Problem Statement:
One of the largest natural resources companies had identified through their research that for one of their commodities in India, there were 400 small buyers (by volume) who were not buying their requirement from the company and were meeting the requirement from the secondary market.
Desire:
To get these buyers to buy from the company directly through a fair process.
Solution:
We created an auction (Yankee) for the company whereby the company regularly started offering quantities (e.g., 2000 MT) at a floor price (minimum premium) with the quantities of the highest bidder (higher than floor price) being allocated first and similarly in the decreasing order of the bids. i.e., after allocating the quantity to H1 bidder, the quantity to H2 bidder was allocated and so on in a dynamic manner for the period of the bid (30 minutes extended by bid in the last minute by another 2 minutes).
The solution is extremely easy to use (it being a KPI given a variety of small buyers participating in it) with easy-to-use UI/UX. The fields in the bidder’s screen are highly decluttered with the relative position indicated clearly and the field to submit the price.
The notifications of the upcoming events (multi-channel), instructions for participation, etc. are extremely simple and broadcast facility makes it easy for the buyer to dynamically broadcast messages to the bidders for changes if any made in the bidding elements like a reduced decrement, etc.
Outcome:
Many (approx. 25-30%) of the unaddressed buyers started participating regularly and the company has been able to meet their requirements successfully in a win-win condition i.e. buyers getting the quality material, in time at better prices (compared to secondary market) and the company realizing better prices than the floor price.
Future Plan:
Encouraged by the above, the company has targeted to do 15% of the revenues through the platform.