E-auctions — electronic marketplaces where multiple bidders compete to win business involving goods or services — enable buyers and sellers to agree on
prices in a fraction of the time that traditional face-to-face
negotiations take. Buyers get the best prices for goods or
services, and sellers get immediate market feedback on their
As with any type of automation, e-auctions are not a
cure-all. If not done correctly, they can result in increased
costs, damaged relationships or significant risks. However,
by understanding and applying a few basic principles, an
organization can enhance its end-to-end value proposition
through online auctions.
E-auctions generally fall into two types: ( 1) forward auctions,
where several bidders compete by increasing prices (as
on eBay) to win a seller’s order for, say, disposal of excess
equipment or scrap material, and ( 2) reverse auctions, in which
bidders compete by lowering their prices.
Auctions can be further categorized into di;erent bidding
or award formats, the most common of which is English. In
this scenario, the highest price wins the business in a forward
auction, while the lowest price wins in a reverse auction.
A sound strategy can help an
organization use the online bidding
process to generate the most value in
the least amount of time.
ISM Mastery Model®
Core Competency: Systems Capability & Technology
RIGHT FOR YOU?
BY MARY D. LEWIS