Reverse auctions go mainstream

There were recently a string of articles that showed up in widely read, Inc Magazine, which focused on reverse auction technology. The first of the series focuses on what is being termed as a supplier survival guide with a lot of basics regarding auctions and supplier viewpoints. Do not consider it a deeply insightful piece, but it does have some interesting comments and perspectives. Of them was this quote that ended the article:

All told, since Gartner Studios began competing in reverse auctions, production and shipping costs have fallen by more than 30 percent per truckload. Sales have increased to $60 million in 2006, up from $26 million in 2003. And profits are at an all-time high. “I know most people don’t look at reverse auctions positively, but we see them as a process that makes you better,” Gartner says. “If companies don’t look at it that way, they’ll lose to somebody who does.”

A second article in the series focused on “Game Day Strategies” for suppliers bidding in auctions. Among the recommendations:

  • Rely on incumbency
  • Look beyond price
  • Low-ball early
  • Start high
  • Sabotage the industry

You can read this for yourself to see if you agree with the details behind each strategy. It is valuable to know what the thinking is on the other side of the CAT-5 cable, however. There is also an article for the case against auctions listed but it is poorly supported, as usual.

One Response to Reverse auctions go mainstream

  1. One key additional factor is the development of specific strategies based on the supplier’s current position, as the incumbent supplier will need a very different strategy than the challenging suppliers. A good quick guide with details is here:

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