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The seller who places the lowest bid will win the job or sell the item. Sellers then place bids for the amount they expect to be paid in order to perform such a service or provide such an item. Buyer makes an advertisement on the need of an item or service, in the case of reverse auction. The person who makes the highest bid usually ends up with the item. Purchaser is allowed to place a bid on an item on the amount that he is willing to pay so that he can buy that item, generally in an auction. And e-auction, e-sourcing, sourcing event, this is also known by many names like procurement auction. Reverse auction deals with internet auction and e-purchasing.

Reverse auction also saves valuable time of buyers. Individuals and companies save from 10 to 40 percent on reverse auction purchases, on average. Certain things like age of the item and quality of the item may be discussed beforehand, if the buyer wants to purchase an item. All these things are discussed at the meeting, budget of the job; the time frame to complete the job, certain things like the materials that are needed to complete the job. Purchaser and seller discuss the requested service, in the meeting. Who is also known as the market maker, it begins with the meeting that takes place between the buyer and the seller. Lot of planning is required when reverse auction takes place on Internet.

It can be defined as specialized auction that allows the organization to procure goods from the sources by featuring decreasing incremental bidding. Reverse auction is a tool available for the procurement in improving its function as well as its effectiveness. Periodical rate contracts and large volume goods, direct materials, applicability of online reverse auctions is for capital goods. And a tool for efficient price discovery complementing the direct negotiation process, dynamic bidding process, benefits of online reverse auction to buyers are it is accessible to a large number of vendors. It ensures savings in marketing costs and distributor margins. Certain benefits on online reverse auction are there is flexibility in pricing decisions. And selection of reverse auctions make them the ideal choice for anyone looking to join the internet auction purchasing revolution, simplicity, savings. Currently more than 20 percent of all business purchases at least some of their supplies or service online. Also buying services and supplies online, as the popularity of online reverse auction has increased.