One of the things that made me really interested in E-Auction is the story behind the graphs that you see develop during the E-Auction process and occasionally surprise the buyer.
For those who are not familiar with E-auction. E-Auction is an online event that allows a buyer to have his pre-qualified suppliers bid during a certain period of time that will ultimately provide the best candidate in terms of the equally shared rules of engagement. This creates a level playing field for all the parties involved.
The whole process is brought to life with real-time graphs that reflect the behavior of the suppliers participating in the event.
As all the suppliers have the same information, some think of surprising strategies that evolve during the event.
Obviously these strategies are aimed at winning the deal, which gets nearer and nearer at the ticking of the clock.
When looking at the graphs you will notice an increase of adrenaline not only in yourself but the graph also tells you that the contenders feel the same.
In my collection of surprises, I will highlight three.
1. In this E-Auction, I was one of the participants and during the event, we were in close contact with our suppliers in order to be able to change the bid at any time. At a certain moment in time when things were getting tough, we needed to consult our supplier. During this phone call, the supplier dropped his price from 500 k to 250 K, which left us all flabbergasted. Unfortunately as a contender, I could not see what happened at the other end, but I suppose some excitement must have emerged.
2. We were asking our suppliers to bid for the percentage number of unforeseen closures of locations due to business reasons. The percentage was an important input for the consecutive auction. Most of the suppliers got stuck at about 15 % but there was one who offered 100 %. At first, there was disbelief so we ascertained whether there was not a mistake made. No mistake, they just took the bet it was not going to happen. In the end, this supplier did not win the Auction as other predetermined factors were of more importance.
3. After a couple of E-Auctions the supplier I am referring to refrained from participating, simply because they felt unable to win. Surprisingly enough they accepted the latest E-Auction as they were determined to win this time. At the onset, we were looking at a straightforward auction, that suddenly turned into a psychological battle. The challenging party dropped his price considerably while nearing the extension period of 2 minutes.
The opponent had clearly suffered a blow as he was looking to recompose himself by each time issuing small bids that bought him 2 minutes of extension time. He was clearly looking for help in his organization that did not arrive in time and the challenger won as shown in the graph.
These examples clearly demonstrate that E-Auction is not only an interesting business model for both suppliers and buyers, but the surprises can also bring an unexpected business effect along, due to the ingenuity and adrenaline levels of the contenders during the event, that is less likely to emerge when conducting face to face talks.
This does not mean that E-Auction is the holy grail to find your new supplier, but considering an E-Auction gives you some food for thought for your next purchase.
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