Reverse electronic auctions and industrial buying behaviour : case studies in the telecommunication industry

Industrial purchasing stands for more than half of the whole economic activity in industrialized countries. Reverse electronic auction (REA) is an electronic procurement tool proven to make the traditional purchasing situation more efficient and to create substantial price reductions. Hence its usage is increasing rapidly and the way it distresses suppliers have created a vast concern in sales and market related activities. In relying on the notion that the sell-side of organisations can be aided by knowledge of buying activities this topic has been carried out by a combinatorial view of REAs and the well-anchored area: industrial buying behaviour. Thus the formulated research problem is to investigate how the buying behaviour when using reverse electronic auctions can be described in the telecommunications industry. This is conducted by investigating the buying process, buying center and the most important choice criterions when procuring through REAs. In order to investigate this area, one case study has been done at an early adopter of REA in the global telecommunication industry, namely Vodafone Group Plc. Another case study was conducted at Ericsson, one of the leading suppliers of telecom equipment, which has implemented REAs as a part of their everyday sourcing activities. The findings offer a framework integrating traditional buying behaviour with current REA theories. An emerged buying process when procuring through REAs and a somewhat less extensive buying center is presented. When investigating the choice criterions, it is found that price is not as important as expected. Rather, the effect of ‘price compression’ is defined and identified as a major finding of REAs. Concluding this thesis guidelines are provided for the activities that sales and marketers thoroughly should recognize for successful REA participation.Validerat; 20101217 (root