Industrial Distribution

Tom Reilly

Is online bidding worth it?
September 26, 2007

I hear a lot of complaints about online bidding and reverse auctions. It’s got me wondering: Is it really worth it? Do you really want to give the world a look at your bottom-line price? Maybe it’s worth it if it cripples your competition, but that raises the question: Are you in business to destroy a competitor or to better serve customers?

I think if I were faced with this business decision today I would have to ask myself some questions:

First, do I want or need this kind of business?

Second, how much energy do I want to put into this low-margin business?

Third, what is the impact of this on my other business and on my ability to serve other customers?

Fourth, are we set up to handle this type of business? Is our infrastructure built on an operational efficiency model which enables us to sell profitably to price shoppers?

Fifth, do I have some inventory that I want to dump, and is this as good a place as any to get rid of it?

I’m sure there are other relevant questions to ask and I welcome your input. To me, online bidding appears to be a different business model from the traditional definition of what it means to be a distributor, which I equate with value added.

Posted by Tom Reilly on September 26, 2007 | Comments (1)