Understanding Reverse & forward auctions and their benefits

Reverse auctions

A reverse auction is just the vice versa of forwarding auction, where a single buyer makes potential sellers aware of their intent to buy a specified product/service. Strongly interconnected with big deals, reverse auctions are typically used for procurement by private companies, public sector agencies, and non-profit organizations. During the course of the actual forward auction event, the buyers compete and bid against one another to secure the seller’s business, thereby driving the price to be paid for the item upward. Thus, the winning bidder is the buyer who offers the highest price.

Forward auctions

The forward auction is associated with the traditional method of auction. It takes the form of a single seller offering a product/service for sale, with buyers competing to secure the item by bidding the price upwards. During the course of the actual forward auction event, the buyers compete and bid against one another to secure the seller’s business, thereby driving the price to be paid for the item upward. Thus, the winning bidder is the buyer who offers the highest price.

In brief

In a nutshell, the forward auction is associated with the traditional method of auctioning where buyers compete to obtain a product or service by offering increasingly higher prices. On the other hand, in a reverse auction, the role of buyers and sellers are reversed i.e. sellers will compete with the buyer’s requirement and underbid. The lowest bid wins in the reverse auction and the highest bid wins in the forwarding auction.

Benefits

The key benefits of reverse auctions include a reduction in purchasing costs, improved market efficiency, procurement process enhancement, last but not least access to a global supplier base. Now that you are aware of reverse and forward auctions, along with their benefits, if you are looking to make the most of auctions, then bidzpro is the right way. Bidzpro- B2B online bidding portal, Our unique online bidding portal makes e-procurement simple and helps both buyers and sellers reach a new height of growth and success, all eventually leading to hassle-free buying and selling.

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