1. Discuss at least three pros and cons of reverse auctions for buyers. Do the same for suppliers.
2. How can a supplier succeed in reverse auctions? How can it avoid them altogether?

In today’s competitive marketplace, many businesses strive to cut costs. One solution is for business buyers to drive down supplier prices. Online reverse auctions allow businesses to do this more efficiently and effectively. Reverse auctions, often called e-auctions, are conducted online with the buyer and seller roles reversed. Buyers announce auctions months in advance and vendors qualify to participate. During the live online auction, suppliers have a short time in which to bid down their prices anonymously. Such auctions started in the aerospace and automotive industries to reduce costs on commodity parts but have now spread to other industries. Buyers don’t always go with the lowest bidder, but the process puts pressure on suppliers to reduce prices and in turn reduce their own costs to maintain profitability. Although heralded as a “best practices” tool by some, reverse auctions are loathed by others. Some suppliers, bitten by the reverse auctions bug of their customers, turn around and reduce costs by requiring such auctions for their own suppliers.