| If you are a limousine operator and service corporate | | | | vehicles often, then their pricing can be significantly |
| travel accounts, then chances are you have | | | | lower than another company who updates every two |
| experience with e-auctions. E-auctions also known as | | | | years. Moreover, a low cost company may not have |
| reverse auctions are a type of reverse sale where | | | | additional amenities such as Wi-Fi, televisions, satellite |
| the roles of buyers and sellers is reversed. It is a tool | | | | radio, water, drinks, newspapers, etc. Also if a |
| used by companies to lower the cost down for | | | | company makes a decision based on price, they may |
| service in a way that normally wouldn't be achievable | | | | find that they have contracted with nothing more than |
| in normal business negotiations. Typically during an | | | | a taxi service with no amenities for corporate |
| e-auction a limousine company will put in a price for a | | | | executives. |
| trip from Point A to Point B. After they put in the price, | | | | Furthermore, does the company they hired have a full |
| they will see how they rank in terms of price. For | | | | fleet of vehicles? For example, if that travel manager |
| example, if ten companies are bidding on the price, and | | | | made a decision based on price, did they realize that |
| you are the eighth highest price, your rank will be | | | | the company that they hired only has sedans, but does |
| number eight. Therefore, there are seven lower | | | | not have SUVs for inclement weather such as snow, |
| bidders and companies whose price for the same | | | | or Vans, Mini-Coaches and Buses for that year's |
| service is lower. After your ranking is given, you will | | | | Holiday Parties? Moreover, did the travel manager |
| now have a chance to lower your price for that trip to | | | | check to ensure that the company they hired not only |
| get a more favorable ranking. Now when you lower | | | | had six-passenger and eight-passenger limousines for |
| the price a new ranking will appear. Let's say you | | | | their executives, but that they were up to date models |
| dropped the price and now you are ranked number | | | | with the latest technology for the executives laptop |
| two. Typically the e-auction will update the rankings | | | | computers. Are their corporate desks in the cars so |
| after an incremental amount of time, possibly thirty | | | | the executive can work in his mobile office? |
| seconds. | | | | For limousine companies that take place in e-auctions it |
| After thirty seconds you see that your competition bid | | | | is also important to realize that they may not be |
| lower again, and now you are ranked number ten! | | | | competing with other limousine companies, but may be |
| Now the process will start all over again. E-auctions | | | | competing with taxi services which may be more |
| are also time sensitive. This means that you only have | | | | economical on certain trips, but not have the same |
| so much time to enter in a lower bid before the bidding | | | | level of service. Moreover, the potential for |
| process is closed. In the heat of the moment, a | | | | manipulation of the computer based ranking and pricing |
| company competing for the bid has to make split | | | | system can happen. It is not without the possibility that |
| second decisions to decide what price is appropriate | | | | fraud exists in e-auctions where the pricing is artificially |
| for this trip, and can be susceptible to making bad | | | | manipulated to an unreasonably low level to get the |
| decisions/knee-jerk reactions to arbitrarily lower the | | | | pricing as low as possible by the corporation. |
| price without actually analyzing if the price is beneficial | | | | E-auctions/reverse auctions look great on paper, but |
| and profitable for the limousine company. For the | | | | can actually end up with neither the corporation or the |
| inexperienced company who bids on an e-auction, | | | | limousine company winning out. It could end up with |
| what can happen is that they bid exceptionally low, | | | | poor service, lost profits, and ultimately a disappointing |
| and will have modest profits with a contracted service | | | | experience. |
| agreement between you and that corporation. This | | | | Limousine companies should not try to compete at the |
| type of agreement is not good for the limousine | | | | lowest possible price, but at a fair price with normal |
| company, and is not good for the corporation who did | | | | profit margins. If a limousine company chooses to take |
| the e-auction. The end results of an e-auction could be | | | | part in an e-auction they should not try adjust pricing |
| that a limousine company now has to provide service | | | | just because you came in at a "Number 10" at the |
| at an exceptionally low cost that can wear down your | | | | pricing scale instead of "Number 1". Your pricing is your |
| limousine fleet, maintenance of vehicles may suffer, | | | | pricing and it is that way because you have been |
| and ultimately you will not be able to update your fleet | | | | profitable at those levels. After all who knows your |
| like you normally would to compete with your | | | | business better than you? Signing on a new account is |
| competition, because though you are doing more | | | | not worth it if it means lower profits that will effect |
| volume due to the corporation who hired you, your | | | | your continued growth, and ability to service your |
| profits are now less. | | | | current clients with the service they have come to |
| E-auctions are a very dangerous ground and really | | | | expect. Short-term satisfaction is not worth sacrificing |
| need to be examined with all thoroughness. | | | | your long-term goal of expansion and continued quality. |
| Corporations who setup e-auctions also may not | | | | To date only about 5% of total corporate spending is |
| benefit from this type of reverse auction. If one is to | | | | sourced through e-auctions. Could you imagine if every |
| base a decision to hire a limousine company it cannot | | | | product was purchased through such an auction? |
| be solely on price. If a company is looking to book a | | | | Profits would dwindle, and industry growth and quality |
| corporate car service then the company needs to | | | | would suffer. |
| compare apples to apples and not apples to oranges. | | | | E-auctions are simply not good for corporate America |
| In the e-auction you may have a limousine company | | | | or the limousine and car service industry. It has a |
| who operates a fleet of vehicles that is primarily older | | | | negative effect on the bottomline, because it effects |
| model vehicles. If that company does not update their | | | | customer service, safety, and productivity. |