This article goes through the process of participating in a reverse auction to ensure efficient collaboration between all platform users.
The key rule in a reverse auction is that suppliers can provide multiple quotations but can only lower the prices. In a reverse auction, the best bid refers to the lowest price.
In the reverse auction per total, the starting price and the minimum step are established for the total sum of all items and quantities.
As a result, suppliers’ rankings are calculated based on their overall bid (which includes the sum of all items and quantities) while considering the lowest offered price.
1. Introduction – how to respond to a reverse auction
Suppliers can use Prokuria without creating an account on the platform.
When a Buyer decides to publish a reverse auction using Prokuria, all invited Suppliers receive an email with a link to a secured response page where they can review all the details of the Reverse Auction, fill in the answer, and submit their bids.
2. View the details of the reverse auction. Accept or Decline Participation
Once the supplier receives the invitation in the mail, he can click on the name of the reverse auction to open a dedicated page containing all the information related to the event, giving him the opportunity to quote and respond.
The supplier then has 2 options:
Participate – if clicked, the Buyer will be informed by email that the Supplier has decided to participate in the reverse auction.
Decline – if clicked, the Buyer will be informed by email that the Supplier has declined to participate in the reverse auction. However, Suppliers can change their minds and still accept to participate in the reverse auction, as long as the reverse auction is still active.
3. Placing a Bid
Only after the Supplier accepted to participate in a reverse auction, the fields on the page become active in order for the Supplier to bid. However, a Supplier can only submit bids after the reverse auction has started.
When placing a bid, a Supplier should take into account the following:
A response page includes three sections. Sections have the following fields and functionalities:
The top of the response page
- “Contact Details of the Buyer”- name of the Buyer, contact person, email, phone.
- “Name of the reverse auction”- a descriptive name, easy to be associated with that specific reverse auction (text up to 200 characters).
- “ID”- a unique code for the reverse auction generated by the platform.
- “Timer” – a countdown timer that shows when the auction will end.
- “Banner” – information about the auction status, like “The reverse auction hasn’t started yet”.
Section 1: Intro
- “Description of the reverse auction”- usually details about the project and about the reverse auction (if provided by the text up to 5000 characters).
- “Starting price”- The maximum amount (as a sum for all items” that the Buyer will accept. Suppliers will not be able to place a higher bid than this amount.
- “Start time”- the date and time following Suppliers can be submitted bis.
- “End time”- the deadline for Suppliers to submit their responses.
Section 2: Attached documents
Documents provided by the Buyer for the reverse auction- There may be pictures, diagrams, tables, or other additional information needed for the Supplier’s response. In order to download these documents, click the name of the document.
Section 3: List of items
List of products or services for which the Buyer needs to receive bids, each item has the following column:
- Item name, Item description, Item Unit – those columns can be fully customizable by the buyer
- Your last submitted bid – the total bid for that item
- Your bid/um – the price of product/service per unit
- Total – automatically calculated by the platform, as a result of the quoted price/unit value multiplied by the quantity.
When placing a bid, a Supplier should take into account the following:
- Starting price: the maximum amount, as a sum of all items, that the Buyer will accept, if a starting price is provided by the Buyer.
- Suppliers will not be able to place a higher bid than the provided amount. If there is no value provided as a starting price, there will be no restriction for the Suppliers’ first bid.
Example: Starting price: 5000 EUR, Necessary quantity: 10 pieces –> Supplier’s bid can be a maximum of 500 EUR. The supplier’s total bid cannot exceed the value of 5000 EUR.
- Extension period: is expressed in minutes and represents the period of time before the auction ends. This extension period is also referred to as the “cool-down period”. Whenever a bid that changes the first rank is placed during this cool-down period, the reverse auction will be extended with the number of minutes specified by the Buyer. This will continue until no bid that changes the first rank is placed during the cool-down period.
- Minimum step: is the minimum difference between a Supplier’s new bidding price and the same Supplier’s previous bidding price. The minimum step is specified by the Buyer and the Supplier can always lower the bids by larger amounts if desired. The minimum step is applied to the total bid (price/um * quantity).
Example: Minimum step 100 EUR, Total bid for articles = 5000 EUR –> next bid of the supplier should be lower or equal to 4900 EUR. The total bid cannot be for example 4950 EUR, because it will not be in accord with the minimum step.
- Timeframe: a Supplier can submit bids only after the reverse auction’s start time, and no later than the end time; as per the above, during a reverse auction the end time can be extended automatically due to the cool-down period settings.
- When submitting a bid in a reverse auction, Suppliers can only decrease the bid. Suppliers cannot place the same bid twice and the new bid value cannot be higher than the previous one.
- A bid can only be placed after all the unit prices of all items have been filled in. This is always a mandatory field and bids cannot be submitted without filling it.
During the timeframe of a reverse auction, suppliers may be able to view the following details related to the rank and best bid value:
- Suppliers will be able to see whether they have the best bid or not.
- Suppliers will be able to see their own rank as compared to the other Suppliers participating in the reverse auction. The ranking is displayed only if the Buyer has enabled this feature. If a Supplier has the best bid (rank 1) and another Supplier in the reverse auction has placed the same bid, both Suppliers will see that they have the best bid, and a notification will be displayed at the top of the response page.
- Suppliers may be able to see the value of the best bid (rank 1), only if the Buyer has enabled this feature.
3.1: Bulk Quote (through Excel)
The feature is specially designed for events dedicated to a great number of items and services. Thanks to it, Prokuria helps you bid using an Excel template. This process can be done in 3 easy steps:
a. Click on the “+ add from file” button. A dedicated window will open a new page that guides you through the appropriate steps.
b. Click on “Download existing records”. The system will download an Excel file in which you complete the “Your bid/um” column. A maximum of 6 decimals are allowed.
c. Click on “Upload file” and select the newly created file and Prokuria will take care of the rest.
4. Cool-down period in reverse auctions
Whenever a bid that changes the first rank is placed during the cool-down period, the reverse auction will be extended with the number of minutes specified by the Buyer. This will continue until no bid changes the first rank during the cool-down period.
5. Communicating during a reverse auction – Messages
Anytime during a reverse auction, a Supplier can communicate directly with the Buyer via Prokuria by using the message functionality.
If the response page is open and the Supplier receives a message from the Buyer, a red icon will appear on the “Messages” button.
If the response page is not open and the Supplier receives a message from the Buyer, the Supplier will be notified by email about the new message.
6. Ending a reverse auction
When the end time for submitting responses is reached, the reverse auction will end, and the Suppliers will no longer be able to submit a new response.
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