A Reverse auction is an event, conducted physically or electronically, where technically equal or equivalent sellers compete commercially in a fixed time frame to obtain a business, and prices decrease in each bid as per the rules defined by the auctioneer or the buyer.
In Indian B2B space, Reverse Auctions are gaining momentum with substantial improvement in internet connectivity even in remote locations and with the successful advent of e-Commerce websites like Amazon, Flipkart, e-Bay, Alibaba etc in Indian consumers lives.5th Feb 2022
The 8-benefits of Reverse Auctions over physical negotiations are:
- Lower Cost Discovery with real-time Competitive Forces: Since final price (L1) arrives through auction participated by all the techno-commercially suitable parties, it creates a platform for vendors to work out the best deal for your requirement to grab the order. It cuts all fat hidden in the process.
- Suitable for Products, Services or any offering: The single platform of digital reverse auctions, is useful for negotiating any offering whether it is a product, service or any other offering.
- Fair & Transparent Process: As a digital reverse auction is a real-time event, vendors have to take final decisions at the time of auction only. As they know their competitive ranking instantaneously, and all process getting captured in the system, there is an extremely low scope of manipulation. It builds trust between buyers and sellers and puts pressure on the organisations to create a level playing ground for vendors.
- Extremely Fast and Robust Process: Unlike physical negotiations, where it takes days to finalize a deal, in Reverse Auctions even very large deals can be finalized in a few minutes. A large number of deals can also be processed simultaneously for further advantage.
- New Supplier Discovery and Global Sourcing: As online bidding does not require physical travel for offer and negotiation; it encourages Global vendors and other large vendors to participate.
- Create better vendors management: The existing vendors can be classified based on Michael Porters’ 5-forces model. The vendor industries where competition is high, Reverse Auctions are extremely successful. In customized and engineered solutions, it puts the onus to the designers and technicians to create more options or ask vendors to offer the most competitive techno-commercial design to meet end objectives.
- Complete record of Negotiations: When buyers do negotiations using reverse auctions, the complete records of negotiations are available like who all were invited to participate, who participated, how prices reduced within auction period etc. This is a completely audit-able document any time in future.
- Low cost of ownership: The cost of ownership of using Reverse Auction is extremely low. A cloud-based model costs a few Lakh rupees for an annual subscription, and you can start using it with just basic training. There is no other hardware or software required for this.
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ProcurEngine is a digital e-Procurement negotiation tool to schedule and conduct reverse auctions utilising any device, at anytime and from anywhere.
ProcurEngine is cost effective, innovative and is concerned with the needs to the customers.