Working with Auction Formats

In Reverse English, the buyer wants to purchase an item at lower price. The bid direction is downwards. The price ceiling is specified, which means the supplier cannot bid above this value.

In Reverse Dutch, the bid direction is upwards. The buyer sets the starting price just below the lowest price at which they expect the seller is willing. The lot closes at the end of the interval that specifies the upper limit price (price cap).

In Reverse Japanese, the price level falls at each configured interval. The system automatically reduces the price and suppliers must accept or be dropped from the event.

Dutch auctions are best suited for events in which cost is the primary concern and when there are few, prequalified suppliers. Participants are pressured to bid the best price they possibly can and to bid before their competitors can take the business away.

Prices are automatically adjusted until one of the participants accepts the price or the configured time expires.

• Participants cannot submit bids during the preview period.
• Forces lots to use serial bidding. One lot is open for bidding. When it closes, the next one opens.
• Disables the overtime option. It is not needed.
• Disables the ability to import responses using Microsoft Excel.
• The page is refreshed every five seconds. (For other events it is 20 seconds).

Follow the Procedure indicated in the Event Management Guide.

Set the starting price for Dutch auctions as follows:

1. Reverse Dutch Auctions: Set the starting price just below the absolute lowest price for which you anticipate the seller is willing to sell it.
2. Forward Dutch Auctions: Set the starting price just above the absolute highest price for which you anticipate the buyer is willing to buy it.

Used to reduce the amount of active participants in a live event if they do not meet certain requirements.

Participants choose to accept price levels as they drop (or rise). By default, a participant who does not accept a price level for an item becomes inactive and is unable to accept any further price levels for the item. Bidding ends when the number of active participants drops to or below the configured minimum value or the target price is reached.

• Participants cannot submit bids during the preview period.
• Participants must act immediately when bidding opens.
  • In a Japanese auction, a participant must submit an approval or risk being dropped from the event. (By contrast, in non-Japanese auctions, participants can choose to wait to participate until the event end nears.)
• Multiple items use serial bidding. One lot or item is open for bidding. When it closes, the next one opens.
• No overtime option.
• Participants can't import responses using Microsoft Excel.

Follow the Procedure indicated in the Event Management Guide.

An SAP Ariba Customer Support representative must run a scheduled task to install Japanese auction templates. To install Japanese auction templates, have your Designated Support Contact log a service request.

"There may be events that I run down the road that might be suited for Reverse Dutch formatting, but I do not think that I would use either of these formats for our laptop auction. Is that correct?"

"Yes, I do not think for sourcing laptops, you would need a Reverse Auction. I like to use an example of an overbooked flight.

An auctioneer could set up a reverse auction with the passengers as participants to find someone willing to delay travel plans on an overbooked flight. The auctioneer raises the price from a low starting point until a bidder agrees to sell at the stated price."

"Oh, that is a great example!

Do you have a good example as to when I would choose a Japanese auction format, and not Dutch?"

"I advise using Japanese formats when the services or products offered by vendors cannot be easily compared or if participants need to be vetted.

In Japanese reverse auctions, after every bid, each seller must signal their willingness to remain in the auction at the current price. The auction is over when only one seller remains, or when only a pre-set number of sellers remain.

With this in mind, reverse Japanese auctions require suppliers to explicitly 'opt out' of a given market. Instead of post-bid analysis and awarding steps, Japanese auctions provide the maximum number of award options at a given price point as the participants would have 'opted in' to the market. The buyer will have greater transparency to the actual market itself by having visibility into each participant's lowest offer."