Reverse auctions
In reverse auctions "the role of the buyer and seller are reversed, with the primary objective to drive purchase prices downward" to quote from the wikipedia article on the subject.
They have a long history and in recent times have most often been used for business or government procurement of goods and services. This has been assisted by the development of software to assist these large organisations in managing their procurement.
Auto eBid has been a pioneer and world leader in bringing the benefits of these auctions to consumers looking to purchase high value items.
What are the differences between a normal auction and a reverse auction?
| Normal Auction | Reverse Auction |
| One seller | One buyer |
| Many buyers | Many sellers |
| Price goes up with each bid | Price goes down with each bid |
| Winning bid is highest bid | Winning bid is lowest bid |
| Reserve price is lowest price the seller is willing to accept, normally based on auctioneer's recommendation | Reserve price is highest price the buyer is willing to pay, normally based on auctioneer's recommendation |
| Buyers may leave absentee or commission bids which is the highest price they will pay and the auctioneer will use this to enter bids on their behalf up to that maximum | Sellers may leave absentee or commission bids which is the lowest price they will sell at and the auctioneer will use this to enter bids on their behalf down to that minimum |
| Auctioneer is paid a fee for each lot sold, or a lesser fee if the reserve is not reached | Auctioneer is paid a fee for each lot bought, or a lesser fee if the reserve is not reached |
A true reverse auction should not be confused with a "lowest unique bid" auction where consumers may be fortunate and "win" goods for a small fraction of the real price. These lowest unique bid auctions have many features in common with a lottery or prize draw; all but one "bidder" will get nothing and have wasted the fee they paid to take part. These events are often used solely as a promotional tool.
They should also not be confused with a Dutch auction in which there are multiple buyers, as in a normal auction, but the price drops until it reaches the maximum price one buyer is willing to pay. (Yes, you can also have a reverse Dutch auction which we will leave you to figure out...)
