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Auctions as a concept are, of course, not new. However the ability to conduct auctions electronically (thereby ensuring transparency, auditability and equality of opportunity to all participants) means that obstacles to their use in many sectors are largely overcome.

For the supplier, electronic auctions (to distinguish them from "in-person" auctions) offer the benefit of allowing bidders to participate simultaneously, remotely and anonymously. The term " reverse auction" simply refers to an auction in which sellers (rather than buyers) bid to provide goods or services. In a reverse auction, the price drops as sellers compete with each other to meet the buyer's requirement. The term " forward auction" simply refers to an auction in which buyers (rather than sellers) bid to purchase goods or services. In a forward auction, the price increases as buyers compete with each other to meet the seller's requirement.

" Electronic auctions" (which, in procurement, generally mean "electronic reverse auctions") refer to auctions which are conducted using internet-based software.

benefits of e-auction
The most frequently cited benefit of auctions is the lower prices which might be expected to result from the heightened sense of competition. Claims of price savings of around 25% are typical.
Time savings 
  In shortening the time and effort which might otherwise be involved in prolonged rounds of post-tender negotiation  
  In facilitating the re-use of auction formats
The ability to open up a procurement to a wider market.
The transparency of the process to all participants and an audit trail of activity.


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