Reverse auction software for small businesses

In a normal auction, buyers bid the price up. In a reverse auction, it's the other way around: you're the buyer, and your suppliers bid the price down to win your order.

You describe what you want to buy, invite the suppliers you'd buy from, and set a time when bidding closes. Until then, each supplier can lower their price as often as they like. When it closes, you see every supplier's final price side by side and decide who gets the order.

The difference from asking for quotes is that the price can move. With a request for quotes, each supplier sends one price and that's it. In a reverse auction, a supplier who sees they're not the lowest gets the chance to do better before the deadline.

Most writing about reverse auctions is aimed at large companies running company-wide purchases. They work for a small team too, on everyday orders: a batch of fasteners, a pallet of packaging, a run of electrical parts. If you're a distributor or buying agent sourcing for your own customer, they work the same way.

A reverse auction works when a few things are true at once:

• Two or three suppliers, at least, can supply exactly what you need.
• The item can be described precisely, so every bid is for the same thing.
• The order is big enough for suppliers to care about winning it.
• Price matters most, and the suppliers are otherwise close on delivery and quality.

It's the wrong tool in these cases:

• Only one supplier can supply it. There's nobody to compete against. Ask for a quote and negotiate.
• The order is small. On small orders, suppliers often don't bother to compete. You'll get one bid, or none, and you could have had a quote faster.
• The item is custom. If the spec needs back-and-forth before anyone can price it, an auction forces a price before the questions are answered. Sort out the spec first, then ask for quotes.
• The relationship matters more than this price. If a supplier holds stock for you or gets you out of trouble when things go wrong, pushing them into a price fight over one order can cost you more than you save.

None of these mean auctions are bad. They mean an auction is one way to buy, and some orders are better as a phone call.

Most reverse auction software is built for large procurement teams, and priced that way. If you're a small team running a handful of auctions, these are the things that matter:

1. Suppliers bid without creating an account. This matters more than anything else on the list. A supplier who has to sign up to a portal to bid on one order often won't. An email link they can open and bid from is what gets you bids.
2. Invites from your company, not the software's. Suppliers answer people they know. An invite that arrives in your company's name is less likely to be ignored.
3. Proof the invite arrived. If a supplier doesn't bid, you want to know whether they saw the email or it bounced.
4. Bidding by line, and split awards. On a multi-line order, you want each line priced separately and the freedom to award line by line.
5. Open or blind, your choice per auction. Different suppliers and markets suit different formats.
6. A choice of bidding rule. Sometimes you just want each supplier's best quote under a ceiling you set, revised as often as they like. Sometimes you want every new bid to beat the current lowest, so the price can only go down. A tool that does only one of these forces every order into the same shape.
7. Scheduled start and end. So you can set an auction up in the morning and have it run in the afternoon without sitting there to start it.
8. Protection against last-second bids. An automatic extension when someone takes the lead near the end.
9. Reminders and alerts. A reminder to suppliers who haven't bid, and an alert to a supplier who's been outbid, both bring more bids in.
10. A clear result. A comparison of every bid on every line that you can share or file, not a screen you have to screenshot.
11. Pricing that suits a few auctions a year. Check the price for the number of auctions you'll actually run, and whether it renews automatically.
12. A free way to try it. You should be able to run a real auction before you pay.

• Not telling suppliers how it works. A supplier who's never seen a reverse auction may send one price and wait, or think the deadline means something else. One line in the invite, saying they can lower their price as often as they like until it closes, gets you more bids.
• Changing the rules after the bids are in. If price isn't the only thing you'll judge on, say so up front, for example "we'll weigh lead time too". Awarding to someone who wasn't lowest, without warning, makes suppliers less keen next time.
• Running every purchase as an auction. Suppliers get tired of competing on every small order, and some stop bidding. Save auctions for the orders where competition makes a real difference.
• Inviting suppliers you'd never buy from. If a supplier wins, you have to be ready to give them the order. Inviting one you'd turn down is unfair to them and to everyone who bid against them.

SourcingHQ is a sourcing assistant that runs reverse auctions for small teams buying from their own suppliers.

• Setting up. Describe the purchase in a chat, or forward an inquiry email, and you get a draft auction with the line items filled in from the text of the email. The AI doesn't invent lines, and you review everything before it goes out.
• Who to invite. It suggests suppliers from your own history, including the ones who never bid. A new account has no history yet, so the suggestions get better as you run auctions. (How to keep that history yourself.) It can also suggest new supplier candidates from the web based on your location, though contact details aren't always available.
• Inviting. Invites go out in your company's name, and you can see the delivery status of each one. Suppliers bid without creating an account. Bid reminders go to suppliers who haven't bid, and outbid alerts tell a supplier when they've lost the lead.
• Running it. Auctions can be scheduled, and you choose open or blind each time. Suppliers bid line by line. If someone takes the lead in the last 2 minutes, the clock resets to 3 minutes, so nobody wins with a last-second bid.
• The result. You get a comparison report and a PDF, with an AI summary you can accept, edit or discard. You can award the whole auction to one supplier or split it line by line.

The AI never sends, awards or contacts suppliers on its own.

SourcingHQ has a free plan with 3 auction events and 1 seat. It isn't a trial and it doesn't expire, and the 3 events are a total, not a monthly allowance. Paid plans are a one-time payment that covers 12 months. Suppliers never pay, and every auction can have as many suppliers as you like. One auction you schedule uses one event, and if you cancel it before it starts, you get the event back. See plans and pricing.