Deb Weidenhamer built her company, Auction Systems Auctioneers & Appraisers, to more than $100 million in annual revenue by adding new formats and seeking new opportunities

September 4, 2013

A Pioneering Auction Company Keeps Innovating

By JOHN GROSSMANN

Deb Weidenhamer built her company, Auction Systems Auctioneers & Appraisers, to more than $100 million in annual revenue by adding new formats and seeking new opportunities.

Deb Weidenhamer is happy to say she practices the world’s oldest profession — it’s just not the one that occurs to most people. “Auctions are truly the oldest known profession,” she said. “They’ve got a longer recorded history than even prostitution.” When Ms. Weidenhamer first picked up a gavel in 1995, there were few female auctioneers. Since then, she has helped invigorate the ancient profession and built her company, Auction Systems Auctioneers & Appraisers, to more than $100 million in annual revenue. She has added new formats, like simulcasting her live auctions, and she has helped establish that auctions are not just for liquidations and closeouts. Seeking new opportunities, she has even taken her gavel to China, where she has mastered enough Mandarin to handle auction chants and where she is creating a new channel for Western companies to introduce products into the vast Chinese market. She discussed all of that, from a dozen time zones away in Shanghai, in a conversation that has been condensed and edited.Q. How did you get started in the business?

A. I was working in San Francisco doing merger and acquisition arbitrage work. My husband worked for American Express in Phoenix. So I commuted back and forth to Phoenix every week. On a flight one night I sat by a man in his 80s who was an auctioneer, and he started telling me about the kind of work he did and how big the auction industry was. A month later I resigned my position and signed up to go to auction school.

Q. How many years ago was that and how old were you at the time?

A. I’ll tell you how many years ago it was. It was 18 years ago. I was basically told: go find product and if you find product, we’ll let you sell it when you bring it to the auction. I think they thought I wouldn’t find anything.

Q. Was this test a way to keep you out of the industry?

A. Right. There were very few women in the business at the time. For some good reasons, women in the auction industry have always struggled. It’s really because a high-pitched voice is extremely hard to listen to for hours. Plus, it was an old boys’ network. The first things I found and sold were surplus computers.

Q. Since then, what kinds of things have you auctioned off?

A. Everything from multimillion-dollar haunted mansions to gold teeth recovered from safe deposit boxes.

Q. Have you said no to anything?

A. We do have standards, things we won’t sell — like pornographic material.

Q. Why did you call your company Auction Systems?

A. Back in 1995, it was a very ma-and-pa industry that seemed to lack consistency and systems. I wanted to offer a consistent experience to both the seller of goods and the buyer of goods.

Q. What did your business look like at the start?

A. I started by myself with a little, 6,000-square-foot warehouse in downtown Phoenix. I conducted the auctions right there. A lot of auction houses have stages, so without one, I bought a step ladder and stood on the ladder and would sell.

Q. What did your husband think when you told him you weren’t going to commute to San Francisco any more — but you were starting an auction company?

A. Honestly, he thought I’d lost my mind.

Q. How long until he realized otherwise?

A. I’m not 100 percent sure he’s convinced yet. I started in October of the first year and did about $150,000 in commissions by year’s end. Typically our commission is about one-third of the sale price. In 1996 we did about $1.5 million. I had three employees unpacking and tagging goods and helping with accounting and sales support.

Q. Where’s the business today?

A. Annual revenues are about $135 million and we’ve got 200-plus employees. We’re now in a huge warehouse with about 150,000 square feet on four acres, but we also do auctions all over.

Q. Is $135 million the total amount of goods you’ve sold – or is that your commission?

A. The commission.

Q. How do you explain that kind of growth?

A. Growth is a combination of good processes, great people and operating outside the traditional parameters of auctions by looking for all kinds of opportunities — everything from real estate to microbrewery products to the latest technology. People value the open-market transparency that auctions create.

Q. When did auctions become a distribution channel for everyday merchandise?

A. I think we were pioneers — the idea that auctions are a first resort and not a last chance.

Q. Explain that.

A. Manufacturers right now are primarily represented in big-box retailers, so they create their products, consign them to the big-box retailer and then wait to be paid — often four to six months. Let’s say you’re a bicycle manufacturer. With an auction, you can consign a large number of bicycles to the auction. We’ll sell them, and you will get paid in three weeks. Oh, and by the way, they will sell for much more than you’d get from that big-box retailer.

Q. Why?

A. We’re trying to get to the end-user — to get that bike to a consumer — because an end-user will pay more for the bike than a dealer will. We’re selling a bike every 15 seconds when we’re auctioning. In a few weeks, we can probably move 250 bikes for you. Point is, this becomes a regular sales channel.

Q. What percentage of your sales are new products?

A. It really changes with the economy, but I’d say we deal in 60 percent new products, 40 percent used products.

Q. How are you operating in China?

A. We’re selling entirely new goods and, increasingly, Western-made goods to the Chinese. For many small American companies that can’t afford to have a full-blown, multinational presence in China but want to see if there is a good fit for their products, we can introduce their products at auction. We also provide some additional marketing and survey feedback for the company we’re selling for: Would the purchaser of the item buy it again? Would they recommend it? Did they like the packaging? Of course, the biggest question is price point.

Q. Can you give us an example of a company that you helped introduce a product into China?

A. We’ve helped a variety of companies from entrepreneurial-type ventures to high-end department stores break into the Chinese market, including beer makers, high-end handbag manufacturers, small kitchen appliance businesses and even cigar companies. Online auctions generally bring in at least 120,000 online views and more than 500 people usually attend the live auctions. Bids are accepted simultaneously from the auction floor or online, creating a very competitive environment to set the market price.

Q. Are there other ways you can help these companies?

A. We work with companies to allow them to avoid complicated registration and regulations that typically make China market entry difficult. This includes registering their logo in China to protect their brand, surveying buyers, conducting market research, shipping the product to China, producing a video of the product, conducting the online auction and conducting the live auction. Often, as we begin selling these goods into China, interested distributors suddenly appear who are able to distribute these Western products throughout China on a larger scale. We help verify the distributor’s reputation and then make appropriate introductions.