| Reverse auction deals with internet auction and | | | | companies save from 10 to 40 percent on reverse |
| e-purchasing. This is also known by many names like | | | | auction purchases. Reverse auction also saves |
| procurement auction, sourcing event, e-sourcing, and | | | | valuable time of buyers. |
| e-auction. Generally in an auction, purchaser is allowed | | | | As the popularity of online reverse auction has |
| to place a bid on an item on the amount that he is | | | | increased, also buying services and supplies online. |
| willing to pay so that he can buy that item. The person | | | | Currently more than 20 percent of all business |
| who makes the highest bid usually ends up with the | | | | purchases at least some of their supplies or service |
| item. In the case of reverse auction, buyer makes an | | | | online. Savings, simplicity, and selection of reverse |
| advertisement on the need of an item or service. | | | | auctions make them the ideal choice for anyone |
| Sellers then place bids for the amount they expect to | | | | looking to join the internet auction purchasing revolution. |
| be paid in order to perform such a service or provide | | | | Certain benefits on online reverse auction are there is |
| such an item. The seller who places the lowest bid will | | | | flexibility in pricing decisions. It ensures savings in |
| win the job or sell the item. | | | | marketing costs and distributor margins. Benefits of |
| Lot of planning is required when reverse auction takes | | | | online reverse auction to buyers are it is accessible to |
| place on Internet. It begins with the meeting that takes | | | | a large number of vendors, dynamic bidding process, |
| place between the buyer and the seller, who is also | | | | and a tool for efficient price discovery complementing |
| known as the market maker. In the meeting, purchaser | | | | the direct negotiation process. Applicability of online |
| and seller discuss the requested service. Certain things | | | | reverse auctions is for capital goods, direct materials, |
| like the materials that are needed to complete the job, | | | | periodical rate contracts and large volume goods. |
| the time frame to complete the job, budget of the job; | | | | Reverse auction is a tool available for the procurement |
| all these things are discussed at the meeting. If the | | | | in improving its function as well as its effectiveness. It |
| buyer wants to purchase an item, certain things like | | | | can be defined as specialized auction that allows the |
| age of the item and quality of the item may be | | | | organization to procure goods from the sources by |
| discussed beforehand. On average, individuals and | | | | featuring decreasing incremental bidding. |