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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