Why is the use of reverse auctions by retailers up?

January 11th, 2010

I was watching a reverse auction with a customer last week and some of the comments from the CEO and his team may shed some light as to why?

From mid tier one retailers on down the use of reverse auctions has been very limited since their inception at the end of the 1990’s. The reason is because there was very little focus on the retail segment and the tools were also very difficult to use and expensive. If retailer’s think a tool is so complicated that they can not do it themselves, they won’t use them.

We are seeing a small uptick in e-negotiation tools in retail and this author believes that some of the following quotes from the folks watching a reverse auction last week may be the reason why.

1. “This was pretty simple to do”
2. “If we hired someone we could do these ourselves with you guys”
3. “This is fun”
4. “You mean the reports are already available”
5. “I love the sports concept”
6. “It was easy to follow the marquis and what was going on from one screen”
7. “The multiple color schemes were great”
8. “I can’t believe how fast you guys set this up”
9. “We saved that much money and only have to pay what we discussed”
10. “Can we do another one today”
11. “I may get a promotion out of this”
12. “I love that calculator at the end of the bid process”
13. “I like all of the supplier data that was accessible during the auction”
14. “Now I know how the big guys get the pricing they do”

So what does this all mean for retail procurement professionals? It means that today’s tools are easier to use, more interactive, maintain your attention during an auction,  integrate gaming technology to keep it fun and are lower cost than their predecessors.

This all adds up to a focus on retailers entire spend both indirect and direct as well resulting in increased utilization by middle market and large retailers alike.

If you would like to have fun, save money and do it quickly, please visit us at www.safesoucing.com.

We look forward to and appreciate your comments.

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