To bid or not to bid........

22 July 2003

On-line or e-auctions continue to prove a point of contention between seller and buyer. Whilst realising that these auctions are here to stay, most converters clearly find it difficult to voice 'on the record' what is best described as the 'off the record' anger over prices and the unfairness of certain auctions they have experienced. As I have already mentioned in this column, various trade associations are calling for some sort of official working practices.

I recently came across a fascinating piece of US research in this really 'hot area' of discussion for converters in Europe at the moment from the B2B Research Center - a new research arm of Koroberi in the USA (see news section). Last March the company conducted its first on-line survey - a study of the use of reverse on-line auctions. Although it covered the materials handling industry, equipment and services, this also included the buying of packaging materials.

Its findings indicate that approximately 20 per cent of respondents have used reverse on-line auctions.

"Sellers indicated that a focus on price over value was an extremely important concern, scoring it an 8.20 on a scale of 1.00 to 9.00," reports the Center. "Buyers cited de-motivation of vendors as a 5.00," it emphasized. "Buyers voted a lowered cost of goods as their number one experience (6.37 out of the perfect 9) with end user savings (5.47) and improved profit margin (5.40) as secondary reasons. These results seem to represent cost reductions above operational efficiency as the importance of reverse auctions for these buyers.

"For the sellers, passions seemed inflamed by these experiences. A focus on price, not value, was their loudest choice with an 8.20 out of a perfect 9. Not bidding "apples" to "apples" (7.42), decreased profit margin (7.37), and less partnering with customers (7.22)."

The arguments will rumble on. It is always the way during times of change and no doubt we will see plenty of research published on this thorny subject in the coming months and years.

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