As the name suggests, reverse auctions are, in many respects, the opposite of traditional auctions. In a traditional auction, a seller offers an item, and potential buyers compete with each other for the purchase. Potential buyers continue to drive the price up until no other participant is willing to bid any higher.
In a reverse auction, multiple suppliers are vying to sell goods and services to a single buyer. The potential suppliers are driving the price down until a pre-established bidding period ends or until no supplier is willing to offer an even lower price. Contrary to traditional tender processes, reverse auctions allow companies to submit multiple prices.
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