An auction in simple words is the process of selling or buying goods or services by inviting competing bids from multiple service providers or vendors. The competing participants may or may not know the identities or actions of other competitors.
In a typical auction, the auctioneer announces the costs and conducts the event, where the buyers or bidders bid the maximum amount they can pay for the item or service. The highest bidder wins the bid and gets possession of the item or service. This is known as forward auction, where the bids increase during the auction. Some common examples of forward auctions include:
This is an auction where the seller is government, and the buyers are commoners.
If the sellers and buyers know each other, the auction is conducted privately.
This is an open auction where potential bidders participate live. This can be either physical or virtual.
A single lot is sold to the highest bidder simultaneously.
Buyers will send their bids to the seller in a closed envelope.
The goods are sold as a batch or lot.
In this auction, the seller gets the unsold items or goods from a previous auction and tries to sell them.
However, for procurement organizations, reverse auctions are of interest — because this is where bids decrease during the auction. Online reverse auctions are commonly used by procurement professionals seeking the best value deal.
Learn about the GEP’s real-time auction tool.