Reverse Auction

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Reverse auction: definition, explanations and case study

Reverse auction: definition, explanations and case study

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  • 1. REVERSE AUCTIONS E-Biz class By Ms. Craig Nov. 10 th 2009 Gwenaelle D.
  • 2. Reverse auction history
    • Birth of reverse auction in the late 1990s, in the USA, after the emergence of Internet-based online auction tools.
    • FreeMarkets -1995 : pioneer of online reverse auctions
    • Consolidation of the reverse auction service marketplace
    • Early 2000, eBay created a online auction model where buyers compete to each other for their highest price for a particular item
    • January 2004, FreeMarkets was taken over by Ariba for $493 million
  • 3. Reverse auction history (con't)
    • At first, only mass distribution was concerned (fruit and vegetables)
    • Then office furniture, and later intellectual property services (counseling or jobs Jobdealer.net)
    • 2005 reverse auctions arrived in France
    • Loi Jacob regulates reverse auctions in France. For further detailed information see « article 33 » of the loi Jacob
  • 4. How does it work
    • A reverse auction model relies on a customer-provider-seller relation.
    • Providers take a bid from customers and match it against the inventory offered by businesses which it does business with.
    • When there is a match the provider gets to keep the price difference between the offer and the bid as profit.
    • It aims at stimulating demand and is oriented towards price sensitive customers.
  • 5.  
  • 6. Case study
    • Hotels available at «name your own price » range from 1 star economic to four star deluxe hotels in a variety of areas.
    • Say, in Washington, I am given 13 areas to choice an hotel from.
    • The offer is diversified and meets my needs. It doesn't make me feel like i'm buying something cheap or at discount.
  • 7. Reverse Auctions 101
    • Select a reverse auction site wisely
    • Register with a selected reverse auction sites using nicknames
    • Find information about the seller. Make sure it is a qualified supplier.
    • Study the posting carefully and entirely
    • Give a time frame as for the delivery of the purchased good
    • Request a tracking number
    • Be on the edge if a deal « sounds too good to be true ». It is often the case. Read carefully the fine prints.
    • Do not offer cash as form of payment
    • Never give your passwords or confidential codes (CB, paypal account, etc. )
  • 8. Ccl: How can a hotel best participate in a reverse auction site
    • An hotel seeking to sell their packages online through the reverse auction model needs to choose the auction seller site wisely
    • It needs to have a very strict ethical vision
    • It needs to get to know the buyer
    • An insurance should be subscribed for if anything goes wrong in the transaction
    • Services on sale need to be of good quality, reliable and safe
    • If the hotel wants to create word of mouth buzz, it needs to be beyond reproach
  • 9. Reverse Auction.End.