Also called e-procurement, a Reverse Auction (RA) is a process that involves the seller bidding to sell their goods to the buyer for a competitive rate. So in other words, the bidder in a reverse auction is the seller, unlike regular auctions where the bidder is the buyer. RAs allow energy consumers to secure a better price on energy costs by getting the absolute rock-bottom price. Here we will outline the benefits of hosting a Reverse Auction.
What is Energy Procurement?
Energy procurement (e-procurement) is a process where energy providers bid against each other in an auction until they cannot drop their prices any lower. This means that the buyer gets the absolute lowest price possible for their energy. These types of utility auctions put the power in the hands of the consumer. Energy deregulation has addressed the monopolization of energy industry has created an open marketplace for energy providers to offer alternatives for energy service.
Reverse Auction Process
The reverse auction process usually begins with an energy broker or the consumer using an online energy procurement auction platform. The auction host inputs the requested service and date of the live auction into the platform. The selection of providers is narrowed down to those that best fit your needs. During the auction, the providers input their offers; competing until the lowest price is reached.
Benefits of Reverse Auctions
RAs offer a variety of benefits to consumers wishing to find the right energy provider. The deregulation of energy came with a consumer learning curve that made it difficult for some consumers to decide what provider to choose. With RAs the decision is much easier because the consumer knows that they are getting the lowest price available.
The time that RAs save consumers is another added benefit. The process of manually contacting each company to determine what program is best presents a logistical burden that many consumers would rather avoid.
The provider’s race to the bottom is another wonderful benefit. There is no need to negotiate for a better price; these companies will often add bonuses to beat competitors. Sometimes these add-on features will greatly benefit the consumer.
There are software platforms intended to help buyers with the process of hosting their own auctions. E-procurement software programs are applications designed to provide an easy-to-use platform for consumers and providers to connect for Reverse Auctions. These applications make it possible for inexperienced consumers to host auctions without the need for a broker.
If you are looking to select a new provider for your energy services, Reverse Auctions offer the control and ease that consumers want in the process of choosing a new energy provider. In the past the consumer had no say so as to how much they were being charged for their energy. Now, with deregulation, customers have the freedom to shop around just as they are with any other product or service. Reverse Auctions take a process that would typically be a chore and make it almost effortless.