Generally, the bidder that bids the lowest wins the race but it might not always be the case. There are certain features a product may be offering that the other product might not be offering. Thus, the actual winner is the lowest unique winner.
While everybody is looking for a bang for their buck, Reverse Bidding might not be the right method for all kinds of variants of services. As Forward Bidding requires a lot of potential buyers, Reverse Bidding needs even more number of sellers to maintain the integrity of the competitive process.
In a motive to get hold of the lowest bid, the buyer might go for the cheapest in the house with less regard for the quality and compatibility of the product or service. In such cases, the buyer ends up buying a substandard offering which might not be having all the features as per his minimal requirements. Does Steemit business model seem sustainable? Come on! Tell us what you think about our article on reverse auction in the comments section.
Yes, add me to your mailing list. Mutual Fund Investments. GST Software. TaxCloud Direct Tax Software. Need Help? About us. Download link sent. Category Business. What is Reverse Auction?
Where Does Reverse Auction Work? Example The government offers most of the contracts through reverse auctions. Related Terms. Recent Terms. CA Assisted Services. Reverse Auction Definition - A type of negotiation process used in Strategic Sourcing; and is exactly the opposite of a forward auction.
E-bay auctions are forward auctions initiated by the Seller in which the Buyer bids the price up. In a reverse auction, the roles are reversed; the auction is initiated by the Buyer and the Supplier bids in real time driving the price down. It is a type of competitive bidding conducted on reverse auction websites, which is suitable when the only point being negotiated between the Buyer and the Supplier is price. Always ensure that all other points such as supplier capability, quality of service, timelines of delivery, financial stability, etc.
English Reverse Auction - Suppliers strictly compete on being the lowest price in the market. Insurance Reverse Auction - A reverse auction process flow specifically designed for negotiating insurance products. Energy Reverse Auction - Online auction sites that specialize in assisting companies who wish to reverse auction energy purchase for commercial and residential energy as well as reverse auction renewable energy.
Reverse Dutch Auction - A type of auction where the buyer sets a low starting price and price moves up in defined increments at defined time intervals. As soon as a supplier accepts the current price, the auction closes. Identify Goods or Services where you have a significant spend volume and are purchasing from multiple suppliers, ideally three or more incumbent suppliers per category.
The higher the number of suppliers, the better. Once the product or service is identified, conduct an in depth study of the spend volume and spend patterns related to that spend category. This would include identifying the total spend for the past 12 months as well as the overall volume annually as well as per transaction.
Create detailed specification documentation related to the product or service you plan on purchasing using this auction format. Specifications should include drawings, spend value, spend patterns, quality and delivery requirements, supplier capability requirements, etc. Detailed product and service specifications are key to a successful outcome in an auction process. Identify the suppliers you wish to invite to the auction process and provide sufficient training and documentation to the suppliers so that they are fully aware of the overall purchasing process via e-Auction.
This should include, ensuring that suppliers have reviewed and understood the specifications, auction rules, participation terms and conditions, legal terms and conditions, etc. Use an auction software that is cloud hosted and easy to use.
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