What is a Reverse Auction?
A. A reverse auction is an auction with a difference, where people can buy goods such as cars, consumer electronics and vacations for pennies! Registered users pay to enter an auction – Their aim? To outwit fellow bidders by placing what they think will be the lowest unique bid. You could be driving away in a brand new car… all for pennies!
In order to properly define the unique characteristics of the ‘reverse auction’ and why it has become one of the most lucrative auction models in the world, it is important to touch upon one of the more familiar auction sites you’d typically see on the interne like of eBay, eBid, uBid, Yahoo and others. These types of auctions are categorically referred to as “traditional auctions.” A traditional auction involves a “Seller” who is offering an item for sale while potential buyers compete with each other for the purchase of the item, which in turn causes the price of the item to continually increase in price until no buyer is willing to bid more…thus the auction concludes with the item being awarded to the “Highest Bidder.” The characteristics of a reverse auction are in fact very similar to that of a traditional auction by the fact that it also involves a “Seller” which for the purpose of this illustration will be DubLi.com. DubLi.com offers an item(s) for sale on their online auction
The success behind DubLi.com’s ‘reverse auction’ lies in the formula of being able to drive down prices incrementally with single bids placed by consumers until the price reaches a point where it becomes irresistible to the buyer and then it’s sold. How they are able to do this on a consistent basis 100’s of times per day is a trade secret, but DubLi.com’s founder was able to implement this revolutionary strategy for extreme discounting through the creation of “Credits”.
Reverse auction is a term that is generally associated with Internet auction and e-purchasing. A reverse auction is also known by many other names, including procurement auction, sourcing event, e-sourcing, and e-auction. The first reverse auction took place in the 1990s, when the Internet was introduced as an auction tool. The reverse auction concept has continued and grown tremendously, mostly because of the success of the first reverse auction company. In a regular auction, purchasers are allowed to place a bid on an item, which is the amount they are willing to pay in order to buy the item. The person who places the highest bid usually ends up with the item. With a reverse auction, however, the opposite is true. More specifically, the buyer advertises a need for an item or service. Sellers then place bids for the amount they expect to be paid in order to perform such a service or provide such an item. Generally, the seller who places the lowest bid will win the job or sell the item
