How does a reverse auction work?

A reverse auction is a type of auction in which the roles of buyers and sellers are reversed. In an ordinary
auction (also known as a forward auction), buyers compete to obtain a good or service, and the price
typically increases over time. In a reverse auction, sellers compete to obtain business, and prices typically
decrease over time.

In a typical auction, the seller puts an item up for sale. Multiple buyers bid for the item, and one or more of
the highest bidders buy the goods at a price determined at the conclusion of the bidding.

BidJam is a reverse auction website where the lowest unique bid wins. It's a brilliant and exciting new way
to win brand new products for a fraction of their guide price!

The idea of a reverse auction is that a player aims to be the lowest bidder on an item, and the bid in
pence has to be one which no other player has made i.e. the lowest unique bid.

Companies today need to shave expenses wherever possible and that includes the purchase of goods
and services needed to keep their businesses running smoothly and efficiently. In the old days, the
process of finding vendors was extremely limited and was very time-consuming. Many businesses simply
found it easier to pick one company and continue doing business with them indefinitely instead of hunting
around for the best provider for each new project. Today, technology has changed that completely thanks
to reverse auctions and the Internet.

For those unfamiliar with the concept, reverse auctions simply are auctions where the bidder is the seller
not the buyer. The bid reflects how much the buyer is being asked to pay, not how much the good or
service is being sold for. Web-based reverse auctions have become extremely popular for purchasing
everything from accounting services to securing raw materials. The reasons for the popularity may not be
immediately clear, but there are a number of benefits for both buyers and sellers.

If so you’ve come close to the concept of the reverse auction. In its proper form, it’s something you find
more for business than consumers, an idea that really came to popularity towards the end of the 1990s.

A company contacts a “market maker,” who arranges the reverse auction. The market maker then
contacts companies that supply the item the buyer wants and handles all the aspects of the auction.

The origins of the 'reverse auction' date back to the mid 1990's. The concept was initially conceived as a
way for companies to bid on available government and private sector contracts. The auction would take
place on the internet and potential buyers were invited to openly compete and bid amongst other
companies vying for the available contracts; which would of course benefit the recipient by driving down
the costs of the project. When bidders reached a threshold and could go no lower for a particular
contract, the auction would conclude and the available contracts would be awarded to the companies with
the lowest bids.

Sound familiar? It should, because bidding on contracts is certainly not something new by any stretch of
the imagination, but it certainly was on the Internet! Prior to the creation of the reverse auction, competing
for contracts was more localized and bids were oftentimes delivered through the mail as potential buyers
had to patiently wait for the outcome of their bid. However, with the advent of the Internet, suddenly a
paradigm shift transformed in the way companies and governments could post important projects and
accept bidding from potential buyers and contractors from around the world. By the same token it certainly
opened the door for contractors and buyers alike who could now bid on far more projects outside their
immediate marketing area and be informed of the status of those bids in real time!

A reverse auction (RA) is an auction where a buyer makes a product or service available for bidding from
different suppliers. The principle is the same as for normal auctions, but the principle is as the name
indicates, reversed. It is the buyer who is in charge and the seller who gives the lowest bid, is awarded the

A reverse auction is commonly also called e-auction, e-sourcing, eRA (electronic reverse auction) or REA
(reversed electronic auction) since they are carried out online on internet or on a system installed on the
Buyers internal server. This site provide a reverse auction system for free. Read more and try here!

In a typical auction, the seller puts an item up for sale. Multiple buyers bid for the item, and one or more of
the highest bidders buy the goods at a price determined at the conclusion of the bidding.

In a reverse auction, a buyer contracts with a market maker to help make the necessary preparations to
conduct the reverse auction. This includes: finding new suppliers, training new and incumbent suppliers,
organizing the auction, managing the auction event, and providing auction data to buyers to facilitate
decision making.

A type of auction in which sellers bid for the prices at which they are willing to sell their goods and
services. In a regular auction, a seller puts up an item and buyers place bids until the close of the auction,
at which time the item goes to the highest bidder. In a reverse auction, the buyer puts up a request for a
required good or service. Sellers then place bids for the amount they are willing to be paid for the good or
service, and at the end of the auction the seller with the lowest amount wins.

Reverse auctions gained popularity with the emergence of Internet-based online auction tools. Today,
reverse auctions are used by large corporations to purchase raw materials, supplies and services like
accounting and customer service.


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