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Competitive Pricing

Reverse online auctions will have suppliers racing to beat each others' bids.

This story appears in the August 2002 issue of Entrepreneur. Subscribe »

If you've ever bid on an item on eBay, you've seen theway your business will probably someday purchase everything fromoffice supplies to critical production materials--in reverse.Online reverse auctions, or downward price auctions, stand thetraditional rising price or English auction on its head. Buyers putout specifications for what they want to buy, and sellers submitbids electronically until someone wins the business.

Online reverse auctions came into being about the time theInternet became popular. So-called dynamic pricing commerce, mostof which is online reverse auctions, will top $45 billion or 15percent of all e-commerce in 2002, rising to $500 billion in 2006,says Rob Rosenthal, e-commerce analyst at research firm IDC.

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