Reverse Travel Auctions


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Reverse Travel Auctions

  1. 1. Reverse Travel Auctions E-Business 2009-2010
  2. 2. History <ul><li>Gained popularity in the late 1990s: </li></ul><ul><ul><li>Emergence of Internet-based online auction tools. </li></ul></ul><ul><ul><li>Pioneer of online reverse auctions: FreeMarkets (1995 by former McKinsey consultant and General Electric executive Glen Meakem). </li></ul></ul><ul><li>Started to become mainstream and the prices that FreeMarkets had commanded for its services dropped significantly. This led to a consolidation of the reverse auction service marketplace. </li></ul><ul><ul><li>In January 2004, Ariba announced that it purchased FreeMarkets for $493 million. </li></ul></ul><ul><ul><li>Since then, other reverse auction sites, such as DubLi have started to spring up on the online shopping portal scene. </li></ul></ul><ul><li>In the past few years mobile reverse auction have evolved. </li></ul><ul><ul><li>The lowest unique bid wins. </li></ul></ul><ul><li>Very recently business-to-consumer (B2C) auctions with a twist have started to evolve </li></ul><ul><li>Travel category has been the most successful reverse auction items </li></ul><ul><ul><li>The product is a commodity </li></ul></ul><ul><ul><li>Uses well known brands (airlines or major holiday companies) </li></ul></ul><ul><ul><li>is of high value with the potential for significant savings ( it is easy to deliver the goods -the tickets-, the item is perishable and there is over supply.) </li></ul></ul>
  3. 3. How do they work? <ul><li>Type of auction in which the roles of buyers and sellers are reversed. </li></ul><ul><ul><li>Sellers compete to obtain business, and prices typically decrease over time. </li></ul></ul><ul><li>The company: </li></ul><ul><ul><li>sells a products where there is a clear industry specification for the item and recognised quality standards </li></ul></ul><ul><ul><li>chooses the supplier and the manufacturer. </li></ul></ul><ul><ul><li>the after purchase service is minimal or very unlikely. </li></ul></ul><ul><ul><li>the required item is difficult to find. </li></ul></ul><ul><li>The company selects generic categories such as hotels or flights. It then negotiates with a number of suppliers who would be interested in selling to company’s customers. To give supplier flexibility, the companies usually has restrictions on buyers or the product. For example, with travel tickets it does not allow users to use frequent flyer programmes, select a preferred airline, or receive refunds. </li></ul>
  4. 4. Key Points <ul><li>Make multiple bids </li></ul><ul><li>Take as much information as possible </li></ul><ul><li>Look after others’ bids </li></ul><ul><li>Keep realistic </li></ul><ul><li>Have free time… </li></ul>
  5. 5. Conclusion How can Hotels best participate? <ul><li>Sign partnerships </li></ul><ul><li>Hide their names during bids </li></ul><ul><li>Use social networks </li></ul><ul><li>Choose strong suppliers </li></ul><ul><li>Have an employee dedicated to hotel’s virtual life & presence </li></ul>