Increasing numbers of trading companies are using the Internet to procure goods. They post their demand for goods on B2B market places on the web and invite selected suppliers to bid. In general the bidder with the most competitive price and the best terms gets the order.

Business-to-Business market places on the web are forums which help trading companies to "meet" their suppliers. Demand dictates supply in the world of Internet auctions. Important procurement platforms include Agentrics, 1Sync and CPGmarket. Contrary to the Internet market place eBay the bidder with lowest price wins the tender. This is called the Reverse Auction principle.

METRO Group launched the auctions in 2000. The trading group processed 1,455 million euros of its total procurement volume of 46 billion euros using auctions in 2004 and the trend is clearly up. Buyers can initiate online negotiations from their PC. It doesn't matter if these are goods for resale or capital goods and services. Buyers have to define product features carefully, request samples and know suppliers quality standards. As well as using the more traditional negotiation methods, virtually all companies within the Metro Group now use online auctions for the procurement of goods and services.

METRO Group can reduce the number of negotiations by using auctions and therefore accelerate procurement. These online negotiations also strengthen the position of buyers. Auctions are not only an advantage for the group: they also increase the transparency of the trading company's decision making processes for the supplier.

METRO Group buyers use standardized METRO forms to procure goods using the virtual market place. Buyers define their need and post their auction on the internet platform, including all further data. The auction may have been preceded by a price inquiry. At least two potential suppliers receive an exclusive invitation from METRO Group to bid. In a so-called preview suppliers can find information such as volume and delivery deadline for samples. Suppliers are only allowed to start bidding when the auction has been officially started. In contrast to blind auctions best prices can be viewed in open auctions. This transparent process has a positive effect on the dynamics of an auction. Suppliers have to stick to very stringent rules such as opening prices and minimum bid increments.

Transparency and comparability the basis for the success of online negotiations. Training, golden rules and standardized forms prepare buyers for Reverse Auctions. Participating parties have to adhere to a strict code of conduct and have to comply to a user contract. Every METRO Group employee posting online RFQ/auctions has to abide by these principles and sign an according declaration.