At e-Trons, a buyer personalizes a page on the Web site to reflect the subset of sellers he wants to deal with, personalizes how the RFQs within a given product category will be promulgated to sellers, whether broadcast or narrowcast. Every time they get a quote back, they will have a notice on the screen. Without electronic marketplaces, buyers have to do those cost comparisons by hand. But with us, they don't have to. FreeMarkets runs reverse auctions, which, unlike traditional auctions, are designed to drive prices down.
Sellers continue to lower their prices until the auction is closed.
According to Kirkland, FreeMarkets boasts a market operation center to answer technical and commercial questions, enforce marketplace rules and attack unique situational problems, such as a bid submitted after the market closes or a disconnection occurring when a bid is made. We have a dynamic market-closing feature built into our software. In most cases the buyer and the market maker will set a parameter which specifies that if there's still active bidding at the time of market closure, then the time of market closing is automatically extended -just like in a hockey game. This way, FreeMarkets ensures that suppliers continue to enter bids and to compete for business and that the buyer gets the most competitive pricing. Downside risks Yet, behind every boom lurks the possibility of a bust, and the generally rosy picture painted of the e-marketplace gold rush does concern a few analysts, who worry about credit verification, market saturation, potential for fraud, price collusion and the absence of any specialized regulatory body to oversee this new electronic commodities boom.