Reverse auction vs. sealed bid auction: Which is best for you?

Fernando
Sep 22
2 min read

Quick guide for CEOs and procurement teams who want to buy better in 2025

Do you want better prices, more transparency, and faster decisions?

Then you need to understand how the two most effective tools of the new digital procurement work:

🔹 Reverse auction

🔹 Sealed Bid Auction

Both are available at CGS and can transform the way you shop.But they are not the same, andKnowing when to use each one is key to making smart decisions.

What is a reverse auction?

It is a process where theSuppliers compete by lowering pricesin real time.

🟨 You as a buyer define what you need.

🟨 You invite several suppliers to participate.

🟨 They see their competitors' offers (anonymously) and lower their price to win.

✅ Ideal for recurring or standardized purchases.

✅ Increases competitive pressure and reduces prices quickly.

What is a sealed bid auction?

In this model:

🟦 Each supplier presents a single offer without seeing the others.

🟦 All offers open at the same time.

🟦 You choose the most convenient one according to your criteria.

✅ Ideal for sensitive contracts, technical products, or multi-factor tenders.

✅ More discretion and less exposure.

Quick comparison between auctions

Reverse Auction 💰

Real-time competition: Yes
Unique offer: No, suppliers can improve their proposal
Greater price pressure: High
Ideal for: Bulk or repetitive purchases
Immediate transparency: Medium
Closing speed: High

Sealed Bid Auction 🔐

Real-time competition: No
Single offer: Yes, each supplier presents their best offer without subsequent changes.
Greater price pressure: Medium
Ideal for: Strategic and technical contracts
Immediate transparency: High
Closing speed: High

🛠️ How to choose which one to use?

🟡 Usereverse auction when:

Price is the main decision factor.
The product/service is standard or repetitive.
You are looking for aggressive competition between suppliers.

🔵 Usesealed bid auction when:

You take into account multiple variables (not just price).
You want to avoid outside influences.
You are bidding for professional, technical or strategic services.

💡 At CGS, you can combine both according to your needs.

📦 Practical examples

Reverse auction:

Packaging, stationery, logistics services, general supplies.

Auction closed:

Software development, consulting, technical tenders, specific machinery.

🧭 Strategic bonus for CEOs

Choosing the right model saves more than negotiating “the old-fashioned way.”
Both methods strengthen theinternal transparencyand traceability before audits or partners.
Combining them within a single platform like CGS allows you to professionalize the entire purchasing process without adding complexity.