Online reverse auctions: Issues, themes, and prospects for the future

Online reverse auctions are increasingly being used in industrial sourcing activities. This phenomenon represents a novel emerging area of inquiry with significant implications for sourcing strategies. However there is little systematic thinking or empirical evidence on the topic. This article reviews the use of these auctions in sourcing activities and highlights four key aspects: (1) the differences from physical auctions and those of the theoretical literature, (2) the conditions for using online reverse auctions, (3) the methods for structuring the auctions, and (4) the evaluations of auction performance. Some empirical evidence on these issues is also provided.