Simple supplier tactics to help you win your next eAuction – Part 1

During our webinar on Wednesday 24th July, we discussed how participants can use simple tactics and strategies to ensure that they increase their effectiveness when taking part in eAuction events. Here is the first part of some of our key takeaways from that webinar.

What should your objectives be when taking part in an auction?

• Win the opportunity for business?
• Make the buyer feel like they have achieved success?
• Obtain the best feedback possible from the event?

Simply put, all of the above. Even if you lose an auction, if you’ve conducted it in the right way then you should have received invaluable information on either your competitors, the market, or the prospective opportunity that you can leverage next time.  Even if you don’t win the auction, you might still win the opportunity.

Some of the most important factors of ensuring that you win your next eAuction are:

• Matching your product/service with what the host is trying to achieve
• Understanding the “Groundworks” (such as the Specification and eAuction type)
• Knowing how you can best place your opening bids
• Keeping to effective bidding strategies
• Communicating and establishing a positive relationship with the host
• Understanding your margin and getting your supply chain involved

Meeting the expectations of the host

The reason why this is our first (and arguably most important) element to winning an auction is that not only should this be the initial consideration for participants planning to take part in an eAuction event but also because this is often the most overlooked.

Jim Cathcart, the pioneer of ‘Relationship Selling’ famously stated: “Become the person who would attract the results you seek” and this readily applies to eAuction events. Our suggestions for ways to look into this are:

• Help them achieve savings – Help the buyer identify the best value that they can achieve (which should be a reflection of the market) and make that your offering
• Give the buyer more options – A buyer likely wants more choice of suppliers around a specific price point, so ensure that you put yourself in place to be in that consideration
• Aid them in achieving personal success – that could be helping them to achieve a moral personal success within a corporate structure
• Build their reputation and your relationship – Be transparent with buyers so that they can look good in front of their organisation and it will help to develop your working relationship with them
• Show a positive supplier impression – Show to them and their other stakeholders that you as a supplier are committed to their organisation achieving their goals

Understand the “Groundworks” 

Once you’ve understood what the host is attempting to get out of the event, then you need to assess how the eSourcing event is set up and plan accordingly.

Specification

The first aspect is to fully appreciate the specification. Understand what they need, why they need it, what conditions or requirements need to be met. By analysing this you can understand whether there is ambiguity and if you can offer alternative products. Or alternatively, if there are aspects of their requirements that aren’t taken into account in the tender.

eAuction Type

The next part of the Groundworks is the structure of the online event. eAuctions can have different elements, the first element is whether it’s “Forward” or “Reverse”. This is in reference to the pricing either increasing (price going up) or decreasing (price going down). 

Different eAuction types can have a very different impact on bidding strategies and supplier tactics when taking part in eAuctions.

Examples of different types of eAuction structures:

• “Ranked” – Suppliers are ranked and notified of their rank but not that of their competitors
• “Open” – Suppliers have a greater vision of the event such as the difference between their bids and their competitor’s bids
• “Japanese” – The pricing is decreased in specific increments over time and you can choose to opt-in or out at a specific level

Other important elements of an eAuction to understand are:

• Weighting – Additional values such as quality can be taken into account when doing the calculation, typically via scoring of a questionnaire prior to the auction
• Final Rankings – Are the hosts hiding the lead bids, is there a “blind bid” stage at the very end of the auction or is the eAuction fully transparent (At Market Dojo we encourage hosts to be as transparent as possible with suppliers)
• Minimum Bid Decrement Level – The lowest acceptable bid value that can be accepted compared to your previous bid, e.g. 5% decrease from your previous bid)
• Timings of the Auction – Is the eAuction scheduled to last 15 mins or 1 day
• Dynamic Close Function – The additional time that the auction might be extended if a competitive bid is produced

Stay tuned for Part 2 of our blog on Supplier Tactics