Innovative electronic auctions in supply and demand chains: Empirical research in the flower industry
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Exploiting the Internet for commercial ends has become a key theme for most organizations. There are significant advantages for both buyers and sellers in using this medium. Savings are made as a result of reducing transaction costs, increasing the circle of potential customers, and improving the search-and-find capabilities for all parties concerned. At the moment there are several hundred Web-based auctions. And yet the place to see state-of-the-art auctions is not on the Web but rather in one of the dozen or so auction halls in Holland. This article analyses different electronic auction initiatives in the Dutch flower industry. These auctions use the "Dutch auction" as price discovery process. In a Dutch auction the auctioneer offers products at successively lower prices until his offer is accepted. Most auctions on the Web today use the English method. An English auction process involves a succession of increasing bids by potential buyers until the highest (and final) bid is accepted by the auctioneer. But the Dutch method offers advantages, as the flower auctions reveal. The Dutch method is much faster and tends to generate higher prices. This is illustrated by presenting the results of experimental economic research with different Web-based auctions. One of the analysed electronic auction initiatives, Tele Flower Auction, shows that electronic auctions have an impact on the chain configuration and its performance. Conclusions are formulated and further research is discussed.