How the "Profit Leverage Effect" Works When Using Reverse Auctions

The Profit Leverage Effect in purchasing tells us that if your organization must find ways to reduce or contain costs, the best place to start is in the Purchasing function. This is because a high percent of many organizations’ total costs are in purchased goods and services. When cost containment becomes a strategic necessity, whether due to reduced sales or revenues, high labor costs, or other factors, companies too often focus on cutting costs in areas such as labor and overhead rather than on purchasing. It is too often assumed that it is easier to implement job cuts than it is to reduce purchasing costs.

For example, as an industry average, 60% of all sales dollars are spent on purchased materials, and therefore, small changes in the cost of purchased materials result in large changes to profit. So if your business spends 10% of the revenues on labor and salaries and 25% on overhead, then your profit is an industry average of 5%. A five percent reduction in purchased costs will result in a three percent impact on net income ~ (.05 X 60% = 3%). This will boost your profits up to 8% from 5%, resulting in a 60% increase in profits. In conclusion, a 5% reduction in purchase costs will result in a 60% increase to profits.

Reducing your procurement costs will also help your company in a highly price competitive market. Your company most likely will be losing margin as lower prices are required to compete in your market. If you can reduce your purchasing costs, then you will be able to lower prices without losing your profit margin.

Fortunately, e-sourcing technologies like reverse auctions have become affordable, easy to implement, and are being used by mid-market and small organizations to control purchasing costs.

While reverse auctions cannot be used to procure everything, they can make a positive impact in the profitability of your company without implementing painful decisions.

You can visit eDynaQuote http://www.eDynaQuote.com for examples of reverse auctions that companies have been successful with.

Estate Liquidation – Pros and Cons of Tag Sales and Auctions

Executors faced with liquidating an estate’s personal property will quickly find that it is their most time-consuming administrative task. Executors who don’t perform their duties could be removed from office by the Probate Judge, so it is important that they single-mindedly pursue disposing of the estate’s property so that the bills can be paid and the estate settled.

What you’ll get from this article

Executors have three main liquidation options, and I will discuss the pros and cons of each in this article. Any company chosen to liquidate an estate should be vetted; I will tell you how to do this conscientiously, and I will also propose the best liquidation method. I assume that the twin liquidation goals of the Executor are to achieve the greatest cash benefit to the estate and to leave the house broom-clean so that it can be sold. Of course, there are ways to maximize the cash return for each type of sale, and I’ll tell you what they are.

Investing ten minutes into reading this article could save an Executor many hours of work.

Option 1: Have An Auction On-Site

Benefits of an On-Site Auction:

Auctioneers are very competitive lot. It should be an easy job for an executor to find an auction company willing to take the estate liquidation job, and commissions will be competitive. A strong argument for an on-site estate auction is that when the auction is over, there will be very little clean-up. If you like, the real estate can be auctioned as well, since auctioneers are licensed to auction the real estate and other titled property. In one day, the house, car, boat, RV, and all the household goods could be sold.

Negatives for an On-Site Auction:

Auctions are driven by competitive bidding. Consequently, it is necessary to have a lot of people at your auction. Big crowds require nice weather, plenty of parking, bathrooms, food, and refreshments to keep the people from leaving. Online bidding can be included to boost attendance, but it is the local crowd that builds excitement and drives the prices up. To attract a crowd, the estate must have collectibles and other quality goods. Run-of-the-mill goods that can be purchased at the local thrift store are insufficient to attract a good auction crowd.

Suggestions for an On-Site Auction:

If your estate has many large collectibles, like antique furniture or a piano, an on-site auction may be your best choice. Summer weekends, when the weather is warm and dry, are the best times to hold an on-site estate auction. The auction company you hire should be equipped with sound equipment, canopy tents, display tables, and plenty of help for fast checkout.

Option 2: Auction Gallery Consignment

Pros for Auction Gallery Consignment

If weather is a concern, you may want to consider consigning your items to an Auction Gallery. Consignments at an Auction Gallery are grouped according to the type of item in order to maximize turnout and get the best prices from their collectors. For example, there may be an auction dedicated to art and home decor, or musical instruments, or ceramics.

Cons for Auction Gallery Consignment

There are quite a few reasons for not consigning to an Auction Gallery. For starters, many Auction Galleries will take only the best items from the estate. Ninety percent of an estate is made up of items that are of little interest to the auctioneer, which leaves the Executor to deal with the remaining ninety percent of the estate property. Lastly, when an Auction Gallery spreads the merchandise out over several auctions, it can take months for all the items to sell, delaying the closing of the estate.

Tips for Auction Gallery Consignment

Before you consign to an Auction Gallery, ask the auctioneer how your merchandise will be distributed between auctions; get a guaranteed settlement date. You will also need a plan for disposing of all the remaining estate merchandise.

Option 3: Tag Sale On-Site

Pros for Tag Sale On-Site

Tag sales have several advantages over an on-site auction. For those that are not familiar with tag sales, the sale is held on the premises and in the house. Companies that specialize in tag sales are less common than auction companies. At a tag sale, everything in the house is priced, much like at a yard sale. Shoppers will browse through the house, and choose the items they wish to buy. When buyers arrive at the house, they take a number, and are admitted into the house when their number is called. Tag sales usually start on Friday evening and end Sunday evening, so there is no need to provide food or bathroom facilities. Tag sales can be held rain or shine and in any season

Cons for Tag Sale On-Site

The biggest disadvantage in hiring a tag sale company is that tag sale companies are not held to the same legal standards to which auction companies are held. Auctioneers and Realtors are bound by law to the estate by a fiduciary bond. A fiduciary relationship binds the agent by law to act at all times in the best interest of the estate. Fiduciaries are licensed by the state, must pass tests, be bonded, must hold all funds in an escrow account until distributed, and has to settle the account with the estate within a specific time frame.

Fiduciaries must also keep accurate records and follow certain protocols. Failure of a fiduciary to follow procedures can result in fines or loss of license. Tag sale companies are not held to the same legal standards, although they certainly have a moral obligation to the estate. Tag sale companies can handle the details of the sale and the distribution of the money any way they see fit.

Another problem with tag sales is that typically there is merchandise left over after the sale. Often, there is a LOT of merchandise left over. When a lot of items are left over, the executor then has a clean-out problem, because the house must be left “broom-clean” before a realtor will list the house for sale. Unlike an auction, where prices go up with each bid, tag sale shoppers want to negotiate a lower price for everything, which is not only time consuming but costs the estate money.

Tips for Tag Sale On-Site

When working with a tag sale company, read the contract thoroughly, make sure settlement dealines are included. the operator should have a solid pricing plan, adequate staff, and a solid track record.

What about Internet Sales and Retail consignment?

Internet sales work well for items that can be shipped easily, like small collectibles, books, and artwork. Before you decide to sell these items online, remember that having a nice assortment of collectibles at your auction or tag sale is what will attract the buyers to your event. If you sell all the good collectibles online, you won’t get very good attendance at your sale. Dont even consider a retail consignment; they will take too long to sell your items.

How do I know if I am dealing with a reputable company?

Unfortunately, asking for references doesn’t always work; no one gives a bad reference. The Better Business Bureau lists ratings for some, but not all, companies. With an auction company, most states have an occupational licensing board which can give you the status of an auctioneers license and tell you if they have any complaints on file. Checking up on a tag sale company is a lot harder, because there is no agency keeping track of complaints. One website that is helpful is http://www.ripoffreport.com. When at the site search the name of the company you wish to investigate; also type in the owners name to see what that brings up.

Hire a company with a solid internet presence

These days, it is imperative for a company to have an online network. A company that is well-connected in the online world is likely to be a company that is well-networked in the local area. It’s unlikely that a company with a poor or no website will be able to use the internet to generate sales for your event. Doing a Google search of the company’s name or web address is the best way to to see how well connected they are. Go to Googles search bar (not the address bar at the top of the page, but the search bar in the center of the page) and type in the companys web address starting with www. How many search results are returned that pertain directly to the company you are investigating?. If the company is a national franchise, disregard the results for the general franchise and only count the results where the local company is mentioned. Ranking well with the search engines doesn’t necessarily mean the company will be the best one for your needs, but it is a good indicator of the professionalism of the company. Typically, companies that have lots of returned results do so because other organizations want to associate with experts in their field, so they link to the experts website. A large number of linking companies is like a “vote” for the company being linked to. A company that displays lots of Google results is usually one that is recognized as being expert in their field.

So, what’s the best way to liquidate an estate?

The best type of sale for estate liquidation is to hire a licensed fiduciary to sell the estate property in one day, to the bare walls, any time of year. To achieve this would require an event that is part tag sale and part auction, run by an auctioneer. Since Tag Sale operators are generally not licensed auctioneers and auctioneers usually hate to do tag sales, that’s a tough solution to implement. There are auctioneers that combine these services, however. Finding such a company will give an executor the flexibility of having a sale any time of year, the ability to sell down to the bare walls with nothing left over, and the assurance of dealing with a state licensed and bonded fiduciary.

How Buying and Selling Has Gotten a Lot Easier With Reverse Auctions

Over the years, a lot has changed in the way people transact businesses. A few years ago, whenever a seller listed something for sale, the whole process of actually negotiating with the buyer was too tedious. First they had to post an ad, wait for the customers to respond to the offer, sit with them and then complete the transaction. Usually in such cases, the amount sellers get from the buyers is much less than what they had wanted due to several rounds of negotiations.

Auctions are always convenient

A far more practical option back then was to arrange an auction whereby buyers competed with each other to buy the goods or services which the seller is offering. In this case, prices usually went up, and the highest bidder could acquire the things on sale. In traditional auctions like this, buyers ended up paying over the odds while sellers enjoyed enormous profits.

But as technology has advanced, it has brought a lot of changes and one of them has been the introduction of reverse auctions. These auctions, unlike the traditional ones, are entirely different. For instance, here it is the buyer who initiates the auction. Usually, the process comprises of:-

  • Posting the job in a reverse auction website
  • Description of the desired service or product from the buyer
  • Receiving and evaluating bids
  • Choosing the lowest bid
  • Handing the job

Unlike traditional auctions, prices are driven down by competing sellers. Here vendors are competing to obtain business from the buyers. But it’s not always the price which is the primary factor when buyers are deciding which bid to accept from a seller and which to reject. It depends on a lot of other factors. The buyer might accept a higher bid from a seller if they feel that their proposal is much better.

There are several advantages of reverse auctions like:-

  • Firstly, as sellers compete with each other to drive the price down, buyers end up saving at least 30-40% on an average.
  • Secondly, it saves a lot of time. All that buyers need to do is post the things they want in a reverse auction website. Sellers will then bid with price quotations.
  • Thirdly, buyers can compare the bids from all the sellers at a glance. This enables them to choose the best proposal.
  • Fourthly, for companies, reverse auctions can be of great help in generating more business if their bid is accepted.

How To Sell On Online Auctions

Ah the vastness of the internet. Seems like a place where dreams are made and broken, where millionaires and has-beens all vie for that internet pie that promises massive financial gain and open ended answers to every question. The online auction has become a simple of the transaction of goods on a global scale, the international yard sale where everyone can and will exchange everything. So you may be familiar with the idea of buying stuff on eBay and Amazon, but how do you go about selling on online auctions?

In order to sell on an online auction, you must understand the nature of the auction itself. An auction is essentially a large clearing house where anyone can attempt to put up anything for sale at any given time. So, if you intend on utilizing any one of a number of online auctions, first decide what is your goal. Define you goals so that you can get more out of the online auction scene. Do you want to sell a single item of yours that has been collecting dust in the garage or do you want to make a business of buying goods and then selling them on the internet? If the latter is the case you need to make a strategy.

If you are interested in testing the water by selling a few items on an online auction, the first step is to make an account. You will need a way to accept your payments for any item you successfully sale. The easiest and most convenient way to do this is to open up a Paypal account, and have it anchored directly to your bank account. After you have managed your payment scheme, you need to take a look at how other people who are selling similar items to what you want to sell list their items.

Take note of what you like, what makes you incline towards a particular poster. Now, once you have gathered a decent amount of back knowledge on how to list an item on an online auction for sale, you need to take pictures of your item, and list it with a decent description. Remember, that the rates which you start bidding will determine how quickly interest will be shown in your particular item. Also, sometimes it isn’t the price that sells a particular item, rather it is the rich description and pictures. So take your time and list your item properly in such a way that you would love to buy it if you were in need of it yourself. Finally, after you make a sell, make sure you follow through with quick delivery. This weighs a lot on the probability of repeated sells.

If you intend on selling on internet auctions as a business endeavor, much of the same techniques listed above should be utilized. Obviously, you will need to acquire a steady supply of items to list, and your ability to acquire items that are in demand will weigh on your ability to steadily make profits. Always keep in mind basic business theory when you are utilizing online auctions.

In conclusion, if you organize your efforts well, you have a large potential to make decent money by selling on online auctions. Even if you don’t intend on making it a business, selling on online auctions is a great way to clear out the garage. Have fun.

Pros and Cons of E Auctions

If you thought that Internet and online business has been enabled only in case of business to customer type of business, you are wrong. Even business-to-business is conducted through online procurement and online e auctions. This is fast becoming the most popular way of selling things to other businesses.

Anything new takes a while for us to learn. This is true in the case of e auctions too. You need to know how things work and decide if this is the right option for you. When you have understood to how to participate in the e auctions you are ready to enter it.

E auctions do not have the scope for physical exhibition of the items on auction. At the most you may get to see the photos online. In traditional auctions one is able to see the item physically before buying it. Therefore if you are buying an expensive item, then you need to think twice if you are comfortable buying without seeing it.

Traditional auctions have both buyers and sellers talking to each other at the auction site and there is opportunity for live interaction. This is not available on e auctions. At best you may be able to chat online with the people carrying out the auction.

Online auctions do score over the traditional auctions in the sense that you need not pay huge amount of rent in securing a venue for holding the auction.

It is not only the rent that you save on in an e auction, but you get to save on other incidental expenses including refreshment and snacks cost that you would otherwise have to spend. E auction does not have any such provisions for expenditure.

Just imagine with e auction you can reach to buyers from across other countries and engage all those who are interested in your ware, but when you hold a traditional auction you are limited to calling only those who are in the nearby vicinity and a small group.

Now that you have been educated regarding both the types of auctions, you are ready to engage that mode which suits your business needs best. Decide on one channel after considering the benefits and disadvantages of both the channels.

Analysis of Reverse Auctions and the Hardware and Software Components Thereof

Unlike some technologies that have sprung up for business use in the recent years, reverse online auctions is not at its core a technology, but rather an amalgamation of a plethora of technological subsets, both hardware and software. Reverse online auctions is a concept, a business process, that utilizes technology to facilitate the exchange of money and supplier contracts at the lowest possible price while still taking into account many other factors that may affect a business deal and prohibit it from reaching its potential success level. Reverse online auctions can be broken down into two components: hardware and the hardware vendors and software and the software providers.

First, the issue of hardware is paramount. If the current IS implementation of a company cannot handle the increased load of database calls and other integrated systems, then the client-side software provided will be of little use. The minimum software requirements for a server run by the company for the auction software are Apache Web Server, PHP 4 to 5, and a SQL database. Though Apache is the most resource intensive application on this list, it is one of the least resource intensive applications available as web server software. Existing servers can be used for the hardware as long as they are able to support the Linux operating system. However, if the software is being purchased on demand from a vendor, then the only hardware needed is a computer that can run the Windows operating system.

On the software side, multiple vendors sell the components needed to establish a connection to an online marketplace and offer contracts to suppliers. One of the largest suppliers of software as a service (SaaS) is Procuri. Procuri offers bundle packages for both suppliers and buyers, each available on demand. This software combines to form the backbone which allows for the completion of a reverse auction online. There are relatively few steps from signing up with Procuri to completing a successful auction. First, a financial management software package is implemented which allows a budget to be made for the auctions. Next, suppliers are found by listing the auction in Procuri’s marketplace and then evaluated using the sourcing software package. Next, the auction takes place, each subsequent supplier bidding lower than the previous supplier in order to win the contract. This allows for incredible cost savings for the company that listed the contract, though it is disputed how much these savings apply when all factors are considered. At this point, contract management software is used to ensure that the contract remains permanent in a digital environment and easily accessible for approval and renewal. Lastly, the supplier management software suite allows companies to audit their suppliers based on the claims that were set forth when the contract was created. This allows for corrective action to be taken quickly and effectively while alerting both the supplier and the buyer that an issue has arisen.

It is easy to think of this entire process as simply online reverse auctions, though there is much more underneath the surface than can be initially grasped. Like every new technology, studies constantly conflict about the benefits of using it; some, like Fortune Brands, claim savings of over 18 percent, while others debate if these savings, when they do exist, serve as a detriment to company/supplier relations and negatively impact the future of the business. As this technology is studied more heavily, businesses will eventually be able to see both sides of this argument clearly and make an informed decision about whether this technology is cost-efficient and prudent to use in their industry.

Penny Auctions: The Future

What is the future of the penny auction industry? This is a tough question to answer, but let us look at trends and future possibilities. The last few years have seen the rise and subsequent bust of penny auctions. When they started in the United States, they took the online world by storm and had a huge surge in the number of members joining each day. That was the honeymoon phase for the industry. Obviously it didn’t last.

A lot of sites began using unethical techniques to advertise. Worse, some were outright scams by employing shady business practices, shell-bidding to drive up prices and deny their members a chance to win or just outright misleading advertising. This gave a bad name to the industry as a whole and didn’t do any good to the ones that were legitimate and genuinely run by people who wanted consumers to save while making a profit. Plenty of penny auctions closed shop in this phase.

After this, only the best survived. Today, there is a clear downward trend in terms of number of new bidders. As a result, businesses don’t see this as an easy money-making scheme anymore and they are forced to see that penny auctions are a genuine business opportunity and like any business, need initial capital, time and commitment from the owner. This is the only way to attract shoppers who will remain loyal.

This new phase has also given rise to a number of new innovations. For example, the rise of the so called “timerless penny auctions” has been a good sign for bidders who don’t like traditional auctions and the concept of timers that are employed. These help cater to another class of bidders who will spend more and be more assured of a win, so that overall they can save money instead of losing.

So where does the future of the penny auction industry lie? I believe it lies in genuine businesses that survive through a reputation of being good for consumers and who are in it for the long run. Look at Quibids, which is now the largest penny auction in the world. It didn’t opt for short-cuts at all, and while some times overtook it for a small time, in the end, it was Quibids which reigned supreme. This is how businesses win in the long term.

For smaller sites, they need to consider innovating. How are they different from other similar sites? If your idea is like Quibids, why should I ever go to your site with trust issues when I can do the same at a site I trust more? You need to think in terms of the users, not your own profitability alone.

The positive thing is that a few new penny auctions are indeed innovating, especially the ones that are looking to make the timerless penny auction model become more popular.

From a bidder point of view, you need to understand all the different types of penny auctions that are out there, so that you really know and understand what is best for you. What do you like? What is your bidding preferences? What is your risk tolerance and how much risk do you like to take? These are just some of the questions that you need to answer before going ahead with joining new sites and trying out the waters again. Remember to study the new models as well.

What Are the Benefits of Selling Assets Through Liquidation Auctions?

There are times when it is necessary to make pretty tough decisions as far as our business is concerned. Try as you might, there may come a time when it is necessary for you to exit the business and to do so without merging it, selling, it or passing it on to another individual or entity. When it comes time to exit the business, you are going to need to develop an exit strategy that is well thought out and follows along with a plan that will benefit you to the greatest extent possible. One part of that plan may be selling some of your assets through liquidation auctions. Why is it a good idea to do this?

Before I begin to discuss the benefits of selling your assets through a liquidation auction, it’s important for you to understand that there may be other options that are available. It is always a good idea to discuss any exit strategy with your attorney as well as your accountant before you make this type of move. There may be legal ramifications that are associated with the closure of your business that you have not considered. Your accountant will be able to help you with any financial problems or questions that you may have so that you can exit the business with the least amount of financial impact on your personal lifestyle.

It is also a good idea for you to take a good look at your assets and the inventory that you have available. While it certainly is true that using a liquidation auction is going to be the easiest way for you to sell off your assets, there may also be some items available that would be better sold elsewhere. This is also something that you can discuss with your accountant to determine if there is going to be any financial or other benefit to you when selling those items.

Among the specific benefits of using a liquidation auction, one that is certainly going to be considered is the convenience of doing so. It is likely that you are dealing with a very stressful situation while you are closing your business and the last thing that you would want to do is to add a lot of stress along with it. Using an auction allows you to put the majority or perhaps even all of your assets on the auction block and to have them taken care of in that way. There is still going to be some sorting that will be necessary on your part, but if you don’t have to worry with the stress of selling those items individually, you will fare much better.

There are also additional benefits that should be considered because they can help to relieve you of some of the stress of the situation and to allow you to fully liquidate your assets. Included among those benefits is the marketing that is available to allow you to reach a much wider audience. There is also the certainty that the items are going to be sold and many full-service auctions have a regular following which may be looking for exactly what you are offering. So if the time is come for you to close your business, consider using an auction to liquidate your assets for the financial and stress management benefits that are available.