How to do a reverse auction

2012 ◽  
Vol 53 (1) ◽  
pp. 26-31
Author(s):  
Ulli Arnold ◽  
Wolfgang Schnellbächer ◽  
Philipp Glaser-Gallion
Keyword(s):  
Time Limit ◽  
Reverse Auctions ◽  
Reverse Auction ◽  
Face To Face

Elektronische Beschaffungsauktionen sind das wohl am intensivsten diskutierte Einkaufsinstrument des vergangenen Jahrzehnts. Befürworter sehen den Grund dafür primär in den zu erzielenden Preisreduktionen im Vergleich zu Face-to-Face-Verhandlungen oder Ausschreibungen. Bei Durchführung einer so genannten electronic reverse auction ist eine Vielzahl an Parametern wie der Auktionstyp, die Dauer des Verfahrens oder der Transparenzgrad zu bestimmen. Dieser Artikel stellt die zur Verfügung stehenden Parameter bei einer Einkaufsauktion vor und zeigt auf, in welcher Beschaffungssituation welches Verfahren zu wählen ist. Electronic reverse auctions (eRAs) are one of the central tools in e-procurement. They enable significant price reductions in comparison to former negotiation methods. When conducting an eRA purchasers have to decide on a variety of parameters such as the auction type, the time limit or the transparency degree. This article introduces these parameters and connects them to specific purchasing situations. Keywords: reversed auction

How to recover B2B relationships after a failed online reverse auction

2019 ◽  
Vol 35 (3) ◽  
pp. 551-563 ◽  
Author(s):  
Roberto Mora Cortez ◽  
Wesley J. Johnston
Keyword(s):  
Mining Industry ◽  
Death Sentence ◽  
Reverse Auctions ◽  
Longitudinal Case Study ◽  
Buying Behavior ◽  
Reverse Auction ◽  
Content Type ◽  
B2b Relationships ◽  
Overall Evaluation ◽  
Seller Relationship

Purpose This paper aims to explore the possible scenarios after a failed reverse auction to continue a current buyer–seller relationship. Design/methodology/approach The authors developed a further understanding of reverse auctions through the examination of a longitudinal case study in the mining industry based on grounded theory. Findings The study indicates that losing a reverse auction is not a death sentence for the current supplier. Four factors influence the potential scenarios: buyer factors, supplier factors, buyer–seller factors and contextual factors. If the overall evaluation favors the current buyer–seller relationship, the supplier can continue the business interaction by full renegotiation or discrete step-by-step reconsideration. Conversely, the buyer–seller relationship would reach a state of dissolution. Originality/value This manuscript contributes to the understanding of reverse auction, an under-researched theme in organizational buying behavior theory. This paper is the first attempt to link buyer–seller relationship dissolution and reverse auctions. The authors suggest that more academic endeavors are needed to study online reverse auctions.

scholarly journals Efficient Multi-Attribute Auctions Considering Supply Disruption

2019 ◽  
Vol 36 (03) ◽  
pp. 1950013
Author(s):  
Jie Xiang ◽  
Juliang Zhang ◽  
T. C. E. Cheng ◽  
Jose Maria Sallan ◽  
Guowei Hua
Keyword(s):  
Private Information ◽  
Dominant Strategy ◽  
Purchase Decisions ◽  
Reverse Auctions ◽  
Reverse Auction ◽  
Truth Telling ◽  
Supply Disruption ◽  
Bidding Strategies ◽  
Numerical Studies ◽  
The Cost

Although supply disruption is ubiquitous because of natural or man-made disasters, many firms still use the price-only reverse auction (only the cost is considered) to make purchase decisions. We first study the suppliers’ equilibrium bidding strategies and the buyer’s expected revenue under the first- and second-price price-only reverse auctions when the suppliers are unreliable and have private information on their costs and disruption probabilities. We show that the two auctions are equivalent and not efficient. Then we propose two easily implementable reverse auctions, namely the first-price and second-price format announced penalty reverse auction (APRA), and show that the “revenue equivalence principle” holds, i.e., the two auctions generate the same ex ante expected profit to the buyer. We further show that the two reverse auctions are efficient and “truth telling” is the suppliers’ dominant strategy in the second-price format APRA. We conduct numerical studies to assess the impacts of some parameters on the bidding strategies, the buyer’s profit and social profit.

Point Counterpoint

2011 ◽  
pp. 1-9
Author(s):  
Thomas F. Gattiker ◽  
M. L. Emiliani
Keyword(s):  
Reverse Auctions ◽  
Reverse Auction ◽  
Online Reverse Auctions

In this chapter, the online reverse auction is introduced through a series of points and counterpoints on the use of the tool. Tom Gattiker, Boise State, and ML (Bob) Emiliani, Central Connecticut State, identify and debate eleven points in the use of online reverse auctions

Wood pallet suppliers' reaction to online reverse auctions

2005 ◽  
Vol 10 (4) ◽  
pp. 278-287 ◽  
Author(s):  
M.L. Emiliani ◽  
D.J. Stec
Keyword(s):  
Service Providers ◽  
Third Party ◽  
Survey Method ◽  
Reverse Auctions ◽  
Reverse Auction ◽  
Content Type ◽  
Cooperative Relationships ◽  
Market Makers ◽  
Online Reverse Auctions ◽  
Parts Suppliers

PurposeThe purpose of this paper is to quantitatively assess wood pallet suppliers' reaction to online reverse auctions and its impact on their business policies and practices.Design/methodology/approachSurvey method was used to determine how pallet suppliers react to online reverse auctions.FindingsDetermines that pallet suppliers do not realize the benefits claimed by online reverse auction service providers. Identifies new sources of costs which accrue to buyers and are not accounted for in so‐called “total cost” request for quotes including: retaliatory pricing practices, less cooperative relationships, and sourcing work back to the original supplier. The qualitative benefits identified for suppliers by third‐party online reverse auction service providers are overstated or false.Research limitations/implicationsThe present work can be extended to other commodity categories to identify similarities and differences in how suppliers react to online reverse auctions, understand the domain of successful and unsuccessful application of the online reverse auction tool, and provide further insight into the evolution of buyer‐seller relationships, including embedded organizational routines such as power‐based bargaining.Practical implicationsFindings mirror the results found in a previous study that examined aerospace parts suppliers' reaction to online reverse auctions, and indicates that market makers have consistently overstated the benefits of online reverse auctions to both sellers and buyers, and the use of this tool will typically result in unfavorable outcomes for both buyers and sellers.Originality/valueThis paper will be of interest to buyers, sellers, and market makers, as it identifies important problems with online reverse auctions, and suggests questions that buyers should ask market makers to ensure better sourcing decisions.

A Reverse Auction-Based E-Business Model for B2C Service Markets

2011 ◽  
pp. 512-528
Author(s):  
Tobias Kollmann
Keyword(s):  
Public Relations ◽  
Business Model ◽  
Competitive Strategy ◽  
Demand Side ◽  
Reverse Auctions ◽  
Reverse Auction ◽  
High Quality ◽  
Marketing Activities ◽  
The Right ◽  
Service Markets

LetsWorkIt.de is a German B2C platform for different kinds of service and handcraft orders. Based on the concept of reverse auctions, demanders compose descriptions of the required services to place orders on the platform. The supplier bidding lowest at the end of the auction obtains the right to carry out the order. Drawing upon and widely confirming existing theories on e-marketplaces, this chapter examines the underlying e-business model and the competitive strategy of LetsWorkIt. The case provides evidence that the reverse auction-based intermediation of handcraft and service orders is suitable to form the basis of an e-marketplace and points out that for such ventures, a combination of public relations, performance marketing, and cooperation, represents an ideal strategy to increase the number of demanders and suppliers. Moreover, the case suggests that, depending on the business model, it may be feasible to concentrate marketing activities on one of these two customer groups, since LetsWorkIt has managed to achieve a significant number of successful, high-quality auctions by primarily aligning its competitive strategy with the demand side.

A Reverse Auction-Based E-Business Model for B2C Service Markets

2011 ◽  
pp. 155-173
Author(s):  
Tobias Kollmann
Keyword(s):  
Public Relations ◽  
Business Model ◽  
Competitive Strategy ◽  
Demand Side ◽  
Reverse Auctions ◽  
Reverse Auction ◽  
High Quality ◽  
Marketing Activities ◽  
The Right ◽  
Service Markets

LetsWorkIt.de is a German B2C platform for different kinds of service and handcraft orders. Based on the concept of reverse auctions, demanders compose descriptions of the required services to place orders on the platform. The supplier bidding lowest at the end of the auction obtains the right to carry out the order. Drawing upon and widely confirming existing theories on e-marketplaces, this chapter examines the underlying e-business model and the competitive strategy of LetsWorkIt. The case provides evidence that the reverse auction-based intermediation of handcraft and service orders is suitable to form the basis of an e-marketplace and points out that for such ventures, a combination of public relations, performance marketing, and cooperation, represents an ideal strategy to increase the number of demanders and suppliers. Moreover, the case suggests that, depending on the business model, it may be feasible to concentrate marketing activities on one of these two customer groups, since LetsWorkIt has managed to achieve a significant number of successful, high-quality auctions by primarily aligning its competitive strategy with the demand side.

Reverse Auctions

2011 ◽  
pp. 297-345
Author(s):  
Barbara Sherman ◽  
Joseph R Muscatello
Keyword(s):  
Procurement Auctions ◽  
Topological Classification ◽  
Future Research ◽  
Disruptive Technology ◽  
Reverse Auctions ◽  
Reverse Auction ◽  
Business World ◽  
The Face ◽  
Use Of The Internet ◽  
The Impact

Online reverse auctions are a relatively new phenomenon in business, although the practice of traditional auctions is centuries old. The online aspect of auctions is an example of a disruptive technology and its impact on the business world. The use of the internet has changed the face of competition in supply and also changed the way buyers and suppliers interact. This chapter is a topological classification of the current literature on e-procurement auctions with the intent of organizing current and future research in online procurement auctions.. Over 200 articles have been abstracted and reviewed. The authors develop three classification frames: content, theory, and methodology. Nineteen content areas are populated, including significant reference to the impact of auctions on the supply chain. In summary, this chapter seeks to increase the topic clarity of current research. The quality of each individual reverse auction paper is not evaluated. However, the classification should stimulate academics to pursue current and new avenues of reverse auction research.

Internet Reverse Auctions

2011 ◽  
pp. 43-56
Author(s):  
Thomas F. Gattiker
Keyword(s):  
Literature Review ◽  
The Internet ◽  
Reverse Auctions ◽  
Reverse Auction ◽  
A Company ◽  
Dollar Volume

Once a company implements an internet reverse auction platform, buyers often have considerable discretion as to whether or not to utilize it. This paper discusses many reasons for fire non-adoption of Internet reverse auctions. The focus is on factors that impact the fit between the Internet reverse auction technology and the characteristics of the particular purchasing task that the buyer must carry out (i.e., characteristics of the material or service to be purchased in the market that it is to be purchased from). Data (qualitative comments) were collected from buyers within one firm. The comments detail the reasons that buyers have not used reverse auctions for particular commodities. Of the 9 factors identified in the literature review, 4 were actually cited by buyers. These are: specifiability, level of competition for the buyer’s business, importance of non-price factors, and dollar volume

Reverse Auctions and Supplier Consortia

2011 ◽  
pp. 10-27
Author(s):  
Peter B. Southard
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Decision Process ◽  
Collaborative Group ◽  
Reverse Auctions ◽  
Reverse Auction ◽  
Supplier Relationships ◽  
Classification Framework ◽  
Six Dimensions ◽  
Supplier Relationship

Competition between supply chains has resulted in firms carefully examining the relationships that they have, or are contemplating having, with other links in their chain. While the main focus of this book is on a specific type of relationship, that of the reverse auction, other forms of buyer-supplier relationships exist. In order to better understand the implications of the reverse-auction relationship, managers should also analyze the alternatives and the environment of relationships in which reverse auctions operate. The focus of this chapter is on an alternative buyer-supplier relationship, that of the supplier consortia. Within the six dimensions of the framework proposed by Parente, et. al. (2004), this chapter examines this little-studied collaborative group and proposes a spectrum to begin to understand some aspects of buyer-supplier relationships. The chapter includes a theoretical classification framework for supplier consortia. It then compares and contrasts supplier consortia to the reverse auction concluding with a prescriptive decision process that can help managers better analyze the most appropriate form of buyer-supplier relationship for their firm and their supply chain.

Face-to-Face

1992 ◽  
Vol 1 (2) ◽  
pp. 11-12 ◽  
Author(s):  
James Jerger
Keyword(s):  
Face To Face
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