A Hybrid Dutch Auction also called a Combined Auction, contains 3 stages: Dutch Part, Sealed Bid Part, and Best Price Part. Each of these 3 parts is a different auction type itself. This auction module was designed for an NPL disposal for Deposit Guarantee Fund (DGF) inside of ProZorro.Sale system and for the state asset sale. Prozorro.Sale received “The Shield in the Cloud Innovation Challenge” anti-corruption prize from C5 Accelerate and USA Institute of Peace and earned worldwide respect as the best anti-corruption start-up in public administration. Also, Prozorro.Sale got an award in the demo-days of the Citi Tech for Integrity Challenge anti-corruption startups finals. During 2018-2019 this auction module helped to gain a profit of $279M.
When can you use this auction?
This auction is convenient for you if you want:
- To sell goods with low demand
- To sell goods, which cannot find a purchaser for a long period of time
- To identify the topmost minimum market price for a particular object (at the Dutch stage)
Hybrid Dutch Auction is an efficient auction for selling and purchasing merchandise and services without overpaying for them. It is suitable for many spheres, but here let’s take a look at some examples, which will surely bring you the profit you crave for.
Top 6 ways to use Hybrid Dutch Auction:
- Non-performing loans - sell your unprofitable loan on a car, apartment, etc. Buy valuable belongings at a lower price than on the market.
- Mineral extraction rights - purchase or sell rights for extraction of such minerals as copper, barium, gold, iron ore, and more at reasonable prices.
- Commercial sales - quickly sell goods that cannot find a buyer for a long time.
- Railcar leases - rent railcars at an appropriate price.
- Property leases - sell property in no time and buy it without overpaying.
- Small privatization - transfer unprofitable business, property, or ownership to individuals. Buy business, property, or ownership cheaply to expand it to gain profit.
Rules of the auction
Let’s see how all 3 stages of the Hybrid Dutch Auction work together to create a good working strategy.
- The lot’s value is falling gradually by a certain % from its original price within a limited time interval until one of the customers takes a lot at its present price.
- If the price amount drops to its lowest prearranged value and no one takes the lot, the auction finishes.
- The first participant who takes the lot at the Dutch Part is called the Dutch Winner.
- New members can enter the auction at any time while the Dutch Part goes on.
- The bid step is a reduction of a lot value by 1%.
- The value contraction pace and the lowest price number is set by an auction designer.
The last lot price in the Dutch Part becomes a starting price for the next stage.
Please note that the winner of this stage of the auction DOES NOT take part in the Sealed Bid part.
* a 10-minute pause *
Sealed Bid Part
- Each member submits his or her bid privately within 10 minutes.
- No one can see others’ bid amounts during the round.
- When the round is up, the highest bid is announced.
- The Dutch Winner does not participate in this part.
This is the second part of the Hybrid Dutch Auction. The bids here should be higher than the starting price (from the Dutch Part).
* a 20-minute pause *
Best Bid Part
Best Bid Part is the third stage of the Hybrid Dutch Auction. Its winner becomes the winner of the whole Hybrid Dutch Auction.
- The Dutch Winner has a chance to compete with the Sealed Bid Winner and propose a higher bid.
- The part lasts for 5 minutes.
- There is no winner if no bid was placed in the first round.
- The winner:
- The Winner of Dutch Part if:
- No one places a bid during the Sealed Bid stage;
- The Dutch winner made the highest bid at Best Bid stage;
- The Winner of Sealed Bid Part if the Winner of Dutch Part did not place his or her bid in Best Bid Part.
- The Winner of Dutch Part if:
The Hybrid Dutch Auction process can also be customized to meet your personal requirements. Our team will help you to make your auction promptly and effectively.
Advantages and disadvantages
Here are some advantages of Hybrid Dutch auction:
- You can buy goods or services at a lower price than usual.
- If you want to, you are able to bid a higher price in the second/third stage of the auction, if you feel that the purchase would be beneficial for you. This option is unique for Hybrid Dutch Auction only.
- You are able to identify the real market price of goods.
- You can quickly sell your property and possessions that, in your opinion, have no important value in your life anymore.
However, there are some disadvantages as well:
- Sometimes it may be unprofitable to sell your property in Hybrid Dutch Auction. If you feel like it is worth more, you can use ascending types of auctions, i.e. Forward English Auction or Texas Auction.
- If you have doubts about the seller's product quality at such a low price, you can set your preferences beforehand and be 100% sure of the quality of goods or services before the auction.
As auctions now are available online, the procurement process became easier and more transparent. Atreus Saas Auction Platform can assure you about the full transparency and the ease of use of its auctions. If you wish to create your own type of auction, which will suit your purchase or sale the best, our platform allows you to do just that and even more. If you prefer to see if Hybrid Dutch Auction fits your requirements, try our demo by clicking the link.