes to equipment in various platforms. "What one person may call a skid steer, someone else may call a compact track loader . . . the key element is understanding what piece of equipment fits into which category, because that's key to pricing and parts configuration. Integrations are a key part of that . . . Rouse brought an incredible amount of expertise in that area," Ackley noted.

Online taking over, but physical sites expanding as well

The past two years have seen Ritchie Bros. move their auctions fully online - Ackley pointed out that more than 70 percent of sales at live auctions were already online, so the transition has been a smooth one - and prices have stayed strong for used equipment across the board. The company has taken advantage of the opportunity to successfully expand its online presence.

"The transition was really positive for us from an opportunity standpoint - we saw that this can work, and people do want to adopt these tools," Ackley described. "As more and more things move online, more and more data is created, and that's the type of data we can offer in these dashboards. We really have seen acceleration with this transition toward online."

At the same time, Ritchie Bros. is doing something that may seem counter to the strategy: It is expanding its network of physical auction sites. There remains a need in the construction industry for buyers to experience the equipment before purchasing, and that isn't likely to change, Ackley noted.

"What we've come to understand is that in this particular industry, there's still a need to see the equipment, to touch the equipment, to inspect the equipment. There's also a need to network and meet people face to face," he said. "Our strategy going forward is really a hybrid approach: marrying the best of technology, data, and software online with a global physical footprint."