Use the Reserve Price Indicator to drive down eAuction prices

Situation

  • A large retailer conducted a single line eAuction for children's socks
  • Both Asian and European suppliers were invited to participate though their price levels were substantially different
  • The buying company needed to confirm a satisfactory result from the event prior to making an award

Solution

  • After a pre-qualification RFQ, 10 suppliers were shortlisted for the auction
  • A Reserve Price was determined and set as a prerequisite for winning the auction
  • These criteria were strongly highlighted during the supplier training sessions
  • As a result, the bidders were conditioned to continue bidding until the Reserve Price was reached

Result

  • The use of a Reserve Price led the suppliers to compete on similar price levels
  • The leading supplier lowered his prices an additional 10.26% with no head-on competition by focusing on the Reserve Price
  • The company achieved savings of 12.91% compared to their Current Price level

Understanding your eAuction solution and using it at its full potential can generate savings even in situations where the competitive landscape is not ideal.

One useful tactic is the Reserve Price Indicator function. The Reserve Price Indicator encourages bidders to continue bidding until they've reached your target price regardless of the bidding activity of others.

This Scanmarket client was able to generate savings of 12.91% utilizing the Reserve Price Indicator even though the competitive market was thin.