Business attitude to online auctions matures

Fears that online auctions destroy supplier relationships are unfounded, claim industry watchers, but firms remain reluctant to use them for anything but the simplest of purchases.

Auctions are often viewed as adversarial, but a maturing approach to usage is improving supplier relationships, said Helen Aulder, e-practice development officer at the Chartered Institute of Purchasing & Supply.

"Initally suppliers fear they are going to be beaten up on price. But we're seeing that contracts are being won where price is only one of many considerations," she said.

Buyers are finding that detailed specifications must be drawn up in advance to achieve a successful auction. This allows suppliers to ensure they fully understand what criteria their bids are measured on, explained Aulder.

But while some firms have piloted online auctions, business software maker Oracle estimates that only 2,500 took place in the UK last year. Most of these were for routine purchases such as stationery, food and computer equipment.

"Online auctions are a good way to start e-procurement," said Andrew Douglas, senior procurement specialist at Oracle. "People are starting to see favourable results."