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Online auctions book up savings

A UNIQUE on-line auctioning for hotel accommodation packages saved BankWest and Curtin University 10s of thousands of dollars.

It is believed to be the first e-commercial auction of its type in Australia, but this way of doing business in the corporate world has already gained a high following in the US.

BankWest as part of its policy of exploring e-commerce solutions (what it calls Telco-Banking) set up an online hotel accommodation auction recently with Cable and Wireless Optus’s E-Solutions Department in which 10 hotel groups covering all capital cities were asked to see how low they could go to grab the bank’s business.

This new Optus net-Auction service was launched four months ago and this was the first commercial auction.

Previous auctions were for Optus in house needs and one for the Starlight Charity Foundation.

General manager of Optus’ E-business division Noel Hamill said research has indicated that within five years 25-30 per cent of all corporate business would be done on line with electronic auctioning.

“There has been a terrific amount of interest because of the savings especially in WA where there seems to be a higher appreciation of e-business opportunities,” he said.

“In the US, General Motors (GM) is one of many companies switching to online auctions to sell excess capital equipment (stamping presses, robots) and has recovered over $800 million since commencing auctions this year.

“It also purchases using reverse auctions (rubber products, foundry tools, engineered products) and claim a saving of 5-30 per cent.”

Head of BankWest E-Commerce department Marcus Stafford who jointly organised the auction said: “The beauty of this is that there is no capital outlay for the bank and the potential is there to realise significant cost savings.”

The savings for the bank on hotel accommodation in Sydney, Melbourne and Perth far exceeded expectations ranging between 15 and 33 per cent although the bank is reluctant to quote actual dollars except to say they were in the “tens of thousands”.

But it was so successful Mr Stafford said the bank is planning to do more of its purchasing by online auctions.

“We are looking at stationery, couriers, and everything else we buy in volume,” he said.

“Following the success of this we expect the use of online auctions will become more common as businesses realise the many advantages such as speed to market and better pricing.

“And it really was a win win situation for both us and the hotels. It saved them time in marketing to us and it saves us time in negotiating with the hotels to organise the best rates for our company.

“Instead of a paper war and protracted negotiations over several weeks it was all done in 15 minutes in one afternoon.

“This was for our corporate needs, but as we develop the concept we see ourselves able to pass on some significant benefits to our clients.”

Any business with access to the internet can use the facility says Mr Hamill.

“We host the event on our Optus server but re-brand the site for the client,” he said. “With a B2B e-commerce (business to business) we have to have a very high level of security, but it also has to be extremely easy for the participants to use.

“This was proved in this BankWest auction”

There is a range of auctions available in this new Optus e-service that include:

Forward Auctions - Sellers offer items to multiple buyers. Typically the highest offer wins.

Reverse Auctions - Buyer invites suppliers to bid. Typically the lowest bid wins.

Exchange - Many buyers and many sellers offer a bid. An example is the stock exchange.

The competing hotels were organised by Optus and given portfolios indicating the number of rooms BankWest and Curtin wanted to buy for the coming year in the seven packages ranging from deluxe executive to economy.

The bank executives set a reserve price for each room package and then sat back and watched the hotels outbidding each other downwards.

In every case the price for the rooms slid well below the bank’s reserve.

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