E-auctions and Reverse Auctions. Do They Make Sense? (2005)

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E-auctions and Reverse Auctions. Do They Make Sense? (2005)

  1. 1. E-auctions and Reverse Auctions Do They Make Sense? Eddy Hagen, VIGC 1
  2. 2. E-auctions & Reverse Auctions Printers say…  Shocking!  Crazy!  Are we still allowed to make money??? Print buyers say…  Great tool to cut prices! 2
  3. 3. E-auctions & Reverse Auctions What’s it all about?  New way of ‘selling’ jobs to printers  Procedure: • Information gathering, at selected printers • First quotes by printers • Top 5 e.g. is selected • Online, live ‘auction’ of jobs • Printers see the price level of competitors and can adjust their prices, downwards of course… • Other criteria than price can be taken into account for ranking • Outcome: either winner gets it all, or negotiations with top 3 3
  4. 4. VIGC Study 3 parts:  Survey - General part: how good do printers know their customers, how do buyers appreciate the printers  Survey - E-auctions as such  Interviews with printers & print buyers Survey:  Online survey  100 participants, 2/3 printers, 1/3 print buyers 4
  5. 5. Do Printers Know what Buyers Want? Same question for printers / print buyers  How important are following factors in choosing a printer? • Price • Quality • Service • Creativity • Flexibility • On time delivery • Financial stability • Stability of workforce • Thinking along with customers • Personal contacts • Skills (printing) • It-skills 5
  6. 6. Do Printers Know what Buyers Want? Same question for printers / print buyers  Rating on a scale from 1 (not important) to 5 (extremely important)  Sometimes interesting differences between what printers think is important and what print buyers really consider important… 6
  7. 7. Do Printers Know what Buyers Want? Rating on a scale from 1 to 5 Printers Print buyersPrice 3,94 8 3,94 7Quality 4,11 5 4,56 2Service 4,31 3 4,34 5Creativity 3,23 10 3,42 11Flexibility 4,40 2 4,47 3On time delivery 4,44 1 4,78 1Financial stability 3,08 11 3,66 10Stability of workforce 2,90 12 3,06 12Think along with customers 4,13 4 4,16 6Personal contacts 4,02 7 3,68 9Skills (printing, graphic arts) 4,03 6 4,38 4IT-skills 3,26 9 3,75 8 7
  8. 8. Do Printers Know what Buyers Want? But… if we ask this in a different way…  Which factor is the most important, the second most important and the third most important?  Then we see something different… 8
  9. 9. Do Printers Know what Buyers Want? But… if we ask this in a different way… Most important factor Printers Print buyers price 42% 45% quality 10% 36% service 23% 3% creativity 0% 0% flexibility 16% 9% on time delivery 0% 0% financial stability 5% 6% stability workforce 0% 0% think along with customers 0% 0% personal contacts 3% 0% Skills (printing, graphic arts) 2% 0% IT-skills 0% 0% 9
  10. 10. Do Printers Know what Buyers Want? But… if we ask this in a different way…Number of times mentionedin top 3 Printers Print buyersPrice 96% 1 97% 1Quality 54% 2 76% 2Service 48% 3 30% 5Creativity 3% 8 3% 8Flexibility 43% 4 33% 4On time delivery 0% 11 0% 11Financial stability 26% 5 39% 3Stability workforce 3% 8 3% 8Think along with customers 0% 11 3% 8Personal contacts 13% 6 6% 7Skills (printing, graphic arts) 8% 7 0% 11IT-skills 3% 8 9% 6 10
  11. 11. Do Printers Know what Buyers Want? Scale 1-5 vs Top 3  On time delivery • Highest ranking for both • But nowhere in Top 3…  Skills • Resp. 6th / 4th ranking (printers resp. print buyers) • But only 8% / 0% in Top 3…  Thinking along with customers • Resp. 4th / 6th ranking • But only 0% / 3% in Top 3  So… it seems that both printers and print buyers take these for granted… 11
  12. 12. E-auctions, the Printer’s Vision on it Q: already being approached by customer to participate in e-auction?  39% yes, 61% no  If not, would you consider to participate? • 46% yes, 54% no  If yes, how did you evaluate it? • Scale 1 (very negative) – 5 (very positive) • 1: 48% • 2: 38% • 3: 10% • 4: 0% • 5: 3% 12
  13. 13. E-auctions, the Printer’s Vision on it Q: was the e-auction organised by existing customer?  63% yes, 37% no Q: did you get enough time to prepare?  58% yes, 42% no Q: were the specifications, questions, … clear enough?  48% yes, 52% no 13
  14. 14. E-auctions, the Printer’s Vision on it Q: were there printed samples?  38% yes, 62% no  If not, do you believe they were necessary? • 83% yes, 17% no Q: were there technical problems during the auction?  31% yes, 69% no Q: who got the order?  No idea: 34%  The cheapest: 28%  Best price/quality: 0%  Shortlist, further negotiation: 31%  Other: 7% 14
  15. 15. E-auctions, the Printer’s Vision on it Note: now are sample gets thin… Q: if you got the job, did it generate extra work?  1 resp. (17%) yes, 5 resp. (83%) no Q: were jobs conform specifications?  0 resp. (0%) yes, 5 resp. (100%) no  If not, did this have an influence on the production cost? • 5 resp. (100%) yes, 0 resp. (0%) no  Could you charge these extra costs? • 3 resp. (60%) yes, 2 resp. (40%) no… 15
  16. 16. E-auctions, the Printer’s Vision on it Q: did you get other jobs than those that were auctioned?  3 resp. (50%) yes, 3 resp. (50%) no Conclusions  The opinion of printers on e-auctions is very negative  And often with reason… • Technical problems • Not enough time to prepare • Not enough or not the right information • No extra jobs, only lots of paper work and a lower (or no) margin… 16
  17. 17. E-auctions, the Buyer’s Vision on it Q: how important are cost savings?  Scale 1 (not important) – 5 (very important) • 1: 3% • 2: 9% • 3: 14% • 4: 27% • 5: 45% Q: how do you want to realise savings?  Asking more printers for quotes: 58%  Working with printer to save costs: 64%  Standardising print jobs: 42%  Centralisation of print buying: 55%  E-auctions: 15%  Buying raw materials (e.g. paper) themselves: 24% 17
  18. 18. E-auctions, the Buyer’s Vision on it Q: did you ever consider e-auctions?  10 resp. (30%) yes, 23 resp. (70%) no • Yes: mainly corporates, • No: e.g. publishers, financial corporations  If not, why not? • Never heared about it: 6 resp. (24%) • Don’t believe in Internet-technology: 1 resp. (4%) • Don’t believe in ROI of project: 6 resp. (24%) • Don’t believe in a good relation afterwards: 12 resp. (48%) 18
  19. 19. E-auctions, the Buyer’s Vision on it Q: what did you expect to get out of it?  Cutting costs: 7 resp. (100%)  Time savings: 3 resp. (43%)  Better insight in market prices: 6 resp. (100%) Q: who got the jobs?  Cheapest bidder: 2 resp. (40%)  Negotiations with Top 3: 3 resp. (60%) Q: agreements regarding changes?  4 resp. (67%) yes, 2 resp. (33%) no 19
  20. 20. E-auctions, the Buyer’s Vision on it Q: more e-auctions in the future?  7 resp. (100%) yes! Q: would you do it different?  5 resp. (71%) yes, 2 resp. (29%) no  What would you do different? • More information to printers • Getting to know people behind the screen • Better specifications • Less paperwork • Being more professional… 20
  21. 21. Some Interviews Printers  They’re not happy… they feel they don’t have any control over it  Too much paperwork, not in relation to possible profit  Some questions are intrusive… (e.g. price structure, pricing policies)  Sometimes complex jobs need to be treated as commodities  The outcome isn’t clear and this leaves a bad impression  And ‘accidents’ happen… 21
  22. 22. Some Interviews Print Buyers  They are looking for professional and stable partners, also financially stable  They also cry for partnerships, for problem solving! • And they expect initiative from their printers!  Most important trend: bringing down the number of suppliers  Cutting costs is important, but cutting the complete cost, not only the print cost… • Look at it in a broader perspective!  Cost savings with e-auction: 10, max. 20% 22
  23. 23. Some Interviews Print Buyers  A pharmaceutical company… • The did e-auctions, for rather complex promotional material • The didn’t do e-auctions for very straightforward stationary… • Why? • Because their printer had installed a web-based ordering system and also did the logistics to deliver the ordered stationary to the desk… • And this was difficult to replace… 23
  24. 24. Conclusions? Printers don’t exactly know what their customers consider important  E.g. financial stability, partnership Printers don’t like e-auctions  The organisation of e-auctions can be improved • E.g. less paper work, better support, better specifications, printed samples  They (usually) don’t generate extra work  But print buyers do like e-auctions… 24
  25. 25. Conclusions? Do they make sense?  Well, they might… • If it’s for more or less standardised print jobs • Not for ‘project’ print jobs! • And don’t use a nuclear missile to shoot a mosquito… • Lots of extra costs, work involved…  But beware… • The organisation must be perfect: no technical problems, not too much paper work, good questions and clear specifications  And there is a need for a personal approach… 25
  26. 26. Thanks! 26
  27. 27. eddy.hagen@vigc.orghttp://www.vigc.org 27
  28. 28. Strategic Partners VIGC 28

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