The complexities of e-reverse-auction-facilitated aggregated procurement in digitally clustered organisations

Purpose – The purpose of this paper is to present the findings of a study into aggregated procurement in digitally clustered organisations. It brings together key principles including business clustering, e-procurement, aggregation and buyer-seller relationships. The paper identifies complexities associated with conducting reverse auctions for clustered organisations. Design/methodology/approach – A case study of a reverse auction carried out by an independent intermediary forms the basis of the paper. Data presented and analysed include pre-auction and auction performance of participants. Findings – Aggregating company spend and sourcing through reverse auctions poses several challenges. These include a selection of suitable products and services, the behaviour of buyers and sellers in a clustered environment and the identification of a suitable business model for the independent intermediary. It also indicates that not all participants may benefit or benefit significantly from clustered auctions. Research limitations/implications – Understanding of participant behaviour before, during and after e-reverse auctions in single and clustered organisations needs to be better understood. Differences in the mechanisms between single buyer and multiple buyer auctions also need more clarity. Practical implications – For clustered reverse auctions, there is a need to identify products with low build complexity and significant value-add. Otherwise, it may be necessary to form “clusters within the cluster” in order to attain true aggregation. Originality/value – This study examines participant actions in intermediary-facilitated multi-buyer and multi-seller e-reverse auctions. It identifies a number of behavioural issues that relate to this context and that impact on the success of auctions in a digital cluster context