Journal of the Academy of Marketing Science

, Volume 30, Issue 4, pp 506–525 | Cite as

Online reverse auctions: Issues, themes, and prospects for the future

  • Sandy D. Jap
Article

Abstract

Online reverse auctions are increasingly being used in industrial sourcing activities. This phenomenon represents a novel emerging area of inquiry with significant implications for sourcing strategies. However, there is little systematic thinking or empirical evidence on the topic. This article reviews the use of these auctions in sourcing activities and highlights four key aspects: (1) the differences from physical auctions and those of the theoretical literature, (2) the conditions for using online reverse auctions, (3) the methods for structuring the auctions, and (4) the evaluations of auction performance. Some empirical evidence on these issues is also provided.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Anderson, Erin M. and Barton A. Weitz. 1992. “The Use of Pledges to Build and Sustain Commitment in Distribution Channels.”Journal of Marketing Research 29 (February): 18–34.CrossRefGoogle Scholar
  2. Anderson, James C. and James A. Narus. 1991. “Partnering as a Focused Market Strategy.”California Management Review 33 (3): 95–113.Google Scholar
  3. Ariely, Dan, Axel Ockenfels, and Alvin E. Roth. 2001. “An Experimental Analysis of Late-Bidding in Internet Auctions.” Working Paper. Sloan School of Management, MIT, Cambridge, MA.Google Scholar
  4. — and Itamar Simonson. 2002. “Buying, Bidding, Playing, or Competing? Value Assessment and Decision Dynamics in Online Auctions.” Working Paper. Sloan School of Management, MIT, Cambridge, MA.Google Scholar
  5. Axelrod, Robert. 1984.The Evolution of Cooperation. New York: Basic Books.Google Scholar
  6. Bajari, Patrick and Ali Hortaçsu. 2000. “Winner’s Curse, Reserve Prices and Endogenous Entry: Empirical Insights from eBay Auctions.” Working Paper. Stanford University, Stanford, CA.Google Scholar
  7. Battalio, R. C., C. A. Kogut, and D. J. Meyer. 1990. “The Effect of Varying Number of Bidders in First-Price Value Auctions: An Application of a Dual Market Bidding Technique.” InAdvances in Behavioral Economics. Vol. 2. Eds. L. Green and J. H. Kagel. Norwood, NJ: Ablex.Google Scholar
  8. Cohn, L. 2000. “B2B: The Hottest Net Bet Yet?”Business Week, January 17, pp. 36–37.Google Scholar
  9. Cox, J. C., V. L. Smith, and J. M. Walker. 1988. “Theory and Individual Behavior of First-Price Auctions.”Journal of Risk and Uncertainty 1:61–99.CrossRefGoogle Scholar
  10. Dyer, D., John H. Kagel, and D. Levin. 1989. “Resolving Uncertainty About the Number of Bidders in Independent Private-Value Auctions: A Experimental Analysis.”RAND Journal of Economics 20:268–279.CrossRefGoogle Scholar
  11. “E-Auction Playbook.” 2001.Purchasing, June 21, pp. S1–S33.Google Scholar
  12. Emiliani, M. L. 2000. “Business-to-Business Online Auctions: Key Issues for Purchasing Process Improvement.”Supply Chain Management 5 (4): 176–186.CrossRefGoogle Scholar
  13. Emiliani, M. L. and D. J. Stec. Forthcoming. “Squaring Online Reverse Auctions With the Caux Round TablePrinciples for Business.” Supply Chain Management.Google Scholar
  14. Ganesan, Shankar. 1994. “Determinants of Long-Term Orientation in Buyer-Seller Relationships.”Journal of Marketing 58 (April): 1–19.CrossRefGoogle Scholar
  15. Garvin, Susan and John H. Kagel. 1994. “Learning in Common Value Auctions: Some Initial Observations.”Journal of Economic Behavior and Organization 25 (3): 351–373.CrossRefGoogle Scholar
  16. Häubl, Gerald and P. T. L. Popkowski Leszczyc. 2001. “The Effect of Minimum Prices on Value Judgments in Auctions.” Working Paper. School of Business, University of Alberta.Google Scholar
  17. Jap, Sandy D. 2001. “The Impact of Online Reverse Auctions on Buyer-Supplier Relationships.” Working Paper. Emory University.Google Scholar
  18. Kagel, John H. 1995. “Auctions: A Survey of Experimental Research.” InThe Handbook of Experimental Economics. Eds. J. H. Kagel and A. E. Roth. Princeton, NJ: Princeton University Press.Google Scholar
  19. — and Dan Levin. 2001. “Behavior in Multi-Unit Demand Auctions: Experiments With Uniform Price and Dynamic Vickrey Auctions.”Econometrica 69 (2): 413–454.CrossRefGoogle Scholar
  20. Kumar, Nirmalya, Louis W. Stern, and Ravi Singh Achrol. 1992. “Assessing Reseller Performance From the Perspective of the Supplier.”Journal of Marketing Research 29 (May): 238–253.CrossRefGoogle Scholar
  21. McAfee, R. Preston and John McMillan. 1987. “Auctions and Bidding.”Journal of Economic Literature 25 (2): 699–738.Google Scholar
  22. Milgrom, Paul. 1989. “Auctions and Bidding: A Primer.”Journal of Economic Perspectives 3 (3): 3–22.Google Scholar
  23. — and Robert J. Weber. 1982. “A Theory of Auctions and Competitive Bidding.”Econometrica 50:1089–1122.CrossRefGoogle Scholar
  24. Morgan, Robert M. and Shelby D. Hunt. 1994. “The Commitment—Trust Theory of Relationship Marketing.”Journal of Marketing 58 (July): 20–38.CrossRefGoogle Scholar
  25. Roth, Alvin E. and Axel Ockenfels. Forthcoming. “Last-Minute Bidding and the Amazon Auctions on the Internet.”American Economic Review.Google Scholar
  26. Ruekert, Robert W. and Gilbert A. Churchill Jr. 1984. “Reliability and Validity of Alternative Measures of Channel Member Satisfaction.”Journal of Marketing Research 21 (May): 226–233.CrossRefGoogle Scholar
  27. Smith, Nathan. 2002. “Dynamic Pricing Effects on Strategic Sourcing and Supplier Relations.” Leaders for Manufacturing Thesis. Massachusetts Institute of Technology.Google Scholar
  28. Swinkels, Jeroen M., 2001. “Efficiency of Large Private Value Auctions.”Econometrica 69 (1): 37–68.CrossRefGoogle Scholar
  29. Tully, S. 2000. “The B2B Tool That Really Is Changing the World.”Fortune, March 20, 132–145.Google Scholar
  30. Wang, Ruqu. 2000. “Bidding and Renegotiation in Procurement Auctions.”European Economic Review 44:1577–1597.CrossRefGoogle Scholar
  31. Weitz, Barton A. and Sandy D. Jap. 1995. “Relationship Marketing and Distribution Channels.”Journal of the Academy of Marketing Science 23 (4): 305–320.CrossRefGoogle Scholar
  32. Wilcox, Ronald T. 2000. “Experts and Amateurs: The Role of Experience in Internet Auctions.”Marketing Letters.Google Scholar

Copyright information

© Academy of Marketing Science 2002

Authors and Affiliations

  • Sandy D. Jap
    • 1
  1. 1.Emory UniversityAtlantaUSA

Personalised recommendations