Question

What is a reverse auction and when is it most likely to be used in a business-to-business setting?

Answer 1

Dear Student, I have spent a lot of time to make these terms short and cean, so if you got something from it, then give it an upvote. Thank You.

Q) What is a reverse auction

Ans: A reverse auction is a role reversal of buyers and sellers. It is a type of negotiation process used in strategic sourcing.

In Detail: Reverse auction is a type of auction in which the roles of buyer and seller are reversed in an ordinary auction also known as a forward auction buyer compete to obtain a good or service by offering increasingly higher prices in a reverse auction, the sellers compete to obtain business from the buyer and prices will typically decreaseas the sellers undercut each other business. The term most commonly refers to a specific type of auction process, also called procurement auction.

Q) When is it most likely to be used in a business-to-business setting?

Ans: Business-to-Business (B2B) online reverse auctions are one of the major competitive considerations for companies in their search for opportunities to reduce purchasing costs

In Detail:  The most common outcome of Reverse Auctions is that the incumbent supplier maintains the business, but at a much lower price point than before the bid. When managed properly, Challengers can successfully gain new business through Reverse Auctions, and incumbent suppliers can effectively defend their hard-earned business and margins.