How does Sealed Tender technology work?

The sealed tender or capacity auction model enables supply to be balanced against demand while achieving the optimal price per unit.

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Understanding Sealed Tender and Capacity Auction mechanisms for your actions

The sealed tender or capacity auction model enables supply to be balanced against demand while achieving the optimal price per unit.

The design of this model was guided by three key objectives:

Maximise total value gain across buyers and sellers
Simplify the decision processes faced by buyers
Enable buyers and sellers to reflect their degree of flexibility over the quantities they want allocated.

The process:

Step 1

Auction set up

The auctioneer or marketplace operator sets up the auction by defining the quantity of product available, the number and duration of bidding rounds and the bidding rules for the auction. The matching engine may also be configured to optimise for price per unit (to yield the greatest profit), to maximise distribution among bidders (to encourage future participation), or to sell the most product (e.g. for products with a short shelf-life).

Step 2

Bidding process

Interested buyers submit their bids privately to the auctioneer or through the auctionplatform or marketplace. The bidders can only submit one bid and are unaware of the bids submitted byother participants.

Step 3

Price increase

Once bidding has concluded, a matching engine determines the final price per unit and distributes available supply among the successful bidders.

Step 4

Auction closure

After the auction, the platform confirms the quantity each bidder has been allocated and final price per unit. The buyers pay for the quantity they have been allocated and the orders are fulfilled. The auction platform or marketplace may provide additional services, such as invoicing, shipping and sales tax calculations, payment processing and arranging shipping.

Why Sealed Bid?

The auction marketplace software and the sealed bid model work together to an efficient and competitive environment for buyers and sellers to conduct online auctions.