“A rose by any other name would smell as sweet.” Would an e-auction by any other name cause the kind of visceral reaction the word “e-auction” does? Words have power, and they also change over time. We can lose a job through layoffs, reductions in force, reorganizations, or streamlining the workforce. And while those phrases all have different connotations, the result is ultimately the same for those affected: job loss. I’ve heard e-auctions called a number of different terms, from reverse auctions to interactive bids, always seeking a less-stigmatized word. Today let’s talk about some of those other phrases, how they differ from e-auctions (if at all), and my take on when to rename an e-auction.
Spelling
My book (Transform Procurement: The Value of E-auctions) and the only other book I know of currently in print (A Practical Guide to E-auctions for Procurement) both use “e-auction” or “E-auction” at the beginning of a sentence to describe the online negotiation tool where bidders place bids until they reach their bottom (or top) dollar and reach true market rates. More on what an e-auction is in this article, and why they are a chainsaw (not a hammer) in this article. I have also worked at companies who use “eAuction,” not capitalizing the “e” if it appears at the beginning of a sentence, and “e-Auction,” always capitalizing the A regardless of how the “e” is capitalized or not.
My editor preferred the non-capitalized “A” because of how it reads and flows on the page. Curiously, I have not seen “eauction” and “Eauction” in much use, likely because it is simply not mainstream enough to shed its strange spelling the way “Email” or “e-mail” became “email” over time. I typically use “e-auction” because that is the version in print and is consistent with my book, but I wanted to note that you may also see “eAuction” and “e-Auction” in the wild.
Reverse Auction
Early on, the term “Reverse Auction” was common for what we now call an e-auction. I find many people use the terms e-auction and reverse auction interchangeably, but these are not actually the same. An e-auction can be forward or reverse, as long as it takes place electronically. Ebay is a forward e-auction platform, as are the tractor-buying websites my husband uses to overpopulate our farm with equipment. In a forward auction, bidders increase their bids over time and the auction host seeks the highest number for their award. This is typically a seller auctioning off something for the highest price, but it doesn’t have to be. In the procurement space, I like to use forward e-auctions to auction the best value for a set price. This might be auctioning a number of sales leads for a set price, or a guarantee of customer impact for a budgeted price (in the utility space, this means auctioning off the number of kWh the customers will reduce for the set energy efficiency budget. And yes, I know this statement is deep into the weeds for non-utility practitioners).
Sometimes when I’m trying to explain an e-auction to someone new, I use the phrase “reverse auction” and it helps them understand what it is. I don’t typically see companies calling it a “reverse auction program,” nor do I usually see this branding in communications to internal or external stakeholders. But “reverse auction” is an alternate name for an e-auction, so I’m including it here. I do think the phrase “reverse auction” carries a little less stigma than “e-auction” and is a little more descriptive, but it doesn’t roll off the tongue easily and so is not in broad use.
E-Something Else
There’s a whole category of names that are e-something-that-isn’t-auction. In this category are “e-sourcing,” “e-negotiation,” and “e-BAFO.” I consider e-sourcing to be the sneakiest of these for suppliers. After all, e-sourcing would also cover Requests for Proposal (RFPs) in a source-to-pay platform, maybe negotiating a contract using a contract lifecycle management tool, and even purchasing directly from catalogs of parts (like Staples office supply catalogs or punchouts). E-sourcing is a fairly vague term and using it specifically for e-auctions is misleading.
The term e-negotiation is less vague and more of a direct replacement for e-auction. Again, it is slightly broad because e-negotiation might refer to negotiating a contract or parameters other than a bottom-line number (note I don’t say price, as e-auctions can definitely be used to negotiate numbers other than price, such as lead time).
The last term in this category, electronic best-and-final-offer, or e-BAFO, is my favorite of the three. It does mean that you’re running an RFP or Request for Quote ahead of the e-BAFO and it implies the e-auction is simply the opportunity for suppliers to come forward with their final offer. This is how I like to use the e-auction tool, and so it dovetails into the process nicely. I’ve used this term before to describe e-auctions and had some success with it. At one point in one e-auction program, all supplier communications evolved to use the term e-BAFO instead of e-auction. E-BAFO does not work well when going straight-to-auction, however, which is sometimes a good path for an e-auction. Usually for straight-to-auctions I advocate for three things in place:
- An acceptable set of contract terms in place (or if PO terms are acceptable for that category)
- More than one supplier is fully qualified, not requiring any qualification after the e-auction
- The scope of work is crystal clear with no unknown parameters
Side note: I just realized I don’t have an article on straight-to-auctions. Consider it added to the queue!
Totally Different Names
So far the only totally different name for e-auctions I’ve encountered in the wild is “Interactive Bid.” This is an interesting name, usually abbreviated “I.B.” when talking about them within the company, and does tend to cause some initial confusion. It sounds kinder and gentler than e-auction, and completely removes itself from the stigma of the term “e-auction.” It implies the supplier is part of the process, interacting in the competitive environment alongside their peers. In my experience, the supplier is initially inquisitive and uncertain, but soon learns that an interactive bid is simply an e-auction. Then the supplier starts calling the process an e-auction regardless of branding. Instead of one, friendlier term for e-auction (interactive bid), there are now two terms floating around and the new term starts to carry the e-auction stigma.
The Bottom Line
I am not, in general, in favor of rebranding e-auctions. Just like with the terms layoffs, reduction in force, reorganization, and all the other names for firing a large number of people from a company; eventually all of them simply carry the same stigma as the first term used and rebranding efforts are useless. In this article we’ve talked about the terms:
E-auction, eAuction, e-Auction
Reverse auction
E-sourcing, e-negotiation, e-BAFO
Interactive bids
Of these, my favorite (other than e-auction) is e-BAFO, when an e-auction is truly serving as the best-and-final-offer process following an RFP or RFQ. Ultimately, I would strongly prefer to instead continue fighting the tide of stigma and focus on the benefits to suppliers of e-auctions:
Speed – Suppliers receive immediate feedback on where they are in the market and if they have won the business. This allows them to start preparing and lining up resources to complete work/fulfill orders even before they receive the purchase order. Without an e-auction, they are left to wonder for days, weeks, or even months if they have won the business.
Transparency and fairness – Suppliers gain information about where the market is for given work and may even gain additional information on where they are most competitive depending on the e-auction setup. It is better than the “three bids and a buy” scenario because all qualified suppliers are invited to bid on the work, not only the three preferred by a given technical or procurement team member. Many suppliers see additional opportunities through an e-auction program. All qualified suppliers have equal opportunity to win the work, it is not based on the ability of one supplier to send sales representatives to visit the procurement team or the prettiest PowerPoint presentation.
Clarity – Knowing a bid may go to e-auction for the final negotiation causes the technical team to write a more complete, clearer, and stronger scope of work. It is the nature of e-auctions to demand clarity of the item or service in negotiation, and so that clarity naturally follows when technical teams know the work is likely to go to e-auction.
While I sometimes feel like I’m in the minority fighting against this stigma, it is strongly my preference that we help suppliers understand that they do benefit from this process. I’ve seen companies start e-auction programs, have suppliers complain about that process, and then end the e-auction program due to those supplier complaints. But then, the suppliers complained the e-auction program went away! Suddenly they see fewer bid opportunities as technical teams simply pick their favorite RFP response and not the one with the best value. Suppliers wait weeks to find out if they received the award and then have to scramble to put a team/program/inventory in place to serve that award in a hurry. Suppliers start to see a return to vague scopes of work that basically amount to “our incumbent supplier knows what we need.” While no one likes their margins squeezed, e-auctions do get pricing to market rates and provide suppliers valuable feedback on where they are most competitive.
While in some circles I feel like I’m the only one fighting against the e-auction stigma, rebranding it another name doesn’t actually change the perception of e-auctions as a negotiation tool. If you’re thinking about launching or rebranding your e-auction program, work instead to talk about e-auctions in terms that highlight supplier benefits and encourage honest conversations with supplier partners about the value they bring.
If you would like to talk about your e-auction program branding, let’s chat. If you’d like to get these articles weekly straight to your inbox and never miss one, sign up for my newsletter.
My book, Transform Procurement: The Value of E-auctions is now available in ebook, paperback and even hardcover format: https://www.amazon.com/dp/B0F79T6F25
