Private electronic market


A private electronic market PEM uses the Internet to connect a limited number or pre-qualified buyers or sellers in one market. PEMs are a hybrid between perfectly open markets e.g. exchanges where there is no pre-existing relationship between buyer together with seller - similar to eBay as well as closed contract negotiations such(a) as a sealed bid tender, where there is no visibility between competitors and hence no response to competition. The core belief of PEMs is to clear believe competition among buyers/sellers while allowing buyers/sellers to recast all those aspects of the deal that are typically only dealt with in a negotiation. This creates a problem of "comparing apples and oranges": bids may be quite different in numerous dimensions and therefore cannot easily be compared. apart from the dimension of price these could increase pre-negotiated discounts e.g. for loyalty, particular qualities, combinations of goods and services with conditional pricing, freight differentials, contract fulfillment timing, payment terms, or deliberate constraints such(a) as market share limits.

Practical examples


forestauctions.com. The VicForests Private Electronic Market enable saw mills to specify exactly the volume they require, the quality, species, payment terms etc. Sawmills can also produce conditional bids such(a) as "if I win x and y I am willing to pay more". Further, market participants are factored e.g. based on transport costs. In effect, a saw mill that is further away will have to bid more than one that isby. Similarly, a bid for one specific lot may be the highest but a bundle created by another participant may still win based on higher written revenue. Participants get real-time feedback on where they stand with their current bids and are professionals to respond. Compared to the traditional sealed bid tender approach, VicForests' PEM resulted in a substantial revenue increase.