Langton's Whinge

[Duncan Disorderly]

I've been buying the odd bottle from Langton's for about five years. I've looked at other auction houses, but Langton's system is very user friendly (despite some more obvious recent glitches).However, the whole auction system now feels so heavily manipulated that it leaves a bad taste in my mouth.

My main issue is vendor bidding. I have no problem with vendors making bids, but it appears that most of the time it's Langton's itself bidding up prices, either acting as a seller's agent or because they are selling large amounts of wine they have bought on consignment.

Take for instance their 'unreserved auctions'. Bidding starts at zero, but it's frequently the case that several lots of the same wine will be bid up to the same price within a short period and then all have exactly the same sales price when the auction closes (if indeed they are actually selling). For example a wine with a market value of about $30 is offered in 7 lots, of different multiples of bottles. Soon every lot has a bid of $20. Then if you buy a couple of lots in the hours before it closes it becomes clear that they all have a reserve say $27 ie the retail market price.

It's feels like it's gone from being a good auction house to just an arm of Dan Murphy's. Clearly this has been the case for a while. Perhaps I've had my head in the sand, and been unwilling to take the plunge elsewhere. Not anymore.

[JamieBahrain]

Conversely, at another auction site, I have been contacted by bidders via internal mail system that's available, asking not to bid up wines and we'd divvy up the booty.

Perhaps I'll leave instructions in my will for my cellar to be auctioned via Langtons? Maximising vendor profits though I'm sure it will always be Langtons doing fine .

[Ian S]

Over here, the sort of collaborative bidding Jamie described is illegal.

I'm less happy than you Duncan with the vendor bidding. Set a reserve if they like, but it makes me feel nervous as to what arrangements they've made with the auction house if their bid is the winning one, and even more so if I've put a commission bid in. Much more dangerous when the auction house itself selling stock (as Langtons might choose to do with retail stock). In such situations I would never put a commission bid in (or electronic 'max bid'), out of fear they'd simply hammer the wine down at that price, even if there was no counter-bidder. I've attended enough bricks & mortar auctions to know there are some pretty lousy tricks that get pulled.

[Wizz]

Over here, the sort of collaborative bidding Jamie described is illegal.

As a vendor, I'd be pretty angry if I knew this was going on. In other industries in Aus its called price fixing - and its illegal.

[Polymer]

I don't think there are any things like that happening at Langtons...

There are just a lot of people bidding...I haven't seen anything weird in the unreserved stuff and have seen some stuff go for some really good prices so I don't think anything funny at all is happening.

I DO think you also get a lot of crazy bids as well...basically making the wine sell for retail which makes no sense...

[Sigmamupi]

If you are logged into your own Langtons account, it is not possible to bid on your own stock - the computer refuses to take a bid - so the vendor bidding issue is moot. However it is clear that Langtons itself places "bids" that are not real but are below the reserve in an attempt to create a market to get to the reserve, which is basically supporting the vendor. These comments apply to "normal" auctions. I agree the so called "unreserved auctions" are no such thing. Duncan's description of what happens is pretty accurate from my admittedly limited observations. Whether that is through manipulation or by single bidders trying to clean up all lots is not clear to me but I would never bid in one of these types of auctions in any event.

[Mark Carrington]

I’ve effectively given up on all wine auctions, for a myriad of reasons.

[JamieBahrain]

Over here, the sort of collaborative bidding Jamie described is illegal.

As a vendor, I'd be pretty angry if I knew this was going on. In other industries in Aus its called price fixing - and its illegal.

I'm not sure of the legalities, but what's important to me having a sizeable international cellar is the process is enabled and there is plenty of conditioning for low expectations of secondary market pricing for foreign wines.

I've left pretty clear instructions my cellar is shipped abroad for sale. The Aussie secondary market seems to be made of of mostly bargain hunters. Abroad, it's different. You can even sell directly to restaurants- I'm unsure if this is allowed in Australia?

[rooman]

If you are logged into your own Langtons account, it is not possible to bid on your own stock - the computer refuses to take a bid - so the vendor bidding issue is moot. However it is clear that Langtons itself places "bids" that are not real but are below the reserve in an attempt to create a market to get to the reserve, which is basically supporting the vendor. These comments apply to "normal" auctions. I agree the so called "unreserved auctions" are no such thing. Duncan's description of what happens is pretty accurate from my admittedly limited observations. Whether that is through manipulation or by single bidders trying to clean up all lots is not clear to me but I would never bid in one of these types of auctions in any event.

The operation of Langtons totally changed after it was purchased by Woolworths who also just happens to own DM. Prior to its purchase it operated more than a traditional auction houses, prices were set by the market and clearance rates were acceptable. Since its purchase however Woolworths seem more focused on maintaining the price of wines at levels that match and support the retail prices in DM or not far off it. Some auctions have a 90% pass in rate, a rate a normal auction house couldn't live with if it wanted to make money and stay in business. Personally I don't believe the ACCC should have approved the purchase of Langtons by Woolworths.

Mark

[Con J]

Conversely, at another auction site, I have been contacted by bidders via internal mail system that's available, asking not to bid up wines and we'd divvy up the booty.

Perhaps I'll leave instructions in my will for my cellar to be auctioned via Langtons? Maximising vendor profits though I'm sure it will always be Langtons doing fine .

I’m confused, how can this happen.

Does this means all other bidders know who is bidding on what wine?
Why would an auction house allow this happen as the higher the price they get the higher commission they make.

I sometimes email some the members from my wine groups and ask them if they are looking at any of the wine I'm interested in, this is so we don't bid against each other.

Oh yeah I haven't used Langton's for about 10 years. I was sick of bidding against the reserve, bidding should start at the reserve price.
The biggest problem with Langton's for was their customer service.

Cheers Con.

[Dragzworthy]

Conversely, at another auction site, I have been contacted by bidders via internal mail system that's available, asking not to bid up wines and we'd divvy up the booty.

Perhaps I'll leave instructions in my will for my cellar to be auctioned via Langtons? Maximising vendor profits though I'm sure it will always be Langtons doing fine .

I’m confused, how can this happen.

Does this means all other bidders know who is bidding on what wine?
Why would an auction house allow this happen as the higher the price they get the higher commission they make.

I sometimes email some the members from my wine groups and ask them if they are looking at any of the wine I'm interested in, this is so we don't bid against each other.

Oh yeah I haven't used Langton's for about 10 years. I was sick of bidding against the reserve, bidding should start at the reserve price.
The biggest problem with Langton's for was their customer service.

Cheers Con.

Agree with you there Con. If a wine is listed and it doesn't meet reserve then thats just a false advertisement/enticement.
I found this recently on Sterling Auctions as well.....I'm not very experienced with these things so I assumed despite my first reaction that it was normal in the wine world.

[Rossco]

I bid on langtons a little. (was a lot more in the past).

I have taken the stance that my one bid is my highest and if i win, great. If I lose, no biggie as someone else wanted it more... OR
the vendor wanted more than I was prepared to pay. As a result, i probably only win less than 10% of all my bids..... and im good with that.

[Ozzie W]

Never bought anything at auction from Langtons. Read too many negative stories just like this one.

My gripe with auctions are the bottles with so called "provenance" of professional storage, temp controlled cellars, etc. Sick and tired of pulling out corks which scream poor storage.

[Bobthebuilder]

I don't think there are any things like that happening at Langtons...

There are just a lot of people bidding...I haven't seen anything weird in the unreserved stuff and have seen some stuff go for some really good prices so I don't think anything funny at all is happening.

I DO think you also get a lot of crazy bids as well...basically making the wine sell for retail which makes no sense...

its the structure of the current bids, its literally obvious whats going on.
In a legitimate unreserved, you don't get this
sometimes you get a bargain, especially when there is a heap of lots
that doesn't happen anymore, and when you see 10 lots of the same wine, that you know the market is already flooded with, and the bids are all the same at a no longer bargain price (quite often a tad more than what you could get at other retailers without commision costs), I smell a rat.
They are most definitely dummy bidding in these unreserved and $5 reserve auctions
it is not other individual sellers product, its Woollworths owned excess stock, which is effectively Langtons owned stock.
When the auction house owns the stock its a completely different set of goalposts and opportunities the seller has.

[Bobthebuilder]

If you are logged into your own Langtons account, it is not possible to bid on your own stock - the computer refuses to take a bid - so the vendor bidding issue is moot. However it is clear that Langtons itself places "bids" that are not real but are below the reserve in an attempt to create a market to get to the reserve, which is basically supporting the vendor. These comments apply to "normal" auctions. I agree the so called "unreserved auctions" are no such thing. Duncan's description of what happens is pretty accurate from my admittedly limited observations. Whether that is through manipulation or by single bidders trying to clean up all lots is not clear to me but I would never bid in one of these types of auctions in any event.

The operation of Langtons totally changed after it was purchased by Woolworths who also just happens to own DM. Prior to its purchase it operated more than a traditional auction houses, prices were set by the market and clearance rates were acceptable. Since its purchase however Woolworths seem more focused on maintaining the price of wines at levels that match and support the retail prices in DM or not far off it. Some auctions have a 90% pass in rate, a rate a normal auction house couldn't live with if it wanted to make money and stay in business. Personally I don't believe the ACCC should have approved the purchase of Langtons by Woolworths.

Mark

My thoughts exactly
The current unreserved auction have miraculously achieved clearances of 99% +
Yet never a bargain these days, and quite often a higher price than the same wine from the same auction house in a reserved auction 3 days later
go figure

[odyssey]

I don't think there are any things like that happening at Langtons...

There are just a lot of people bidding...I haven't seen anything weird in the unreserved stuff and have seen some stuff go for some really good prices so I don't think anything funny at all is happening.

I DO think you also get a lot of crazy bids as well...basically making the wine sell for retail which makes no sense...

Actually I've also come to the belief that this is happening, too many times I've seen multiple lots of the same wine on "no reserve" auctions miraculously end up with precisely the same price. If the auction house is bidding as a vendor on a no reserve auction, that is most definitely misleading and deceptive conduct... if it's true. Can't do much or prove it without an audit or whistleblower though. What you can do about it is not bid.

[Diddy]

This thread inspired me to have a look at their terms and conditions:-

https://www.langtons.com.au/terms-and-conditions

Clause 10.9 says that a seller can't bid on their own lots unless "explicitly permitted" - would be interested to know under what circumstances this may occur?

However, perhaps the most interesting clause is this one:-

10.3 Langton's has the right, at its absolute discretion, to refuse any bid and to advance the bidding (including through vendor bids) as it may determine.

[Dragzworthy]

Well there you go. That's basically a clause allowing themselves to do anything shifty they like

[Polymer]

I don't think there are any things like that happening at Langtons...

There are just a lot of people bidding...I haven't seen anything weird in the unreserved stuff and have seen some stuff go for some really good prices so I don't think anything funny at all is happening.

I DO think you also get a lot of crazy bids as well...basically making the wine sell for retail which makes no sense...

its the structure of the current bids, its literally obvious whats going on.
In a legitimate unreserved, you don't get this
sometimes you get a bargain, especially when there is a heap of lots
that doesn't happen anymore, and when you see 10 lots of the same wine, that you know the market is already flooded with, and the bids are all the same at a no longer bargain price (quite often a tad more than what you could get at other retailers without commision costs), I smell a rat.
They are most definitely dummy bidding in these unreserved and $5 reserve auctions
it is not other individual sellers product, its Woollworths owned excess stock, which is effectively Langtons owned stock.
When the auction house owns the stock its a completely different set of goalposts and opportunities the seller has.

I'm not sure from when you're measuring but I've got a lot of really good deals on unreserved auctions from Langtons...ones that should be impossible if what people were saying is true..

Maybe I'm just not as cynical..but to shill bid would cost them their entire business...it just isn't worth it. Even if this their own stock, they're better off either not or ever putting them in unreserved/$5 reserve..or because they have historical data, simply don't put wines in an unreserved auction that aren't popular enough to get noticed...

I'm not saying it can't happen..just doesn't make any sense to do so...unless for some reason shill bidding is not against the law in AU..but pretty sure it is..

Well there you go. That's basically a clause allowing themselves to do anything shifty they like

You can't create a clause that breaks the law even if all of your users agree to it...Vendor bids are to bring the price up to the reserve...which doesn't exist in an unreserved or bids beyond the reserve...

[Dragzworthy]

Why not just offer the wine at a starting price matching the reserve? Just seems like a waste of time not to...?

[Ian S]

There is a real danger that they are 'selling to themselves using zero buyers / sellers premium, thus achieving high 'sales %' and also high prices. I'd fear any auction house that was also putting its own stock through. The two must be completely separate to maintain credibility.

[Duncan Disorderly]

In regards to Polymer's question it seems to have got worse over the last 12 months. I have still got some reasonable deals in unreserved auctions over that time, but, as I outlined above, I've also really noticed bidding behaviour that leads me to believe a single entity is orchestrating bids. The end results are just seem too similar to be by random bidders. It appears that others have also come to this conclusion.

One can only conclude that that bidder is the house ie Langton's or another entity within the Woolworths group, and in an auction that is meant to be unreserved it just leaves an unpleasant taste in my mouth, as it were.

Where that gets them is a bit of mystery. Perhaps their clearance rates are so low in their other auction formats, they need to use the numbers from the unreserved auctions to prop up the values they quote to attract vendors - as much as that strikes me as unlikely and possibly illegal. One is led to speculation when transparency seems to be lacking...

[swirler]

Imagine a bidder wants to buy a wine and there are 5 lots of this wine available in an auction (lets assume that each lot is the same size to keep things simple.) If 4 lots are priced at, say, $20 and one lot is priced at $19, which lot will the bidder bid on? Quite possibly the $19 lot. The bidder bids $20 and then all the lots are the same price. Nothing sinister here.

[Polymer]

Yeah..that's exactly right..someone will bid on the multiple lots with their max and move on to the next one...

The unreserved auctions might be there to prop up clearance rates..but I don't see them needing to do so. They're attracting consumers because they have the best overall selection. The second most active wine auction site in AU also has good overall selection just not as good.

Not only that but wines don't clear because the reserve is too high or the wine itself no one cares about (which means the reserve is too high) but either way, it isn't a lack of bidders.

I get why people might feel like there is something underhanded going on..and possibly there is...but it just isn't worth it for them to do that..the cost to their business would be huge..and any audit would easily show what is going on..

Their business model, without doing anything stupid, gets them nearly 30% of their revenue without taking any risks. They don't have to pay for stock, other people have already paid for it. All they provide is a website and a place to store the stuff while it is being auctioned.

[Duncan Disorderly]

Imagine a bidder wants to buy a wine and there are 5 lots of this wine available in an auction (lets assume that each lot is the same size to keep things simple.) If 4 lots are priced at, say, $20 and one lot is priced at $19, which lot will the bidder bid on? Quite possibly the $19 lot. The bidder bids $20 and then all the lots are the same price. Nothing sinister here.

Fair point. But in my experience you often already have your four lots, in unreserved auction, with bids at exactly $20 five minutes before the close. So you select one lot and bid $21 but you haven't outbid the winning bid, no problem there, so you keep bidding up by a dollar until finally at $26 you have the winning bid. You then bid on the next lot and it's the exactly the same and the next, and the next. This happens all the time and it's not just a coincidence.

[rooman]

Having bid on wines at Langtons now for the past 17 years, there was a clear change in activity after it was purchased by Woolworths.

Since the purchase by Woolworth, it appears they have attempted to keep the wines at prices close to the prices you see in DM stores which makes sense when you consider the revenue from DM far exceeds the money they’d make off Langtons.

Walking around DM this evening there is a whole section with museum stock and some seriously over inflated prices for the wines they are selling in these areas. For example the Grosset Springvale 2017 is going for $37 in the normal aisle. Over in the museum section the 2012 is going for $58. The Clonakilla SV 2106 was going for $100 whilst the 2012 was $134. They also move a lot of wines through this area from lousy vintages.

The only way they can maintain higher prices for their museum stock is to make sure the major online auction house has similar pricing. Multiple this over all DM stores and it’s easy to see why they are happy to sacrifice the sales on Langtons. It’s all about artificially supporting secondary market prices.

[Duncan Disorderly]

Their business model, without doing anything stupid, gets them nearly 30% of their revenue without taking any risks. They don't have to pay for stock, other people have already paid for it. All they provide is a website and a place to store the stuff while it is being auctioned.

You might be right, but a close look at auction catalogue after catalogue over a number of years indicates to me that they buy wine on consignment. Most of it, the international stuff anyway, would appear to be stock from on-premise distributors, but I expect there are a lot of wineries either clearing excess stock or going broke, and a few deceased estates. They may also act as sellers agent for some wineries looking for another sales channel and/or to establish a secondary market presence, but who don't have the time or the inclination to sit up to 9pm a couple of nights a week to make vendor bids.

Could be wrong here, it's happened before.

[Diddy]

On a slightly related topic, how many of you have seen Langtons stock with their distinctive logo sticker/barcode end up on a retail shelf at Dan's? Who knows what the provenance of that wine may be? I've never seen any of these wines disclosed as second-hand from their auction partner.

[rooman]

One of the really sad changes that came with the Woolies purchase was Langtons change of policy about offloading en primeur stock from the prior year when the next en primeur vintage came around.

Prior to Woolies purchase, Langtons was ruthless in getting rid of the previous years stock. When it was time to release the 2006 vintage they just dumped cases of top quality 2005. I purchased a 24 bottle case of 350 ml Chateau Guiraud Sauternes for around $25 pb - at the time it was cheaper than Noble One. 2005 Ch Lynch Bages went out the door at just over $100 pb.

[Polymer]

Their business model, without doing anything stupid, gets them nearly 30% of their revenue without taking any risks. They don't have to pay for stock, other people have already paid for it. All they provide is a website and a place to store the stuff while it is being auctioned.

You might be right, but a close look at auction catalogue after catalogue over a number of years indicates to me that they buy wine on consignment. Most of it, the international stuff anyway, would appear to be stock from on-premise distributors, but I expect there are a lot of wineries either clearing excess stock or going broke, and a few deceased estates. They may also act as sellers agent for some wineries looking for another sales channel and/or to establish a secondary market presence, but who don't have the time or the inclination to sit up to 9pm a couple of nights a week to make vendor bids.

Could be wrong here, it's happened before.

Well they put their own stuff that they import there...

They might be picking up stock from estates but they'd only do that if they'd be making huge margins on them..and most people, at that point, are better off giving it to Langtons to auction..even if completely unreserved...There doesn't seem any way you'd sell your wines to Langton's vs. giving it to them in an unreserved auction unless you had absolutely no time to resolve this (which maybe for some estates is the issue).

Either way, you can be sure Langtons would be making huge margins if so...there is no benefit for them to do it if it would be the same margins they get in a normal auction..all they'd do at that point is carry risk.

Fair point. But in my experience you often already have your four lots, in unreserved auction, with bids at exactly $20 five minutes before the close. So you select one lot and bid $21 but you haven't outbid the winning bid, no problem there, so you keep bidding up by a dollar until finally at $26 you have the winning bid. You then bid on the next lot and it's the exactly the same and the next, and the next. This happens all the time and it's not just a coincidence.

Some people bid like that..some people put their max in (you don't bid online auctions like you would a live one)...You'd also have multiple lots listed so if you put in your bid, you'd not continue riding the same one for more when other lots are going for less. Using your example, would you bid $26 on a lot when there are other lots still at $20 (same wine/condition, etc)? Maybe..some people do..but the way Langtons times it all (all at the same time) and the easy of looking at multiple lots means you'll bid the cheaper lots (assuming you're ok w/ the quantity) before upping your bid on another lot that is higher...Unless you just can't be bothered and don't mind paying more...

This is how you get many lots at the same price..and you'd expect that as well..I would expect the same wines to go for roughly the same price..assuming same quantity and quality...sometimes that isn't the case...although I'd put that down to more of the last 5 second bidding than anything else...