Introduction

First off, a big shoutout to BaT for dropping this news at the eleventh hour—really keeping me on my toes tonight! This past year has been a rollercoaster of changes for BaT, some of the most ‘extreme’ since they started almost a decade ago. We’ve seen the verified checkout (which is a fantastic addition), a hike in fees, and now we’re diving into a hot new feature for handling those dreaded Reserve Not Met (RNM) situations.

Remember our chat with Randy in November? (here’s a snapshot) We talked about many of these changes, so this shouldn’t come as a shock.

As a side-note, I’ve always admired how BaT blazes its own trail, not just copying what Mecum, Barrett-Jackson, and the like are doing. Their results speak for themselves, and it’s clear why so many live auction houses are trying to pivot online. This is where the market is headed, and as I’ve shown with my numbers, this is where we are today.

So What’s the New Change?

Starting today, if an auction ends without meeting the reserve, the highest bidder gets 24 hours to make their best offer directly to the seller. The seller then has another 24 hours to accept that offer or make a counteroffer. This back-and-forth will be limited to one round apiece, keeping things straightforward and efficient. Plus, these interactions will take place in a secure environment, with transactions conducted through BaT’s Verified Checkout process where eligible.

This new feature aims to simplify the post-auction experience and help more buyers and sellers achieve success in their BaT auctions. It’s designed to streamline and standardize negotiations, making the process more efficient and reducing the need for fee adjustments.

Key Questions and Answers

I think the best way to discuss these changes is by asking questions that I think many of you will have, and then giving my answers, which of course you might not agree with. Let’s start with the big one…

1. Is this just a money grab by BaT?

I can see why some might think this is a money grab, especially since negotiating post-auction deals was free before. However, let’s be honest—BaT has been leaving a lot of money on the table. (see my question above to Randy in November) I’ve written previously about the significant revenue potential BaT misses out on with so many RNM deals happening off-platform.

Formalizing this process ensures BaT captures a fair share while providing a more structured and secure transaction environment, benefiting both buyers and sellers. So for me, it’s innovation and not a money grab. See below for further answers on increased revenue for them.

2. Why not offer a reduced fee for these post-auction transactions?

To those who might say BaT should have just left it as is, I understand your opinion, but it's not the right way for any company to innovate and grow. BaT should 100% be charging for this service, as I’ve said many times. The simple answer to this question is: why should they offer a reduced fee? The current 5% fee (capped at $7,500) is already cheap compared to the value they offer. So why cheapen it?

On the other hand, I understand the argument that adding a fee post-auction might make deals less attractive. It’s often that 5% of not paying the fee that enables sellers to stretch their budget to make that purchase happen.

After thinking about this, I’ll stick to my guns on what I’ve said in the past, in believing that a reduced fee for a 'failed auction' could have been the smart play.

Maybe 4% or 2.5% could work, but there's always going to be someone who thinks even that is too high because it used to be free. You can’t please everyone!

We'll need to monitor the data over time to see where it all lands, but it's impossible to know if a reduced fee would be better than the still very low fee of 5%. (see the poll at the end to give us your opinion.)

3. Are these changes driven by Hearst’s acquisition of BaT?

For those of you who don’t know, back in 2020, Hearst acquired BaT. (Randy & the early team are still partial owners) The financial details were never publicly shared, but suffice it to say, it was a lot of money. It could have been even more a year or two later with the business boost from COVID. Importantly, the acquisition kept Randy running the show, so the core spirit of BaT remained intact.

When Hearst bought BaT, everyone panicked, saying it was the end of BaT and that Hearst would change everything etc etc… But, as we’ve seen, the initial changes were minimal and sensible. Remember when Apple removed the headphone jack? Everyone thought it was a money grab for wireless headphones, but it was a move towards innovation. People generally resist change because we like things as they are.

However, there was a lot of money being left on the table at BaT. Fees hadn’t changed, and the post-auction negotiations were happening off-platform. With the acquisition, Hearst brought in a lot of infrastructure and knowledge, enabling the significant changes we’ve seen this year. These changes didn’t happen overnight. The process likely involved strategic discussions, phased planning, and resource allocation.

Without Hearst taking over, I’m not sure these changes would have happened. Selling to Hearst was probably partly about bringing in the resources and expertise needed to grow BaT further. (the other part was of course cashing in on what they’ve built - can’t blame em!)

So, to answer the question: In my opinion, YES, these changes are definitely driven by Hearst’s acquisition of BaT.

4. Will BaT still lower fees to get deals done, or is this the end of that practice with the new RNM feature?

So, here’s the deal. In the past, BaT has been known to selectively lower their fees to help close deals that were close to the reserve. But with this new RNM feature, it looks like that practice is pretty much over. Now, if an auction ends with a Reserve Not Met, it goes straight to the highest bidder for a 24-hour period to make their best offer, followed by the seller’s 24-hour response period.

So YES, this pretty much marks the end of fee-lowering practices in favor of a more streamlined approach.

5. Are more changes expected?

My understanding is that the changes will incrementally continue. (just look at their most recent hires.) There have been hundreds of small changes over the years, and as we spoke about at the beginning of this article, the last year we’ve seen the biggest changes to the platform since their inception. Like you, I can think of many more improvements they could make.

6. How will this affect our reporting of sell-through rates and trends?

Well, this is going to be new territory for us at The Daily Vroom!! In a way, it’s better because we’re all about the data from all platforms. We know there are so many sales happening after the auction, so at least now we can see what those sales prices are from BaT, (maybe others will follow)—that will help us understand trends and the market much better.

But, it means we’ll have to go back every 48 hours and examine all the RNMs to see whether their status has changed to sold. Maybe (fingers crossed) they’ll add a dropdown tab where we can easily see 'after auction sales.' That would make our life a lot easier!

Conclusion

Let’s keep it real here, this was not a shock move. This change was always on the cards—it was ridiculous for BaT to leave so much money on the table. (I think I’ve overused this phrase, but it is 1am!)

I like how they’ve integrated it with their Verified Checkout (if you use it- still unsure how many people are using it?)

And it makes total sense to have only the highest bidder involved. (this will likely encourage more bids at the end).

The 24/48-hour timeframe adds a nice sense of urgency to get deals done. Naturally, there had to be a fee—what that fee should be is up for debate. (see poll below)

As a data guy, I believe the numbers will tell the story over time. We’ll see how this new feature impacts the market, sell-through rates, and overall user satisfaction. In the end, BaT needs to do what they think is best. After all, it’s served them well thus far.

Please let us know your view point in the polls below. We’ll share the results and comments you leave tomorrow.