Online Auctions Discover 6 Myths Surrounding Them

Online Auctions Discover 6 Myths Surrounding Them



Online Auctions are unmistakably among the​ hottest e-Sourcing technologies on the​ Internet business today. But what exactly is​ an​ online auction anyway and​ what are its benefits? According to​ the​ Pocket Oxford Dictionary, fourth edition (1942), an​ auction is​ a​ "public sale in​ which articles are sold to​ the​ highest bidder." and​ if​ done on Internet it​ is​ online auction.

Online auctions create a​ competitive advantage because they make it​ relatively simple for​ Procurement managers to​ negotiate on all corporate purchases and​ create better deals.

Let us see some common myths surrounding online auctions:

MYTH #1: Only very familiar, particular or​ consistent items can be auctioned:

The myth came into being because no one understood how to​ measure criteria other than price. Total cost auctions take price and​ no-price factors, such as​ delivery time or​ customer service, into account, and​ they allow a​ customer to​ weight each factor accordingly. This is​ only a​ myth because when someone with sourcing expertise takes a​ creative approach to​ defining or​ breaking down the​ item in​ question, that item or​ its components can generally be auctioned.

MYTH # 2: Auctions are only effective when there is​ a​ level playing field:

This is​ false since a​ level playing field simply doesn't exist. And, not all suppliers are alike. Face-to-face negotiations have long proven this fact. Procurement managers can now normalize for​ differences (e.g., customer service, warranty terms, delivery cost, etc.) using Web-based technology. in​ effect, these technologies measure total cost allow customers to​ compare apples-to-oranges.

MYTH #3: Only Internet-savvy suppliers can participate in​ an​ online auction:

Today, the​ majority of​ legitimate suppliers have access to​ computers. the​ myth that only internet-savvy suppliers can participate in​ an​ online auction is​ wrong. in​ order to​ participate in​ an​ Internet based online auction, the​ suppliers merely need to​ be able to​ log on to​ the​ Internet, log in​ to​ a​ web site, and​ log their bids. It's just very simple. Suppliers don't have to​ know how to​ navigate the​ World Wide Web or​ use any sophisticated search engines to​ participate.

MYTH #4: Maximum benefits could be derived only if​ large number of​ suppliers participate:

For any online auction, competition is​ a​ must and​ you must create a​ competitive environment, no matter if​ the​ suppliers is​ 4 or​ 400. Internet auctions put the​ business "up for​ bid." Incumbents are wise to​ take notice. Once existing suppliers believe that the​ buyer really will change where he takes his business, a​ competitive environment is​ created. Thus concrete results for​ online auctions occur irrelevant to​ number of​ suppliers.

MYTH #5: Only products are auctioned?

Not true - in​ fact, services are also auctioned. Services such as​ Telemarketing services, Cellular phone services, Security services, and​ temporary labor services are all good examples. for​ example, a​ particular auction site held an​ auction for​ telemarketing services that resulted in​ an​ 18% cost reduction. the​ auction involved over 60 suppliers and​ more than 700 bids. the​ study shows that apart from products, services can also be auctioned.

MYTH # 6:Auctions are carried out only once in​ a​ year:

Event online auctions are generally used for​ categories of​ goods and​ services that require a​ long-term contract (say one year). These will achieve better results if​ auctioned year (or less). for​ example, a​ buyer may auction off the​ purchase of​ 10,000 PCs over a​ two-year period.

It is​ important for​ all to​ expand their concept of​ what can be auctioned, as​ long as​ the​ value of​ each item is​ 'elastic' enough to​ preclude fixed pricing. Once they have done that, the​ possibilities are almost endless.




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