5STAGES

OFA B2BONLINEREVERSE AUCTION

SELECTS SUPPLIERS AND

INVITES TO PARTICIPATE

RECEIVE INVITATIONS AND

DETERMINE DESIRE TO BID

This process can be managed exclusively by the buyer based on current industry knowledge, or through a supplier identification service provided by the Auction Service. The number of extended invitations varies by product and market.

Suppliers complete a quick analysis to determine whether or not the probability-weighted potential befits from participating outweigh he associated time and resource commitments needed to properly manage the remaining 4 stages.

1STAGE

REVIEWS APPLICATIONS

AND SAMPLES

SETS GOALS AND PREPARES

TOOLS FOR LIVE AUCTION

Determinations are made on supplier’s quality, fitness for use, and ability to provide the required levels of service and support. Buyers may choose to eliminate vendors at this point to reduce noise, or keep all vendors through the Live Event to potentially promote more aggressive downward bidding.

Goals are established for the Live Event, along with bidding strategies and tactics. Price Floors are set, and relevant bid-management spreadsheets are developed.

2STAGE

WATCHES THE LIVE

AUCTION IN REAL TIME

COMPETES IN ONLINE LIVE

AUCTION EVENT

Most Auction Service Providers or Software Systems allow the buyer to watch all bids as they happen in real time, typically around 20 minutes per lot plus extensions. After time expires the Buyer reviews the results and “Closes” the auction.

Display information is limited, frequently only showing their current bid and their current rank (i.e. $100,000, 3rd Place). From there, suppliers bid downwards in an attempt to win the auction by having the lowest submitted bid when time expires.

3STAGE

CONDUCTS POST

AUCTION NEGOTIATIONS

FINALIZE PROPOSALS AND

PRICING

The negotiations are rarely finished at this point, particularly if the Incumbent supplier did not finish with the lowest bid. The field of potential suppliers is typically narrows to 2 or 3. In some cases all remaining suppliers are given the one last chance to match or beat the leading bid from the Live Event.

Strategies are formed based on the suppliers’ respective positions in the process, with alternate proposals submitted as applicable.

4STAGE

SELECTS A WINNER OR

NEGATES AUCTION

REVIEWS AND SIGNS FINAL

AGREEMENT!

Reverse Auctions normally end in the development of a supply partnership, but it is not uncommon for the buyer to throw out the auction results completely if a desirable outcome was not presented or identified.

For one supplier, it’s time to celebrate (depending on the final price point).

For all of the rest, there’s always next year!

5STAGE

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