Reverse auctions are a popular topic in recent years because they can achieve huge savings for buyers and new markets for sellers. But they also carry risks. Three primary motivation, three possible disadvantages and four conditions and the associated guidelines for success are reported here. If a reverse auction to be successful, the product or service specifications must be clear and comprehensive, the purchase must be large enough to provide an incentive for providers to participate in the … Read more »

Reverse auctions are a popular topic in recent years because they can achieve huge savings for buyers and new markets for sellers. But they also carry risks. Three primary motivation, three possible disadvantages and four conditions and the associated guidelines for success are reported here. Adequate supplies when a reverse auction to be successful, the product or service specifications must be clear and comprehensive, the purchase must be large enough to guarantee participate in the auction as an incentive for providers, must exist market conditions and the corresponding organizational infrastructure must be available.
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from
Larry R. Smeltzer,
Amelia Carr
Source: Business Horizons
6 pages.
Release Date: 15, March 2002. Prod #: BH073-PDF-ENG
Reverse Auctions in Industrial Marketing and Buying HBR case solution