Reverse auction

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A reverse auction is a type of auction in which the roles of buyers and sellers are reversed. In an ordinary auction (also known as a forward auction), buyers compete to obtain a good or service, and the price typically increases over time. In a reverse auction, sellers compete to obtain business, and prices typically decrease over time. In business, the term most commonly refers to a specific type of auction process (also called procurement auction, e-auction, sourcing event, e-sourcing or eRA, eRFP, e-RFO, e-procurement, B2B Auction) used in government or private sector procurement. In consumer auctions, the term is often used to refer to sales process that share some characteristics with auctions, but are not necessarily auctions.

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1 Context 2 History 3 Current State 4 See also 5 References 6 Further reading 7 External links

The most common application of reverse auctions is in E-procurement. Reverse auction is a strategy used by purchasing and supply management organizations for spend management, as part ofstrategic sourcing and overall supply management activities. In a typical auction, the seller puts an item up for sale. Multiple buyers bid for the item, and one or more of the highest bidders buys the goods at a price determined at the conclusion of the bidding.

Headquartered in Pittsburgh. was founded in 1995 by former McKinsey consultant and General Electric executive Glen Meakem after he failed to find internal backing for the idea of a reverse auction division at GE. It includes relevant buyer and seller business data. when America West Airlines (now US Airways) used FreeMarkets software and awarded the contract to MaterialNet. competitive process. Meakem hired McKinsey colleague Sam Kinney who developed much of the intellectual property behind FreeMarkets. H. Or. rushed to join the reverse auction marketspace. reverse auctions are also used to source buyer-designed goods and services. including constraints. Multiple sellers offer bids on the item. [2] [edit]History Reverse auctions gained popularity in the late 1990s as a result of the emergence of Internet-based online auction tools.[citation needed] The use of Optimization software has become popular since about 2002[clarification needed] to help buyers determine which supplier is likely to provide the best value in providing goods or services.[citation needed] . lead-time. either using specialized software or through an online marketplace.[1] Bidding performed in real-time via the Internet results in a dynamic.In a reverse auction. competing to offer the lowest price that meets all of the specifications of the bid. Visteon. FreeMarkets customers included BP plc. or other value-adding capabilities. PA.[citation needed] Reverse auctions are used to fill both large and small value contracts for both public sector and private commercial organizations. FreeMarkets built teams of "market makers" and "commodity managers" to manage the process of running the online tender process and set up market operations to manage auctions on a global basis. a buyer puts a contract out for bid. to name a few. In addition to items traditionally thought of as commodities. and they have even been used to source reverse auction providers. andRoyal Dutch Shell.J. The first time this occurred was in August 2001. United Technologies. As the auction progresses. the price decreases as sellers compete to offer lower bids than their competitors.[citation needed] The company's growth was aided greatly by the hype of the dot-com boom era. This helps achieve rapid downward price pressure that is not normally attainable using traditional static paper-based bidding processes. FreeMarkets. Dozens of competing start-up reverse auction service providers and established companies such as General Motors (an early FreeMarkets customer) and SAP. Exxon Mobil. Heinz. capacity. a buyer may award contracts to suppliers who bid higher prices depending upon the buyer's specific needs with regards to quality.[citation needed] The buyer may award the contract to the seller who bid the lowest price. Pioneer of online reverse auctions. researchers claimed an average of 5% of total corporate spending was sourced using reverse auctions.[citation needed] In 2003. Phelps Dodge.

both the Government Accountability Office and Court of Federal Claims upheld the legality of Federal agency use of online reverse auctions. the White House Office of Federal Procurement Policy (OFPP) issued a memorandum encouraging increased use of commercially available online procurement tools. technical writing and other professional. (b) Reverse auctions .[citation needed] In 2004. including reverse auctions. OFPP issued a governmentwide memorandum encouraging agencies to improve and increase competitive procurement and included specific examples of competition best practices.[citation needed] [edit]Current State Reverse auctions (also becoming known as service auctions) are undergoing a resurgence at present. your requirements.[3] Fortune magazine published an article in March 2000 describing the early days of reverse auctions.[citation needed] In Congressional testimony on the 2008 proposed legislative package to use federal funds to buy toxic assets from troubled financial firms. This led to a consolidation of the reverse auction service marketplace.they are more similar to the original business-to-business (B2B) auctions than mobile reverse auctions in that they offer consumers the option of placing a specification before retailers or resellers and allowing them to publicly bid for their business.[7] In 2010. as evidenced by a number of service auction sites that are doing a significant volume of business both in number of projects and amount of money spent.Although FreeMarkets survived the winding down of the dot-com boom.[8] Keys to success as a supplier in reverse auctions are: (a) Thorough preparation – it's essential to know your costs. and your market to the greatest extent possible – tiny details can make the difference between winning and losing. Federal Reserve chairman Ben Bernanke proposed that a reverse auction could be used to price the assets. and between being profitable or not.[6] In 2008. The White House Office of Management and Budget cited “continued implementation of innovative procurement methods. The lowest unique bid wins.[5] In 2005.[citation needed] Very recently business-to-consumer (B2C) auctions with a twist have started to evolve . including reverse auctions. by the early 2000s it was apparent that its business model was really like an old-economy consulting firm with some sophisticated proprietary software. desk-based work or in home improvement and construction work. [4] In the past few years mobile reverse auction have evolved. There are narrow scope sites. Online reverse auctions started to become mainstream and the prices that FreeMarkets had commanded for its services dropped significantly. Unlike business-to-business (B2B) reverse auctions. In January 2004. Ariba announced its purchase of FreeMarkets for $493 million. mobile reverse auctions are business-to-consumer (B2C) and allow consumers to bid on products for pennies. such as those specializing in programming. your suppliers. such as the use of web-based electronic reverse auctions” as one of the contracting reforms helping agencies meet acquisition savings goals.

all I cared about was saving money when I shopped online! These are a few of the items that have sold in this killer online reverse auction recently:  An Apple iPod for $1.should be largely kept to the supply of commodity products rather than proprietary ones.” Honestly.. The modern version started to form in the late 1990s as the Internet became more popular. they are typically talking about Dubli.DOWN? I stumbled across Dubli awhile ago when I was trying to save money shopping online.80? . but it was really more focused on procurement and business to business. competent bidder leading your effort at the time of the auction. An Auction Where Prices Go. Somebody told me about how the bids go DOWN instead of up and what a great business model it was. Reverse Auctions have been around approximately 2. Today. and (c) Having a strong.500 years. with clear guidelines on when to bid and when to fold is essential. when somebody has heard all the buzz asking what a Reverse Auction is.] What is a Reverse Auction? Believe it or not.. and wanted me to “get involved.

. Due to the one-of-a-kind site that Dubli has created.A Sony VAIO Notebook for $3. it is an auction. Now don’t get me wrong . but with a brilliant twist.after all.  The Dubli concept started similar to eBay. I was hooked. Now that Dubli is bringing its amazing Reverse Auction concept to the U. so that all sounds great. it is expected to grow even faster. right? That is why I think it is key to go check it out for yourself to see what it is about.00! Yeah.especially if they get to buy something like that BMW for $759.00 value) to get started. Xpress . right? But I bet you still want to know… What Is A Reverse Auction?!!! The two different types of Reverse Auctions are discussed below.00? Once I saw those kinds of savings. Its growth in Europe (where it started) has already surpassed eBay back when it was initially introduced.I’m not saying that you’ll buy everything at those kinds of prices . customers will recommend these fun reverse auctions to their friends and loved ones .S.25?  A brand new BMW 116i car for $759. I’ll even give you 10 free Dubli credits (an $8.

Buy when the price is right. but the current price is hidden while the auction is underway. Unique Bid The lowest unique bid gets the item at that price! In this Reverse Auction. . If you want it…don’t hesitate for too long or somebody else will grab the item before you do. Remember. Dubli Xpress is a cool concept . Each credit you use will reveal the current price.25... either one at a time. or pressing your luck to get it cheaper. The starting price is displayed. you have to be the lowest bidder AND the only bidder that has offered that price to get the item. allowing you the possibility of buying it right then and there. You can bid using increments of $0.the auction ends at any time when somebody decides that the “price is right” and purchases the item. the item is only shown for a limited time. or a whole range of bid amounts.

2011 Unlike traditional auctions.The Pros & Cons of Reverse Auctions By Sarah Arianrhod. the participants on a reverse auction place lower and lower bids. until the lowest bidder wins. Other People Are Reading  Pros and Cons of Real Estate Sale by Auction      The Pros & Cons of Public Land Auctions Print this article 1. Reverse auctions have both pros and cons for suppliers and for buyers. It also streamlines the procurement process and reduces the need to send a different request for . They are widely used in the B2B world to reduce costs and source services or products at the lowest possible price from the participating suppliers. Pros for Buyers o A reverse auction provides buyers with the most competitively priced solution to their needs by pitching suppliers against each other to be the one offering the lowest-priced bid. eHow Contributor | updated April 10.

Competition for the lowest price can lead some suppliers to cut corners to maximise benefit or even send them out of business when the project turns out to be a loss. Unless the request for proposal is very clearly constructed and specific.hktdc.educlassesonline. A successful bid can lead to more business down the line with the same buyer. Cons for Buyers o The main issue with a reverse auction is that it is based solely on price. enabling entrepreneurs and small business to compete to supply firms that would usually overlook them. souring the relationship with the client and potentially harming any chance of entering this kind of auction Connect with over www. Free! .000 suppliers Trusted Service Provided by HKTDC  Electronic Power Design 500 Free Bids ($300 Value) To Be Used On Penny Auction Sites.  Free Sourcing Platformwww. the buyer may find that the lowest bid is not the one with the highest quality or does not offer all the expected features. Sponsored Links o  Supply Chain Management Get online Supply Chain Management masters degree from UK University. Sponsored Links  We're Giving Away Up Read the Latest Electronics Design News & Daily Updates from EW-  Luxury Homes San AntonioSAHomeExpert. Reverse auctions also save time in the procurement Pros for Vendors o Reverse auctions are generally open. In turn that will negatively affect the buyer. and access the same bidding processes as more established or bigger firms. but they can lead to problems when the proper safeguards are not put in place beforehand.ElectronicsWeekly. Aggressive under-bidding practices can result on winning a project that cannot be completed for that budget.proposal to each potential supplier.freepennyauctionbidz. The costs of performing due diligence on the winning bid and managing the project may outstrip the savings. Conclusion o Reverse auctions are a very effective way of optimising the procurement process and opening it to new businesses. Cons for Vendors o Vendors intent on winning a reverse auction are at risk of placing a bid that is too low for their business.asp The Finest Luxury Homes with Photos Search Online Now.

In addition. those who violate consumers' privacy should be promptly called to task. Finally. the personal identifying information of eBay members who received ReverseAuction's spam but who have not registered with ReverseAuction. ReverseAuction registered with eBay. according to the complaint. the settlement . and refrain from using or disclosing. The agreement and policy protect consumers' privacy by prohibiting users from gathering and using personal identifying information. "Confidence that privacy will be protected is an important element in consumers' decisions where to shop on the Internet. Self-regulatory efforts by e-businesses to protect their customers' privacy should be ReverseAuction is an online site that features "Declining Price" and "Wanted" auctions. and representing that eBay authorized the mailing are deceptive or unfair acts that violate federal http://www. Consumers should have confidence that their privacy choices will be protected. for unauthorized purposes. by eBay. and that eBay did not know of. a competitor site. or authorize. It also requires ReverseAuction to delete the personal information of consumers who received the spam but declined to register with ReverseAuction." said Robert Pitofsky." Settlement of the FTC charges bars ReverseAuction from making the misrepresentations in the future. ReverseAuction harvested eBay users' personally identifying information and used the data to spam eBay members with a message promoting its own online auction site. or authorized. including the purpose of sending spam. notice of the FTC charges and an opportunity to cancel their registration and have their personal information deleted from ReverseAuction's database. and agreed to comply with eBay's User Agreement and Privacy Policy. the order requires ReverseAuction to delete. sending the deceptive spam. But beyond self-regulation. In the process of marketing and promoting its new site. many consumers concluded that the eBay user ID and other information had been provided to ReverseAuction. In addition.Read more: The Pros & Cons of Reverse Auctions | eHow. as a result of the spam. it requires ReverseAuction to provide notice to consumers who. ReverseAuction's dissemination of the spam. The notice informs these consumers that their eBay user IDs were not about to expire on eBay. registered or will register with Chairman of the FTC. The message contained a deceptive subject line informing the eBay user that his or her eBay user ID "will EXPIRE soon. and to give those who did register. The complaint alleges that violation of the eBay User Agreement and Privacy Policy. such as eBay users' personal e-mail addresses. has agreed to settle Federal Trade Commission charges that it violated consumers' privacy by harvesting consumers' personal information from a competitor's site and then sending deceptive spam to those consumers soliciting their business. Settlement of the FTC charges bars ReverseAuction from engaging in such unlawful practices in the future. Inc. According to the FTC complaint detailing the charges." According to the complaint. as a result of receiving ReverseAuction's spam. "The FTC takes consumers' online privacy seriously and will act quickly against those who violate privacy policies and other commitments designed to protect consumers' privacy.html#ixzz1pLWLLUBc Online Auction Site Settles FTC Privacy Charges Personal Identifying Information Hijacked From Competitor's Site. After agreeing to comply with the User Agreement and Privacy Policy. The notice also provides these consumers the opportunity to cancel registration with ReverseAuction and have their personal identifying information deleted from ReverseAuction's database. Many Consumers Sent Deceptive Spam Online auction house ReverseAuction.

S. the Commission does not here declare that sending unsolicited commercial email ('spamming') is unfair in all circumstances. "The injury in this case was caused by deception: that is. however. so that the Commission may react to changes in the marketplace. . . " .requires ReverseAuction to disclose its own privacy policy on its Internet site. under the facts presented here. This standard for substantial injury overstates the appropriate level of government-enforced privacy protection on the Internet. initiatives of private parties (like eBay) who develop and implement their own privacy arrangements. posits substantial injury stemming from ReverseAuction's use of information readily available to millions of eBay members to send commercial e-mail. Commissioners Swindle and Leary wrote: "We join our colleagues in support of the deception theory in Count I. nor does it suggest that privacy invasions cause substantial injury in all circumstances. It is not necessary or appropriate to plead a less precise theory." In his separate statement. ReverseAuction's use of eBay members' information to send them e-mail did not cause substantial enough injury to meet the statutory standard. . "We do not say that privacy concerns can never support an unfairness claim. . with Commissioner Mozelle Thompson issuing a separate statement and Commissioners Orson Swindle and Thomas B. [T]he injury caused by ReverseAuction's conduct. I believe the harm caused in this case is especially significant because it not only breached the privacy expectation of each and every eBay member. a majority of the Commission recognized that.' 15 U. We further believe that it is in the public interest for the Commission to pursue the deception allegation in Count One because such deceptive conduct undermines consumer confidence in the nascent electronic marketplace at a critical point in time and may thereby inhibit its development. The Commission vote to accept the proposed consent settlement was 5-0. The proposed stipulated consent agreement was filed today in U. . "In voting for an alternative pleading. 'Section 5 of the FTC Act deliberately incorporates a flexible standard. that the injury could not have been avoided by those members.S. . The unfairness theory . In its statement on Touch Tone. This injury is exacerbated because consumer concern about privacy and confidence in the electronic marketplace are such critical issues at this time." NOTE: A stipulated consent agreement and final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. and provides no rationale for when unsolicited commercial e-mail is unfair and when it is not. far from being speculative. Stipulated consent agreements and final orders have the force of law when signed by the judge. but instead represents a reasoned and tailored response to the circumstances presented. . is a tangible misappropriation of personal protected information that enabled the company to send personalized deceptive e-mail messages to scores of consumers. Leary concurring in part and dissenting in part and issuing a joint statement. . § 45(n) (emphasis added).C. . I believe this action is not an overly expansive view of the unfairness doctrine. "I believe that ReverseAuction's behavior caused substantial injury to members of the eBay community. The Commission has no authority to declare an act or practice unfair unless it 'causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition. [O]ur decision to challenge ReverseAuction's deception is an effort to buttress. . support the unfairness theory in Count One. . District Court for the District of Columbia. and it was not outweighed by countervailing benefits. In their joint statement. In this case. it is unfair for ReverseAuction to improperly obtain personal information for its use. the Commission posits that. and contains record keeping provisions to allow the FTC to monitor compliance. . . "We do not. It is subject to court approval .' For these reasons. not supplant or detract from. Instead. however. Commissioner Thompson wrote. by ReverseAuction's failure to honor its express commitments. . it also undermined consumer confidence in eBay and diminishes the electronic marketplace for all its participants. .

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