Reverse auction


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Reverse auction

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  2. 2. Reverse Online Auction is a web-based portal for marketing goods andservices from pre-qualified Sellers through bidding on requests from pre-qualified Buyers during a given time period. Unlike a traditional auction inwhich prices are bid higher, the winner of a reverse auction is typically thecompany or individual that submits the lowest bid. Its not only the lowestbid, but also the service the buyer provides and also the feedback rating. Similar terms: e-auctions e-sourcing procurement auction sourcing eventReverse auctions popularity gained with the emergence of Internet-based onlineauction tools.
  3. 3. Advantages of Reverse AuctionIs a specialized auction that allows the organization to procure goods from thesources by featuring decreasing incremental bidding. It is transparent process. It saves time as it is very fast as the auction is live. It gives additional vendor base as in the case of open reverse auction.  It is best suited for the standard off shelf items.  With its continuous competitive bidding process, the possibility of getting better price is always there.
  4. 4. Who uses Reverse Online AuctionsReverse Online Auctions are used to purchase a variety of products, notjust commodities.Some examples include:  Made-to-order printed circuit boards for an electronics manufacturer.  Construction materials for a cell-phone transmission tower by a construction engineering company.  Government department may notify several traffic light distributors that they wish to buy a large number of traffic lights.
  5. 5. Key ComponentsProxy Bidding : Bidders can set price points and allow the systemto bid for them to those levels.Dynamic Close : System monitors event within moments of theclose and if a bid is placed, the event is automatically extended toallow for a responding bid. Variables/Factors : Introduces other variables into the bid value determination to better reflect true value, for example – warranty, incumbency, service rates.
  6. 6. Types of Auctions SpacingOpen auctions as well as sealed-bid auctions there are four major one-sidedauction formats: English Auctions : Seller announces reserve price or some low opening bid. Bidding increases progressively until demand falls. Highest bidder earns right to purchase item. Vickrey Auctions: Bids submitted in written form with no knowledge of the bids of others. Winner pays the second-highest amount bid. Dutch Auctions : Seller announces very high opening bid. Bid is lowered progressively until demand rises to match supply. First-Price Sealed Bid Auctions : Bids submitted in written form with no knowledge of bids of others. Winner is determined in the resolution phase when the bids are opened.
  7. 7. Reverse Auction CategoriesReverse Auctions are not appropriate for all types of business, because they metthe three basic criteria’s Competition Exists: At least two competing suppliers. Of relative value to the suppliers: The business must be of value to the supplier. The product or service can be defined: Defining a material or a service is a key component of the Auction Strategy.
  8. 8. of the Most Common Categories are Travel Services Requirement Services Numerous Direct Materials Consultancy Support Printing Materials PC’s and Laptops Telecoms Car Hire
  9. 9. for Buyers by Using Reverse Auctions  Maximize competition on price  Minimize negotiation time (skips what could end up in several negotiation rounds)  Greater transparency in the selection of a supplier  Minimize the influence of personal relations selection of supplier  Low cost of supplier selection  Shorten time for negotiationBenefits for Suppliers by Participating in Reverse Auctions  Easier access to potential customers  Equal treatment of all participants
  10. 10. Information During The Reverse Auction The reverse auction website should display:• The number or name that identifies the procurement• The starting price for the reverse auction• The number of bidders • The current bid • The time remaining for the reverse auction
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