Do not try to recoup perceived losses post-auction by charging exorbitant fees for change orders. In addition to expecting that a supplier will maintain the same level of quality, buyers expect that the supplier will maintain the same ethics and fair price structures that they have in the past. Charging more might help a supplier’s profits in the short term, but when the contract ends, chances are the buyer will drop the supplier. Furthermore, if a supplier gains a reputation in the marketplace as being deceitful, the chances of that supplier being invited to other auctions will severely diminish.
Exceptions are made for honest, data entry errors. Any errors submitted during an auction should be immediately reported to the Buyer to prevent disruption of the auction. Many e-Sourcing software providers can support a process for managing auction-related errors. It is important that the e-Sourcing software can technically remove bids placed in error.
This includes any discrepancies or inaccuracies the supplier may find in the RFQ and timeline. The buying team should establish a process for handling this type of feedback. Additionally, the e-Sourcing software should have a technical ability to accept comments from the suppliers.
If the buyer thinks a supplier is participating solely to collect market intelligence, not only is it likely that the buyer will not award that supplier any business, but it is also likely that the supplier will not be invited to participate in future auctions. If a supplier gets a bad reputation by word of mouth, it could be a long time before that supplier is invited to another auction.
Interested suppliers cannot sabotage the auction process by submitting bids via email, fax, post or orally. To be considered, all bids must be submitted via the online auction.
Avoid this barrier by openly communicating with suppliers at all times, particularly with regards to the award criteria. Be very clear as to what will be the critical factors determining who will win the business, when possible what weight is given to each, and how it will be assessed. Only use the pre-established forums for communication, consistently and honestly follow up on any and all issues that arise, and stick to the code of ethics, which should be available to all suppliers at all times.
Furthermore, if the buyer doesn’t follow through on award and contract negotiations quickly, the buyer could lose credibility in the marketplace. It is very important that all auctions conducted by the Sourcing Team are managed in a consistent and ethical manner. News travels fast, especially when suppliers feel they have been treated unethically or unfairly.
Online auctions are not just electronic markets that connect buyers and sellers; they also are services thatcan be used to improve the purchasing/sales efficiency and decision making of auction participants (Kambil and Van Heck 2002). Much literature has been written on the use of ‘comparison-shopping’ agents to automate the search for price and product information across multiple online merchants simultaneously (Clark 2000; Crowston 1996; Doorenbos et al. 1997). Online auctions provide potential buyers and sellers with a unique ability to use similar software agents to improve their purchase and sales outcomes. This section examines the availability and use of agents on several B2C and C2C online-auction sites to gain a better understanding of how agents impact online-auction processes. The first part of this study involved gathering data on auction site activity and the availability of different software agents at various online-auction sites. This data was used to determine what agent-based services are currently being provided at different online-auction sites. The various types of agent-based services are discussed in the remainder of this section.
source: Anonymous (2002) ‘EBay Help Basics’, online at: http://pages.ebay.com/help/basics/ [accessed 5 February 2002].
Bakos, Y. (1998) ‘The Emerging Role of Electronic
Online auctions have become big business, with millions of items for sale at any given time. (5 million+ at eBay alone, right now.) Tens of thousands of people around the world currently make a full-time living selling items through Internet auction houses.
One reason for their incredible growth and popularity is that they make it easy for people to find great deals on hard to find items from around the world. The excitement also makes them prime hunting grounds for scam artists, ready to play on the desire many auction bidders have for that "unbelievable deal."
We want to mention right off the bat that the vast majority of sellers and buyers at online auctions are honest people, and deliver on their promises. According to eBay, only one auction in 40,000 on their site ends with a reported case of confirmed fraud.
That doesn't take into account unreported cases, and it's little comfort if you're the one in 40,000.
In fact, auction fraud accounts for roughly 48% of online fraud reports to the FTC. Almost 500 reports per week. And the fraud isn't solely committed by the sellers. Buyers can be just as sneaky.
So, what can you do to protect yourself, short of simply staying away from the online auctions? Plenty. The most important thing is to learn the ropes.
If we had to offer you just one piece of advice about buying and selling on online auctions, it would be to always carefully check the feedback on the seller you're considering buying from. We don't ever buy from a seller who doesn't have at least 10 positive reviews. (More on this later.) If you're the seller, check out the buyer's feedback as well.
If you are really concerned, consider using an escrow service. There's a price of course, but it may be worth it.
Here are descriptions of the most common fraud seen at auctions, condensed from an article by Sharon Curry.
Misrepresentation: One of the oldest tricks in business. Just what it sounds like. Or more accurately, the merchandise ISN'T what it sounds like. Value, authenticity or condition may be overstated, sometimes wildly.
Failure to ship merchandise: The merchant takes your money and runs, leaving you nothing but a lighter wallet for your troubles.
Failure to pay: Through the use of fake money orders, bounced checks, stolen credit cards, or a number of other techniques, the buyer gets the goods and leaves the merchant with nothing in return.
Shilling: Artificially inflating the price on an item by use of fake bids from phony user IDs or accomplices.
Bid Shielding: Using high bids from phony accounts to run up the price and scare off potential buyers, the actual bidder then retracts the higher bids, getting the item at a much lower price than he would have otherwise.
Piracy and counterfeiting: The sale of pirated music and software or counterfeit art, phony jewelry or gems, and forged collectibles.
Internet Fencing: Selling stolen goods through the auction.
Triangulation: The seller offers to send you the item (usually new, brand name goods) on approval. They then use stolen credit cards to order the item shipped to you. You pay for the goods (in cash) after receiving them, and get a visit shortly thereafter from the police. Credit card fraud and theft.
The "Buy and Switch": The buyer gets the merchandise and returns a similar item that has been damaged, or a fake, with the claim, "It isn't what I expected." The seller refunds their money, and is left with broken and unresellable product.
Fee stacking: Fees, usually "related" to shipping costs, are added to the cost after the sale has been made.
Loss or Damage Claims: Not always fraudulent. After all, things do get broken in transit. Often these claims are a result of the buy and switch, or careless handling by the buyer.
Shell Auctions: No merchandise exists. The sole purpose of the auction is to get money or credit card numbers from unwary buyers.
source :
Electronic marketplaces can provide several types of business processes depending upon their target audience. A form of such processes is electronic auctions. Several companies have built and marketed auction software. Flexibility in customizing the software has been a design goal of many auction systems. However, due to the lack of flexible design methods and implementation technologies flexibility is achieved only in some degree. The topicality of this problem is also recently increased as new advanced auction formats such as combinatorial and multi-attribute auctions are introduced. In order to preserve the flexibility in this new context new technologies have to be introduced for designing and implementing advanced electronic auction systems. In order to achieve this goal, BPMN in the design of auction formats, BPEL4WS in implementing the auction processes, and mobile web services in implementing the interaction of mobile users. Technologies can be put together to form a working electronic auction system that can be easily modified as the requirements or target audience changes and also illustrate the use of such a system in supply chain management.
Source: http://www.actapress.com/Abstract.aspx?paperId=27717
