What is a Reverse Auction?
Executive summary about reverse auction by Jenny Zhang
reverse auction
The lowest unique bid is the amount closest to 1 cent that has only been bid by one person.
Reverse auction turns the traditional auction model on its head by declaring the winner to be the person who places the lowest unique bid. If there is no unique bid at the end of the auction, the lowest bid made by only two bidders is used, and the person who places their bid first wins.
Bid No. of bids Outcome
0.01 cent 4 Lowest, but not unique
0.02 cent 1 Lowest unique bid
0.03 cent 0 No bids
0.04 cent 2 Not unique
0.05 cent 1 Unique, but not the lowest
0.06 cent 3 Not unique
The Use Of Reverse Auctions In Business – Frequently Asked Questions
Executive summary about reverse auction by selectsourcing
In business the use of online ‘e-sourcing’ tools such as e-tenders and e-auctions is becoming commonly used to help buyers achieve rapid cost reduction. In this scenario suppliers are invited to bid for the buyer’s contracts either by submitting their tender online and/or participating in a reverse auction.
e-Sourcing is the use of internet technology used by purchasing professionals to find suppliers and negotiate prices for a wide range of goods and services.
Traditionally buyers send out tenders listing the purchasing requirements and invite suppliers to submit prices. Each supplier submits one bid and does not have the opportunity to adjust his or her pricing in response to other bids. What is an on-line reverse auction (e-auction)?
Reverse auctions are an ideal way for buyers to reduce the costs of goods and services, streamline the procurement process and increase profitability.
A fully managed service incorporates a spend analysis of your company expenditure, suitable selection of e-auction categories, strategic category objectives, supplier research, developing lotting strategies, drafting the Invitation to Tender, management of suppliers, hosting the software, training the suppliers (inc helpdesk), managing the e-auction and post event review.
How do suppliers benefit?
Suppliers benefit in the following ways:-
A more fair, more competitive bidding environment
Ability to benchmark prices across their industry
Shorter sales cycles
Wider access to potential business opportunities
Do Suppliers have to pay anything?
No costs are levied to the suppliers for using our services
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