Multi directional auctions

We launched a new kind of auction format a few months ago …. A multi directional auction. I’m sure the TradingPartners marketing juggernaut will kick in soon enough but I’m too excited not to mention the success this product has had in live use.

Multi Directional Reverse e-Auctions are useful when you have some elements you want suppliers to bid down (e.g. unit cost) and others you want to bid upwards (e.g. a rebate, marketing money etc). Without multi directional auctions you have to find some complicated way of calculating net prices and having suppliers input those net prices into the auction. With multi directional this is all taken care of by the system.

The first live ones happened over the past couple of weeks, one in Europe and one in the USA. One of the events was for Mobile Telecoms (tariffs being bid downwards, hardware credits being bid upwards) and the other was for Furniture (price for new furniture being bid downwards, price for buying back existing furniture being bid upwards).

Very cool.
[By the way if you are confused about the terms “reverse” and “multi-directional” – remember that a Forward Auction is a selling auction and a Reverse Auction is a buying auction. Depending on what you are buying and how you are buying it, bids can go upwards or downwards in a reverse auction. I know it’s confusing. But not much I can do about the terminology]



2 responses to “Multi directional auctions”

    • Hi Vishal

      I’ll try:

      Suppose you are buying office supplies. In a normal reverse auction suppliers will compete amongst each other to bid the price down. However office supplies companies often offer a rebate – if you spend $x with us, we will give you $y back. It is in your interest as a buyer to have as low a unit price as possible for your office supplies and as high a rebate as possible. A multi-directional auction allows the suppliers to bid down the unit price at the same time that they bid up the rebate and you, as a buyer, get to see the true total value of the contract taking unit costs and rebates into account.

      Multi-directional auctions are also useful in categories such as branded goods where suppliers aren’t willing (or able) to lower the unit price very far, but are able to give you money out of their marketing budget. Mobile telecoms is another good candidate for multi-directional auctions.

      Hope this helps.

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