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Keeping Warm with Creative Auction Strategies

Situation

  • A Major European Retailer needed to source Men’s Thermal Underwear for the cold season
  • Company preferred one supplier for all the products, therefore bidders were asked to provide their best possible offer for each product
  • In addition to price, other elements such as quality, trading, flexibility, logistical setup needed to be incorporated
  • Three suppliers were invited to all eAuctions, including the incumbent supplier
  • The start price was based on RFx information collected prior to negotiation

 

Solution

  • Two Japanese Auctions and a CherryLot Auction were used in the negotiation
    • Japanese format was chosen due to limited bidder pool
  • First Japanese Auction included six product line items; the second had only three products
  • Bidders were allowed three consecutive bid rejections prior to closing
  • The CherryLot Auction contained one lot and three product lines
  • Traffic light system provided feedback to bidders on their positioning
  • Parameters such as office fees, transit costs, and Duty Paid on Carriage were applied for all auctions
  • The order allocation was announced within 2 weeks of bid close

Result

  • The Japanese Auctions generated strong savings (12,03% & 13,82%)
  • The CherryLot Auction had 2,30% Savings
  • All suppliers submitted their bids in all the organized auctions