1. What kind of Auction Services does eProcurement offer?
2. Who is the target audience for eProcurement.gov.in Auction Services?
3. Why is eProcurement offering Auction Services?
4. What is the value proposition to buyers and sellers?
5. How is what eProcurement is providing different from consumer auctions ?

eProcurement.gov.in Auction Services will provide three different auction applications. At a high level, the following key auction applications offered are:

• Reverse Auction
• Forward Auction
• Exchange

Reverse Auction - RFQ capabilities for the professional buyer
This is a trading model where a buyer invites many suppliers to bid. This model is also known as 'downward' auction. Typically, a seller's lowest bid wins the deal.

A reverse auction will typically be performed by a procurement professional when he or she needs to source goods or services that are not covered by existing contracts or when contracts need to be negotiated or renegotiated. In summary, it is a powerful tool for the professional buyer when:

• faced with a need to procure goods, services, or ad-hoc requests that are off-contract
• consolidating suppliers in a spending category
• looking to source new components or materials, e.g. for product development

Typically, a buyer issues requests for quote, proposal or information (RFQ, RFI, RFP) to suppliers and invites their bid on those requests. Using eProcurement.gov.in Reverse Auction, a buyer can post an RFQ to all eProcurement.gov.in trading partners or to a specified group of selected suppliers and invite them to bid online in an interactive reverse auction event.

eProcurement.gov.in Reverse Auction lends itself to support purchase decisions on direct/strategic high dollar items as well as MRO items and services.

Forward Auction
This is a trading model where a seller offers items to many buyers. This model is also known as 'upward' auction. Typically, a buyer's highest bid wins the deal.

Companies will typically use an online forward auction as a platform to sell slow moving, excess, obsolete inventory items, assets, distressed or returned merchandise. A business-to-business auction lends itself to efficiently liquidate capital binding items. The forward auction model can also be applied as an effective tool to allocate limited capacity or rare goods to customers or to perform price discovery in a new market.

Typically, professional buyers or inventory/supply managers handle this selling process. Using eProcurement.gov.in Forward Auction, items can be posted to all eProcurement trading partners or can be offered to a specified, selected buyer audience, for instance to avoid channel conflicts.

Exchange
This is a trading model where many buyers and sellers can both offer and bid in a dynamic market environment. Typically, exchanges will be in a vertical industry context, where raw materials, commodities, standardized goods or services, financial instruments etc. are traded at dynamic market prices.

eProcurement Auction Services will be available to all trading partners connected to eProcurement.gov.in or any portal in the Global Trading Web (GTW) trading community. This includes all buyers, suppliers, as well as other registered service partners.

Once registered on any portal within the GTW, a company can be visible to all other trading partners in the trading community through the Trade Directory and will be able to participate in global auctions as applicable.

Within a given company, participation in an auction will in all likelihood be limited to the professional buyers and sellers. The average employee or desktop user is typically expected to requisition items and services from existing contracts and would typically not have access to Auction Services.

Most electronic procurement solutions today focus on automating the requisition-to-payment process for indirect goods and services based on pre-negotiated contracts between buyers and sellers. However, unplanned purchases of direct and indirect items and services often require dynamic sourcing from known and unknown suppliers, based on specific purchasing requirements like availability, lot sizes and pricing. This sourcing process, in contrast to the self-serve requisitioning process which can be performed by average employees from their desktops, needs to be performed by procurement professionals.

eProcurement.gov.in Auction Services fundamentally advance global eCommerce beyond mere MRO procurement automation and strict contract-based buying and selling and enable a market-driven dynamic pricing model which is suitable for all item and service purchases and strategic, market-based sourcing. The eProcurement auction capability allows buyers to post requests for quotation (RFQ's) to an open or closed group of suppliers and also allows suppliers to respond dynamically in a reverse auction bidding event. In this way, by helping with the selection of possible suppliers, enabling the best possible match to the buyer's requirements and establishing an actual market price for goods or services, eProcurement.gov.in is now able to provide buyers with an effective sourcing tool.

eProcurement.gov.in Auction Services will also enable eProcurement to further grow the Global Trading Web (GTW). eProcurement.gov.in Auction Services will be one of the business services that attract new trading partners to the eProcurement.gov.in and other marketplaces in the GTW. It will further establish eProcurement and the GTW as a true business-to-business electronic commerce platform where trading partners can find each other, validate each other's trading credibility, establish contact, exchange offers and bids and start trading online in an effective and frictionless manner. New parties will be attracted to the portal either as they are invited to participate in auction events by potential trading partners or as they access public auction areas on the portal and register in order to become visible to the network of connected trading partners

Open sourcing, as enabled by eProcurement.gov.in Auction Services, presents new value propositions for both buyers and sellers. Current e-procurement ROI is based primarily on improving productivity, while reducing administrative costs and cycle time. With auction capability, buying organizations can actively drive down the cost of goods and services purchased. Sellers can promote special offers to preferred customers or liquidate merchandise among a large community of bidders. To reflect preferred trading relationships, eProcurement.gov.in Forward Auctions and Reverse Auctions can be conducted among a select group of buyers or sellers, or they can be open to all participants on eProcurement or other portals.

Buyer Benefits
Traditionally, the sourcing process has been handled by buyers through RFQ's, RFP's or RFI's (Request for Quote, Proposal or Information) submitted to suppliers via mail, telephone, fax or EDI, involving many manual tasks and hand-offs. Using eProcurement.gov.in's Internet transaction and Reverse Auction capability, buyers can reduce the cost of goods sourced by improving overall process efficiency and by establishing true market prices for goods and services. Other buyer benefits include:

• Sourcing and selection of suppliers from a worldwide seller community
• Shorter supplier negotiation cycles
• Additional sourcing capability for hard to find and discounted items from surplus or excess inventory

Supplier Benefits
Auction capability enables sellers to cost-effectively liquidate obsolete and excess inventory or undesirable merchandise, and gain access to an expanded market of buyers. Typically, today this type of liquidation is often handled by a third-party liquidation service who will sell items at supplier's cost. Via eProcurement.gov.in, sellers can maintain better control of unwanted merchandise through auctions in which the seller directly defines the minimum price and terms. Typically, sellers are able to realize sales prices of 20 to 30% above cost. In summary, seller benefits include:

• Convenient access to new low cost sales channels
• Access to a worldwide market of buyers
• New revenue opportunity

There are a number of key differences between person-to-person or business-to-consumer (B-to-C) and business-to-business (B-to-B) auctions.

First, participation of trading partners is more rigorous and regulated in the B-to-B world. While any Internet user can sign up to sell and buy products in a B-to-C environment, buyers and sellers need to be registered trading partners of the eProcurement.gov.in or Global Trading Web (GTW) trading partner community to participate. As part of the registration process, new trading partners are checked for company background, credit history etc. to ensure low risk trading relationships.

Second, disclosure of trading partner information in a particular auction event is usually treated more sensitively in a B-to-B environment. Popular consumer auctions focus heavily on attracting a large number of participants to compete in an ascending price auction where information about who is bidding how much is typically disclosed. In a eProcurement MarketSite Auction event, bidding vendors would typically not be able to see who the competing vendors submitting competitive bids are. This information would only be transparent to the party inviting the bid.

Third, market rules and business rules defining auction events are much more sophisticated in a B-to-B environment. In B-to-C, most auctions are traditional ascending or forward auctions; very few auction sites offer reverse auction capabilities. Also, when creating an auction, a seller may typically only be able to modify some simple auction parameters such as quantity, minimum bid and auction duration. Such a 'one-size-fits-all' approach is not suitable for B-to-B auctions as trades are typically higher, items are more complex and trading partner relationships are more strategic. Therefore, buyers and sellers using eProcurement.gov.in Auction Services have a wide choice of different auction designs and business rules that support their individual requirements for sourcing and trading decisions.

Fourth, item and service catalogs and descriptions are more regulated and standardized in the B-to-B world. In a B-to-C environment, there are little restrictions to what can be listed and listings can be fairly freeform. In B-to-B, items and services need to have meaningful descriptions and must be categorized in a standardized way so they can easily be retrieved and recognized by parties submitting offers and bids. eProcurement.gov.in Auction Services offer a categorization and description of items and services leveraging existing supplier catalog taxonomy.

Fifth, business transactions following an auction event are only supported in a B-to-B environment. B-to-C auctions will typically end with an established deal once the event closes. Upon closing, it is often left to the parties to perform the actual transaction, i.e. shipping of the item and paying for it. In contrast, when a deal is closed through eProcurement.gov.in Auction Services, buyers and sellers will be able to fully leverage eProcurement.gov.in's B-to-B electronic commerce transaction capabilities. A buyer can submit a purchase order for a trade established in an auction event to the respective seller. Transaction of subsequent business documents such as the invoice, as well as shipping and payment, can all be handled through the eProcurement trading platform. In this way, the B-to-B auction becomes part of an end-to-end B-to-B 'source to cash' process that can be performed electronically in a seamless manner between trading partners who may never have done business with each other before.