What are the benefits of an online reverse auction versus the standard purchasing process?
In the standard purchasing process, a buyer sends out purchasing specifications (as an RFQ or RFI) and invites suppliers to bid on them. Suppliers normally return their bids by mail and buyers often wait weeks or months for all proposals to arrive before they can make a decision. Each supplier submits one bid and does not have the opportunity to adjust his or her pricing in response to other bids. With online reverse auctions, suppliers are invited to bid in Web-based auctions on a specific day and time. With this process, suppliers compete against each other in real time to win the buyer’s business, driving down the price in the process. Once the auction is over, the buyer has all the information he or she needs to make an informed decision. The bidding process takes minutes or hours, instead of weeks or months.
