Few fans of reverse auctions

Jul 1, 2005 12:00 AM, By Katherine O'Brien

From the Pressroom…

At the recent Print Oasis conference, a print buyer asked AMERICAN PRINTER columnist Dick Gorelick about reverse auctions. "Don’t do it," advised Gorelick, explaining that such auctions can create disloyalty and lack of trust. While some people literally applauded Gorelick’s stance, another print buyer said reverse auctions can work, provided the buyer offers very specific criteria.

When the presentation ended, several printers rushed to give this buyer their cards. We asked our e-newsletter readers for their comments. Here are some of the highlights:

‘Our own worst enemy’
We printers are our own worst enemy. Keep me out of the auctions. There’s more money in a CD at the bank.
—Phil Minor, president, Minor’s Printing Co. (Boone, NC)

Ditto for Chuck
I would not participate, but your story proves that we are our own worst enemy. Why cut your own throat?
—Chuck Gherman, Printing Arts Press (Mount Vernon, OH)

Give ‘em a ‘swift kick in the ass’
These guys, along with print brokers, need a swift kick in the ass out of the business. All one has to do is look at the PIA numbers for profitability over the past five to 10 years to understand that these two areas—brokers and auctions—have done no one a favor.
—Robert Johannes, vice president, Parris Printing (Nashville, TN)

‘Needs fine-tuning’
I’ve been involved in many of these, and asking for specific criteria is just the start. The majority of times, the lowest bidder does not, in fact, get the business. What the reverse auctions [often] become is:

An exercise for those truly interested in the book of business.

A way to get the incumbent supplier to lower its prices, if it's interested in "saving" the business.

I think this practice has its merits, however, it needs some fine-tuning.
—Jim Gleason, Oser Press (Rochester, NY)

Three key questions
I am not in business just to run my plant for anything that comes in and wastes my resources. There are three questions our customers should ask:

What is working for your company today? It’s critical for my company to fully understand our customers’ and prospects’ businesses.

What is not working for you today? We want to know where we can help the most. Our goal is not to cut your price. Our goal is to cut your costs.

What would you change if you could? How can we collectively and collaboratively use our innovation and technology?

If my customer or prospect is willing to answer the above, then I know a REAL relationship can come about."
—Thomas A. Turano, director of corporate development, www.malnove.com

A wasted effort
If the only thing you have to sell is price, then reverse auctions can work for you. But if quality or service is part of your business, auctions are a wasted effort.
—Dan Kelley, Kirkwood Printing (Wilmington, MA)

Print buyer says ‘no thanks’
I am the print buying manager for a large ministry. Reverse auction vendors regularly solicit us. As a ministry dealing with donated dollars, we are very serious about the way we conduct business and our reputation. We have not nor do I expect that we ever will participate in bidding wars.

Before I came to the purchasing side, I was a partner in a small, $2 million sheetfed shop. In the mid-1990s, we began to struggle and my partner wanted to pursue "alternative" methods of filling press time. I still see that as the primary motivation [for reverse auctions]: These vendors can’t book sufficient capacity through normal channels based on service, price and quality. When I am approached by one of these vendors, my first thought is, "Why is he willing to sell himself short?"
—Kevin Shirin, senior manager, Focus on the Family, Peak Creative Group (Colorado Springs, CO)

Printing for nothing is the real problem
The problem is that the vendors who bid in these reverse auctions are printing for nothing. They have gotten equipment for next to nothing with liberal paybacks, thanks to the manufacturers, set up shop and given work away. Two or three years later, they can’t make it because they don’t know how to run a business.
—Mike Williamson, owner, Litho in USA (Battleground, WA)

The final word
They all should set up shop at the Mustang Ranch.
—Rick Pietroski, Resource Graphic (Schaumburg, IL)

E-mail feedback to kobrien@primedabusiness.com.

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