Most buyers shun e-auctions

29 November 2007
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29 November 2007 | Antony Barton

The majority of purchasers do not use e-auctions, according to the latest SM poll.

In the survey of 100 buyers, only 40 per cent of respondents said they use the tool, while 60 per cent do not. This echoes survey of 600 marketplaces and 200 suppliers five years ago, conducted by the University of Oxford's Saïd Business School, which revealed more than 60 per cent of respondents did not use e-auctions and had no plans to do so within the next two years.

Many SM readers said e-auctions are intended for high-volume purchases and not suited to their spend areas. One buyer said they are "a highly limited, one-off way to make savings and do not seem to have truly led to any sustainable savings yet".

The general opinion was that e-auctions should be used with care where ongoing relationships with suppliers are critical. Dianna Knight, strategic sourcing manager for a London financial institution, said: "In the case of reverse auctions, for example, relationships may fail because you are setting up a win-lose situation."

For this reason, a number of buyers said they prefer face-to-face negotiations.

Several buyers said suppliers are still wary of e-auctions and the less technologically advanced feel disadvantaged. Philip Dews, procurement manager for GAJ Construction, hopes to use e-auctions for tool hire, protective equipment and site consumables but is hindered by suppliers: "In the construction industry it's still a problem finding suppliers that use e-mail."

He also refers to a major construction group that used an e-auction but did not award the contract to the supplier that won. He says actions like this may add to suppliers' distrust of e-auctions.

But buyers who use e-auctions said they reduce administration, cut preparation time and provide an easy way to compare data and track orders. One procurement manager said: "We have made a decision to channel as much of our procurement spend as possible through e-auctions, to the extent that exceptions to the rule have to be signed off."



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