nline Auctions are no one understood how to measure
unmistakably among the criteria other than price. Total
hottest e-Sourcing cost auctions take price and
technologies on the Internet no-price factors, such as
business today. But what exactly delivery time or customer
is an online auction anyway and service, into account, and they
what are its benefits? According allow a customer to weight each
to The Pocket Oxford Dictionary, factor accordingly. This is only
fourth edition (1942), an auction a myth because when someone with
is a "public sale in which sourcing expertise takes a
articles are sold to the highest creative approach to defining or
bidder." And if done on Internet breaking down the item in
it is online auction. question, that item or its
components can generally be
Online auctions create a auctioned.
competitive advantage because
they make it relatively simple MYTH # 2: Auctions are only
for Procurement managers to effective when there is a level
negotiate on all corporate playing field:
purchases and create better
deals. This is false since a level
playing field simply doesn't
Let us see some common myths exist. And, not all suppliers are
surrounding online auctions: alike. Face-to-face negotiations
have long proven this fact.
MYTH #1: Only very familiar, Procurement managers can now
particular or consistent items normalize for differences (e.g.,
can be auctioned: customer service, warranty terms,
delivery cost, etc.) using
The myth came into being because Web-based technology. In effect,
these technologies measure total must create a competitive
cost allow customers to compare environment, no matter if the
apples-to-oranges. suppliers is 4 or 400. Internet
auctions put the business "up for
MYTH #3: Only Internet-savvy bid." Incumbents are wise to take
suppliers can participate in an notice. Once existing suppliers
online auction: believe that the buyer really
will change where he takes his
Today, the majority of legitimate business, a competitive
suppliers have access to environment is created. Thus
computers. The myth that only concrete results for online
internet-savvy suppliers can auctions occur irrelevant to
participate in an online auction number of suppliers.
is wrong. In order to participate
in an Internet based online MYTH #5: Only products are
auction, the suppliers merely auctioned?
need to be able to log on to the
Internet, log in to a web site, Not true - in fact, services are
and log their bids. It's just also auctioned. Services such as
very simple. Suppliers don't have Telemarketing services, Cellular
to know how to navigate the World phone services, Security
Wide Web or use any sophisticated services, and temporary labor
search engines to participate. services are all good examples.
For example, a particular auction
MYTH #4: Maximum benefits could site held an auction for
be derived only if large number telemarketing services that
of suppliers participate: resulted in an 18% cost
reduction. The auction involved
For any online auction, over 60 suppliers and more than
competition is a must and you 700 bids. The study shows that
apart from products, services can auction off the purchase of
also be auctioned. 10,000 PCs over a two-year
period.
MYTH # 6:Auctions are carried out
only once in a year: It is important for all to expand
their concept of what can be
Event online auctions are auctioned, as long as the value
generally used for categories of of each item is 'elastic' enough
goods and services that require a to preclude fixed pricing. Once
long-term contract (say one they have done that, the
year). These will achieve better possibilities are almost endless.
results if auctioned year (or
less). For example, a buyer may
About the Author:
Pradeep Aggarwal is the creator of the Auction Spectrum. This site is dedicated to helping people start and run a successful online auction business. Visit his site to get a free report and articles on "Tips & Tricks on Online Auction" http://www.auctionspectrum.com
Read more articles by:
Pradeep Aggarwal
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