A Comprehensive Guide To Reverse Auctions

In conventional industrial auctions, the highest bidder procures used industrial equipment. In fact, irrespective of being a business liquidation or otherwise, most auctions function in a similar fashion. A seller has one or multiple pieces of surplus equipment that are auctioned off in lots. Multiple buyers or bidders quote their price for a particular auction lot, with the highest bidder securing the equipment. However, in the case of reverse auctions, the rules are quite different. Their definition, criteria, pros and cons will be addressed below.

What Is A Reverse Auction?

In a reverse auction, the event is centered around the buyer instead of the seller. The buyer lists out the goods and equipment required before the auction, and multiple sellers bid their products and services to the buyer. The seller with the lowest price quotation wins the bid.

Criteria For Reverse Auctions

The fundamental criteria to fulfill are multiple sellers. Furthermore, these sellers must offer the specific goods or machinery that is sought after by the buyer. Therefore, it is often not a viable option for niche industries. Moreover, the auction also relies heavily on the reputation of the buyer. Hence, reverse auctions are typically reserved for large corporations or government bodies.

Pros And Cons Of Reverse Auctions

The pros and cons of reverse auctions are closely correlated. Due to multiple sellers and a single buyer, the buyer has a financial edge. Hence, they can procure quality goods at a competitive price. This advantage can also become a major drawback if the seller is not reputable, as they can sell equipment or material that is sub-standard, making it a detrimental investment for the buyer. Of course, with stringent quality checks and documentation in place, it can be avoided.

Infinity Asset Solutions is a global leader in the field of Industrial and commercial auctions. We are a full-service asset solution provider ready to help you obtain the best value for your surplus equipment. Our services include machinery auctions, appraisals, audits, financing and business liquidation. Contact us today to obtain the best value for your assets!