The idea is catching on. More than 1,000 suppliers have taken part in bids. Sales flowing through its invitation-only online procurement service have skyrocketed. For its effort, Freemarkets charges varying service fees to corporate customers, and takes commissions of 1 percent to 2.5 percent from winning bidders. If a purchasing manager wants it, Freemarkets will help write up a bid request and identify suppliers willing and qualified to participate in the bidding process.
Auctions run from one to three hours in length, depending on the number of lots and bidders.
Bidders range from two to 50. The end result is big savings. On contracts bid so far this year, Freemarkets customers are paying an average of 17 percent less than they would otherwise have paid, Meakem says. Freemarkets runs its bidding system on a proprietary system, rather than the public Internet. Security is better that way, Meakem says.