Reverse Auctions in the Service Sector

Abstract

LetsWorkIt.de is a German B2C platform for different kinds of service and handcraft orders. Based on the concept of reverse auctions, demanders compose descriptions of the required services to place orders on the platform. The supplier bidding lowest at the end of the auction obtains the right to carry out the order. Drawing upon and widely confirming existing theories on e-marketplaces, this article examines the underlying electronic business model and the competitive strategy of LetsWorkIt. The case provides evidence that the reverse auction-based intermediation of handcraft and service orders is suitable to form the basis of an e-marketplace and points out that for such ventures a combination of public relations, performance marketing and cooperation represents an ideal strategy to increase the number of demanders and suppliers. Moreover, the case suggests that, depending on the business model, it may be feasible to concentrate marketing activities on one of these two customer groups, since LetsWorkIt has managed to achieve a significant number of successful, high-quality auctions by primarily aligning its competitive strategy with the demand side.

Cross-channel cooperation: on the collaborative integration of online and offline business models of e-entrepreneurs and traditional SMEs

“…The wide, open and cost-effective infrastructure of the internet allows a simple, fast exchange of data and thus a synchronisation of business processes over large distances. Particularly for e-entrepreneurs introducing new business ideas, online cooperation is a promising strategy as it enables the partners to create more attractive product offers and represents a basis for more efficiently and effectively communicating and distributing their product offers (Volkmann and Tokarski, 2006;Kollmann, 2006;Kollmann and Häsel, 2007). Also for SMEs operating in the Real Economy, cooperation has been of increasing significance in the past years.…”

“…Internet-based ventures that are operating at this electronic trade level are based on innovative and promising online business models. In order to capture the value created in the Net Economy, new and highly adaptable e-entrepreneurs have emerged that generate revenue and profits independent from a physical value chain (Matlay and Westhead, 2005;Kollmann, 2006;Kollmann and Häsel, 2007).…”