What is reverse auction?
In a reverse auction the role of buyers and sellers is reversed; sellers bid against each other to win a buyer.
A buyer advertises the services they need and the price they’re willing to pay, and sellers compete for the business by undercutting each other.
Where have you heard about reverse auction?
If you’ve ever searched for a tradesman through an online directly you may have experienced a reverse auction, where you list the work you need and tradesmen come back to you with quotes. You then get to choose which one you want to go with and at which price.
What you need to know about reverse auction.
Reverse auction is widely used in business; you may be familiar with the process in relation to supply contracts or bid-based construction. It’s also used for online procurement and is sometimes called 'e-procurement' or 'e-auction', where suppliers compete for contracts online in real-time.
It’s a method that works best when there are lots of sellers offering similar products and services.