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| Reverse Auction |
Reverse auction, as the name suggests is a kind of auction in which the functions of buyers and sellers are reversed. In case of ordinary auctioning or forward auctioning, purchasers contend to acquire products or services by rendering increasingly superior prices. But reverse auctioning comprises of low cost bidding. Traders compete to acquire businesses from buyers by offering typically low prices. All the traders try to lessen down the price of the business by trying to undercut each other.
This somewhat resembles to bidding auction as the basic principle of both auction are same. However in case of bidding auction prices bided by the auctioneers are kept confidential and are disclosed only once the auction ends.
The term is commonly referred as procurement auction, sourcing event, e-auction, eRA. Often people call these processes as eRFP or e-sourcing/ e-RFO. Ths is because most of the work is done online via internet or special software. B2B Auction and e-procurement are also common terms that are used in private or government sector procurement.
This auction is entirely different in comparison to a consumer bidding. Here, a solitary buyer presents an indenture out for bid. The bid can be made public by using an online marketplace or specialized software. Several traders are then able to bid on that particular contract for their desired prices. As the auction moves forward, its price goes on decreasing. The buyers try to cut down the price of the business by offering lowest possible price bids.
Bidding is mainly performed via Internet and bidding websites. Online bidding helps business sellers to achieve instant downward rate pressure which cannot be attained using typical statistical paper-based bidding procedures. Haven’t you noticed lots of online stores who involve bidding procedure weirdly for lowest price? There are always offers like bidding Smartphone for as low as 0.5$ or even less in some cases.
In such cases, buyer generally hands over the agreement to the trader who bids the lowest value of the business. The buyer can also choose to award agreements to traders who propose higher costs of the business depending on the specific needs of bargain-hunter in regard to lead-time, quality, capacity or other value-adding capacities.
Reverse auctioning has been prevalent since 2002 after the optimization software was launched. The optimization software assisted buyers to offer the best price in rendering products and services. The optimization software includes significant buyer and seller data of the business, including certain constraints.
Here, we commonly mention the term contract for various private companies. But, we would like to tell you that such contracts can belong to both public sector as well as private mercantile organizations. In addition to those items which are traditionally thought as commodities or products, reverse auction serve as a viable option for buyer-designed products and services.
This sort of online auction is greatly regarded as a money saving exercise and off-course is turning out to be more and more popular each day. In fact, there are several Indian websites that proffer reverse auctioning services. Such websites can be visited to purchase and sell all imaginable products. The products sold by such websites are can be located by matching alphabets of the desired product.
By the way, we strongly recommend staying away from the sites that are fake and are designed to suck the money from the buyers. Being an expert, I would personally recommend checking all the online certificates as well as verifying infrastructure of the company before trusting any reverse auction companies to deal with. For a common man, it is better to deal with reverse auctioneers via online stores. This is the most trusted and safe way to bid the contracts.
Some of the reverse auctioning websites conduct bidding on behalf of buyer instructions. They comprise of 'Buy Now' features which assists buyers to buy the product instantly at displayed prices. Overall, the reverse auction/ bidding involve the risks like other commercial processes. So, be cautious before dealing the contracts.
