Reverse Auction


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Reverse auction: definition, explanations and case study

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Reverse Auction

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