What is a reverse auction?

Reverse Auction is a unique type of auction where multiple sellers compete to win business from a single buyer. In a Reverse Auction, the buyer sets the initial terms, including the desired goods or services, quantity, and any other relevant details. Sellers then bid competitively to offer the lowest price or most favorable terms to secure the buyer's business.

The goal of a Reverse Auction is for the buyer to obtain the best possible deal from the sellers. This format is often used in procurement to drive down prices and achieve cost savings. It creates a dynamic and competitive environment in which sellers continuously adjust their bids to remain competitive.

Reverse Auctions are facilitated through online platforms or software, making them efficient and transparent. They are particularly useful for sourcing common commodities or services where price is a primary factor in the decision-making process.