E-Auction vs Spot Buying/Contract

BuyingTIRTHANKAR SUTRADHAR

E AuctionsThe electronic auction (e auction) is an e-business between auctioneers and bidders, which takes place on an electronic marketplace.

It is an electronic commerce which occurs business to business (B2B), business to consumer (B2C), or consumer-to-consumer (C2C).

Types of E Auctions

The two major types of the electronic auction are :

•Forward auction in which several buyers bid for one seller's goods

•Reverse auction in which several sellers bid for one buyer's order.

7 Steps to E-Auction success• Define Requirements and Goals

• Invite all Potential Suppliers to an Open RFI

• Pre-Qualify Capable Suppliers

• Clearly Document All Requirements

• Hold a Q&A Training Session

• Monitor the Auction

• Follow Through and Award Promptly

Benefits of E-AuctionsBenefits to sellers

•  Increased revenues

• Better customer relationships

• Lower transaction and administrative costs

Benefits to buyers

•  Market Transparency

•  Opportunities to find unique items and collectibles

• Anonymity

Limitations of E-Auctions•Possibility of fraud

•Limited participation

•Security

•Auction software

•Long cycle time

•Monitoring time

•Equipment for buyers

•Order fulfilment costs

Examples•B2B: Product exchange and wholesale quotation

•B2C: B2C reaches from Online-Shopping, tourism and the booking of a trip, reservations of tickets, to services in finance and insurance and to auctions.

•C2C: Typical C2C-transactions are auctions and file sharing services. Some examples are ciao.de and e-bay.

SPOT BUYING A spot contract, spot transaction, or simply spot, is a contract of

buying or selling a commodity, security or currency for settlement (payment and delivery) on the spot date, which is normally two business days after the trade date.

The settlement price (or rate) is called spot price (or spot rate).

It is in contrast with a forward contract or futures contract where contract terms are agreed now but delivery and payment will occur at a future date.

Example of Spot Buying A simple example : even if you know tomatoes are cheap in July and will be

expensive in January, you can't buy them in July and take delivery in January, since they will spoil before you can take advantage of January's high prices. The July price will reflect tomato supply and demand in July. The forward price for January will reflect the market's expectations of supply and demand in January. July tomatoes are effectively a different commodity from January tomatoes.

It’s summertime, and you’re hosting a big barbecue on the coming weekend. Your gas grill breaks unexpectedly, so on short notice, you head down to your local hardware store and buy a new one. Guess what you just did? You just made a spot buy.

BENEFITS FOR BUYERS Facilitated and accelerated by an online business network, buyers can find

what they need in a way that’s economical, fast, and easy.

They can procure the right product or services from a trusted community, on a platform that ensures they get it at a competitive price, and integrates spot buying with other key buying functions.

Better matches between buyers and sellers mean faster turnaround.

BENEFITS FOR SUPPLIERS Sellers have the opportunity to win business that is immediate, real,

and needs to happen quickly.

These sales are a great way for sellers to show off their capabilities.

A spot buy win could be the beginning of a new customer relationship, or an opportunity to get added business with existing customers.

E-AUCTION

Many Sellers, Many Buyers Buyers and their bidding prices are matched with sellers and their asking

prices based on the quantities on both sides and the dynamic interaction between the buyers and sellers

CONTRACT SELLING

Single seller ,Single Buyer

Buyer and seller make a contract in mutual understanding to sell and buy