Reverse auction platforms

Before my recent trip to Indonesia, I used this website called Cash Kumar to buy my foreign exchange. It was rather simple to use. I posted my location and my requirement for foreign exchange. I had to provide my phone number (and verify it by entering an SMS code; I think this was to make sure only genuine buyers asked for a quote) and then a message went out to all foreign exchange dealers in this part of town, and a few of them responded to my request with quotes.

One of them was significantly cheaper than the other, so I chose him, and CashKumar connected us up. This dealer sent the foreign exchange home. It was an incredibly smooth process.

This is one example of a platform that conducts “reverse auctions”, where a customer states his preferences and you have providers who bid (in a competitive fashion) to provide the said product or service. This results in significant ease-of-use by the customers (though not for service providers since they need to have someone monitoring the requests and bidding for them).

There are several other websites that follow this model. TaxiForSure used to operate like this (I haven’t used it in a while so not sure if it still does). Your request would be broadcast to all taxis around and if one of them accepted it, a match would be made. The difference there was there was no bidding, just matching.

Then there is this AirBnB clone called TravelMob where you can post your requirements (rather than selecting an existing posting), and providers will start responding to that.

One of the “hot” sectors currently in India is hyperlocal delivery, where you request for a product, which a provider procures and delivers for you. In this context, I was thinking of reverse auctions for grocery. You upload your shopping list which goes to nearby grocers (with infrastructure to deliver to you). Since it’s all commodities, the platform can solve some kind of a set covering problem to determine which grocer has to sell you what for you to get the goods at the cheapest rate (after accounting for transaction costs). And in the next couple of hours, more than one delivery can come in to deliver the goods, which you’ve paid for on the platform!

And this multiple delivery thing reminds me of the time when I was doing my MBA (a decade ago), when Dell’s supply chain was widely hailed in Operations Management classes. And the beauty of that supply chain was apparently that once you specified your requirements, the Dell supply chain would get to work and within the next few days different components of the computer would land up at your door!

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