Reverse auctions in industrial marketing and buying

Reverse auctions have been a popular topic over the past several years because they often result in tremendous savings for buyers and new markets for sellers. But they also carry risks. Three primary motivations, three potential disadvantages, and four conditions and related guidelines for success are reported here. If a reverse auction is to succeed, the product or service specifications must be clear and comprehensive, the purchase must be large enough to provide an incentive for the supplier to participate in the auction, the appropriate supply market conditions must exist, and the appropriate organizational infrastructure must be in place.