Reverse Auction

A reverse auction is a procurement process in which buyers invite sellers to compete by offering the lowest possible price for goods or services. Unlike a traditional auction—where buyers bid higher amounts to purchase an item—a reverse auction flips the roles: sellers bid downward to win the buyer’s contract or order. This method is commonly used by businesses, organizations, and governments to obtain goods, materials, or services at the most competitive prices, leading to cost savings, efficiency, and transparency in procurement.

Example: A government department organizing a reverse auction for office supplies allows multiple vendors to bid online, and the vendor offering the lowest price for the required quality and quantity wins the contract.