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Effective strategies for combating reverse auctions

The common perception among selling organisations is that reverse auctions commoditise their offering, destroy established relationships and focus single-mindedly on price. And who can be surprised with this mindset, when the vice president of supplier management in a Fortune 10 technology firm has publicly observed: “There is no reason suppliers should like reverse auctions. It is a tool that is designed to transfer margins from them to me.”Finally, when participating, suppliers can get into a bidding war that drives prices down below their bottom line, as the desperation of the ‘herd mentality’ takes over. The sales director of an industrial product distributor explains: “It was one of the most frightening experiences I have ever had. I went in with a limit, was soon bidding far below it and realised I had lost control.”  

 

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