We are leading up to that. The Covid-19 virus helped us understand the importance of “how” a Seller sells his converters.

Here is a question for you: In April of 2020, when the Covid-19 virus had virtually shut down most of the world’s economies.

Did you stock up on toilet paper or water?

Why did you do that?

Exactly. You changed your buying behavior based on changes in your circumstances.

And your change of behavior had nothing to do with increases or decreases in the price of products that make toilet paper. Your behavior changed based on some intangible factors like your fears that all the toilet paper may be gone when you need some, or your assumptions that this might last longer than anticipated, or your opinion that you have to act because “other” people are in a panic, or your need for security, etc.

What occurred to us is that, like the toilet paper example, there are several factors – each unique to every Buyer – that have a significant impact on a Buyer’s behavior…..whether they are buying water, toilet paper….. or scrap catalytic converters.

Absolutely. Everything bought and sold is impacted by these “intangible” forces that modify Buyer behavior.

When we started looking at the buying and selling of scrap converters – we asked ourselves “other than the precious metals contained in the converters, and the current prices of those precious metals…….what other things might influence a Buyer’s behavior when valuing a scrap converter?

Sure, one important one is: “Are there other Buyers competing with me for this converter – or am I the only Buyer?”

Another factor is: “Is the Buyers processing capacity being fully utilized or are they starved for converters?”

Exactly.

Another would be: “Is the Buyer looking to expand his market?”

Exactly, but the change in the Buyer’s behavior had nothing to do with the price of or the quantity of the metals in the converter – his behavior was based on another objective – to expand his market.

Another would be: “Is the Buyer looking to defend his current supplier from being poached by a new Buyer?”

Okay, and how do you “fight like hell”?

Exactly. You would push up the price you are willing to pay for converters – even to the point of losing money – which again, has you acting based on something “other” than the amount of metal in a converter & the prices of those metals.

There are a lot of other reasons, such as (1) a Buyer’s hedge position relative to the market, (2) the Buyer’s process recovery technology relative to competitors, (3) If the Buyer is a metal consumer and not just a metal processor…..etc.

Shall we go on, or, have we convinced you that there are many factors, other than the current market prices, that influence what Buyers are willing to pay for scrap converters?

I see where you are going and would agree that there are a number of intangible factors that alter Buyers’ behaviors.

How big an impact can these “other” factors have on the price a Buyer offers a Seller?

We have seen that these “other” factors can lead a Buyer to adjust his prices anywhere from 5-25%.

That is exactly what we thought. We regularly see spreads of $20-$30 per Unit between the highest and lowest prices offered for the same LOT of converters, by Buyers ALL claiming to have the best deal and prices.

After recognizing the impact these “other” factors have on price, it was now making a whole lot more sense to us why any Buyer, on any given day, can win any given LOT….and win by a large margin.

Neither did we. In fact, we probably would have never considered them if we had not started ScrapCATapp.

Yes!

Yes!

When we recognized the influence these “other” intangible factors can have on the price a Buyer offers a Seller – that led us to the “how” Sellers should sell their scrap converters.

After understanding that “other” factors and how on any given day any Buyer can win, we realized a couple of things.

The first thing we realized is that each Buyer only knows the factors that affect them personally. They do not know the factors that affect other Buyers.

Exactly. Did you get the piano?

Great example. That other Buyer assumed that you were buying the piano to resell it, but you were buying it to have a memento of your wife’s childhood. That Buyer walked away thinking you overpaid – and you walked away happy to have the piano. They had no idea of your real motivations in buying that piano.

The second thing we realized is that the “other” factors that go into a Buyer’s pricing decision are dynamic and constantly changing for each of the Buyers.

Sometimes those changes work to the Buyer’s advantage and sometimes they work to their disadvantage.

Let me see if I understand what you are saying.

If I am a Buyer with an empty warehouse – I am motivated to fill that warehouse.

However, once I fill my warehouse, the specific factor that motivated me to be an aggressive Buyer before (wanting a full warehouse) is no longer a concern of mine so I will adjust my buying to be less aggressive.

Is that what you are saying?

Yes, Exactly!

The third thing we realized - and this will lead right into the “how” Sellers should sell their scrap converters.

Because these “other” factors are constantly changing for each Buyer – no one Buyer keeps their buying advantage over a very long period of time.

This means that the very thing that most Sellers are searching for – A Buyer that pays the most every time - and in every circumstance – DOES NOT EXIST!

Exactly.

Alright, the “when” to sell is a timeline that Sellers set to meet their particular situation (once a week, month, quarter, etc). Sellers should stick to that timeline unless a Major disruption causes them to change their timeline.

That leaves us with the “how” Sellers should sell their converters.

And the “how” is the simplest part.

Whether Sellers want to sell on an assay basis or by a per unit basis, the answer is the same. Sellers should auction their converters.

Most Sellers use one, or maybe two Buyers on a regular basis. Because of this, they rarely allow other Buyers to bid on their Units. However, based on what our ScrapCATapp.com transactions have proven to us, we know that on any given day, any Buyer can be Buyer with the highest price. This means Sellers should strive to offer their Units to as many Buyers as possible, every time they sell!

Auctions have been around for thousands of years, so we know from experience that they are a proven business model and the most efficient way for Sellers to get the highest value for their product.

There is a simple elegance to the auction process. It quickly and easily creates Buyer competition by allowing ALL interested Buyers a fair and equal opportunity to compete for the product being auctioned.

During that auction process, each Buyer that bids is thinking about the intangible factors we talked about above when determining the price they are willing to pay.

And the final price a Buyer offers will reflect the value that they place on all of the tangible and intangible factors. Simply, the Buyer who wants the Seller’s product the most will offer the highest price!

Exactly. At ScrapCATapp we like to say:

“When you sell your converters by auction, your converters go where they are treated best.”