The idea behind the Bulgarian Auxionize platform had been born out of a real business need. "For our business to function, it needs to be supplied with thousands of materials," said Ivaylo Penchev, founder and CEO of a number of successful companies, the most famous of which being Walltopia - a world leader in the artificial climbing walls design and manufacture.
"I wanted to encourage employees buying products and services for all our projects to make it in the most profitable and transparent way possible," explained the entrepreneur.
For most business owners and managers, this feels like having to overcome a problem with one hand tied behind their back.
As a rule, buyers collect offers via email, by contacting suppliers of their choice - those they already work with or others they have found online. This model, of course, does not guarantee the clients will be able to find every suitable supplier of the product or service required. Offers can be provided for similar, yet different goods. They may differ in terms of payment and delivery, as well as various other features. Thus, comparing them constitutes a slow and inefficient process. It hinders the achievement of the best deal based on the client’s criteria.
This is not an optimal model for suppliers either – clients communicate with each of them through different channels, not at a single location. Thus, sellers receive feedback on how competitive their offers are only if buyers notify them.
Collider Activity Center - the building of Walltopia in "Sofia Tech Park" - is an example of the scale of orders a company can make using Auctionize. When Ivaylo Penchev and his team started planning its construction, the auction platform was already up and running. This allowed him to choose the designer, as well as all products and systems needed for the project (from metal profiles, gypsum boards, cement mortars and glass, through building management systems and energy monitoring to roof landscaping) by using the Auxionize platform.
Nowadays all the supply processes in the entrepreneur’s companies are carried out through Auxionize - including products and services for events, exhibitions and corporate parties.
What does the supply world look like without Auxionize?
Let's say that today I decided to build a building. And I have one man on the team, who is quite experienced in the supply of products for capital construction. His first job, after getting used to the work and starting to feel some power, is to start taking advantage of it. Now he is very important - he has 20 million to spend. The first message of such a person to the world is: "I decide to whom I will award the contract. It's up to me. I will invite supplier 1, I will not answer the email of supplier 2, and I will tell my boss that supplier 3 is no good." This means that your buyer is becoming an information operator - he can distort and block it, instead of promoting free and transparent competition.
How does Auxionize change that picture?
If something is done secretly, it is done the way a certain person wants it. When something is done in public, it is done the way it should be, as society expects. At Auxionize, everything happens in public. When I announced that we were building an office building, this message reached hundreds of subcontractors, manufacturers and traders of construction materials who are active in Auxionize.
For example, if an employee from the supply department, by any chance decides to exclude one of the suppliers, I get notified and I can check the suppliers profile - let’s say so far he has participated in 50 auctions, won 40, so he is not that bad. Thus we solve the problem of restricted access to transparent information, which is huge, especially in growing organizations.
Why is the client-centric market an advantage for both parties in a transaction - customer and supplier?
All existing markets are rather "vendor-centric". Suppliers or manufacturers of a particular product own stores (physical and online), where they display their goods, and customers make an effort to visit a number of stores to get acquainted with a particular product and choose the best at the best price. On these markets, the seller arranges the products in the most profitable way - for example, on the basis of the best margins, not the best qualities. Then he talks to the client in the absence of his competitors, which allows him to omit or distort information - something he would not allow himself to do in a public environment.
In short: it restricts information to buyers and does not allow transparent and effective competition between multiple sellers. On Auxionize's client-centric market, each customer has a virtual "territory" where they announce what they intend to buy, and it is available to all suppliers offering the products they are looking for.
When does a business purchase products through an auction or through the new "live nomenclature" functionality?
Live nomenclatures are intended for products that businesses need on a daily basis. If I own a restaurant, I will not use an auction to buy lettuce for the kitchen. In my nomenclature I can constantly monitor the prices at which different suppliers sell this product and I can buy the quantity I need for up to two days ahead. Today I enter the live nomenclature and order 10 kg of lettuce.
Auctions are suitable for products that are bought less frequently, in larger quantities. At Walltopia we buy metals every week, but there are times when we decide to buy a much larger amount of metal because we expect a rise in the prices. Then I launch an auction because I don’t want to buy only 50 tons (which I can buy through the live nomenclature), but I need 1000 tons - a quantity for which suppliers are starting to compete.
How does the platform change and optimize business processes?
Auxionize for the supply process is what the printer is for calligraphy. Since we developed Auxionize, we do not need to turn to a supplier for every product - everyone can buy efficiently using the platform. The supply department is a legitimate part of the business for sure, but many cumbersome processes related to it can be avoided. For example, logistics.
Every day we send cargo to different parts of the world by road, water and air. Something is constantly being loaded somewhere. You think you would be lost without the logistics department. However, Auxionize allowed us to eliminate this department. Previously, there was lots of unnecessary communication between the project manager and the logistics department. Now any project manager can organize transport services through Auxionize and in general - gather all the knowledge he lacked in terms of logistics processes through the platform.
How do you see Auxionize in five years?
We have large-scale ambitions. We are testing the work of the new version and if we are satisfied, we will enter the United States and the entire world. We are looking for an investment of about 100 million euro to turn Auxionize into a global platform.
Ivaylo Penchev,
Founder and CEO of Auxionize
We will seek an investment of 100 million euro to make Auxionize a global platform.
The new features of Auxionize enable businesses to develop even more strategies in trade and supply transactions. Some of them are the Interchangeable Product Set (IPS) and the live nomenclature, which are logically connected. IPS allows grouping of equivalent products into a single "bundle" that becomes part of the buyer's nomenclature.
Top 10: most developed categories with over 100 contractors
Manufacturing
raw materials
Production
equipment
Workwear
Construction
Office supplies
Packaging
Hardware and software
Advertising materials and services
Consumables
Transport
THE FUTURE
of Business Deals
Auxionize reverse bidding platform is being established as a multifunctional digital market for customer- supplier transactions. Global development is the next step for the service
From the Тrench
to the Рoof
Currently, the platform has over 11 thousand companies registered in 50 categories - 400 of them are buyers and the rest are sellers. Since the launch of the platform in 2014, more than 41 000 transactions have been made using the platform. Although construction and transport are some of the most developed categories in the platform, it is suitable for companies from all sectors as well, and it can be useful for both small and medium-sized businesses and multinational corporations - buyers. One of the most interesting companies in the platform at present is the Czech manufacturer of medical devices for physiotherapy, cardiology and aesthetic medicine, which purchases mainly electronic components - integrated circuits, microcontrollers and diodes, using Auxionize. Another outstanding company is a Bulgarian organic food producer, which buys packaging materials, transport services, construction products, printing and advertising services. The companies having the highest turnover buy products from about 10 categories on average.
Since the entire supply process of a buyer company can be organized in Auxionize, this also helps the management to monitor all company purchases more accurately and easily. According to Ivaylo Penchev, this solves the third significant problem - corruption.
"All people who spend other people's money, sooner or later start spending it inefficiently, then even more inefficiently, and at some point they start spending effectively, but for themselves. Therefore, everyone who spends other people's money must do so in a transparent environment," he commented.
The information available on the platform (auctions with few participants, auctions ending at an inconvenient time, % price reduction, etc.), as well as access to comparative analysis with industry practices and prices help to control procurement processes and ensure optimization, where needed.
Automatically Linking
Demand and Supply
registered companies in 50 categories
11 000
over
for over € 100 million
Auxionize deals:
~ 41 000
Auxionize creates a new market that combines the benefits for buyers and sellers. Rewards companies that create value.
The best, not the most cunning.
Insufficient number of people, too many products, absence of bargaining power in the customer’s supply departments
Corruption
High price for reaching potential customers in the sales departments of sellers
What is Auxionize’s
client-centric Market
How It Works
Buyer’s
Benefits
Seller’s
Benefits
Why the Best One Has an Advantage Over the Smartest One
Customers announce what they want to buy and sellers compete for the contract, improving their bids. Auxionize provides the platform where all of that happens, it is not an intermediary on the transactions between buyers and sellers.
The client-centric market ensures that as many sellers as possible have been informed about the products sought by buyers, so that they can bid competitively. The objective is for the buyer to reach the best supplier of the most appropriate product, choosing it in the most informed way possible. Auxionize’s functionalities allow easy comparison of similar products by their specific parameters and values, as well as their prices.
The buyer compares similar products offered by different manufacturers at a single location, based on criteria set by him, and makes an informed choice according to his own needs and delivery conditions. The detailed description of the product world educates buyers and allows them to choose based on relevant rather than misleading information. Auxionize ensures complete control over the entire purchasing process within the company.
The sellers make direct offers to specific customers who want to buy their products simultaneously, because the platform automatically connects demand and supply. It allows sellers to drastically reduce their costs for finding new business opportunities and virtually eliminates potential losses arising from missed opportunities for deals, which remained "under the radar". Sellers participate only in real deals. They are able to negotiate multiple deals at the same time.
The rating system (customers rate suppliers and vice versa after the deal), the history of each company including auctions won and lost, as well as the certainty that if a new suitable supplier appears, the system will automatically recommend it, contributes to the above. The rating system provides a good indication of the integrity of both sellers and buyers. The ratings and comments made are visible to everyone and users can take them into consideration when choosing a contractual partner.
products in the global Auxionize catalog. If the seller / buyer does not find the product he is looking for, he can create it and it will be available to all users.
100 000
AUXIONIZE 2.0: ETERNAL REVERSE BIDDING AUCTION
In IPS buyers group products that meet their needs on an equal level and receive offers for all of them at a single location. This reduces the time for researching prices and materials.
"In Auxionize, buyers buy IPS, not specific products, since nowadays almost always a product has an alternative," explained Ivaylo Penchev. We can further understand how important the ability to create an IPS is by looking at the "design computer" example. This computer must have RAM over 16 GB, a processor not older than Intel 6, a disk with at least 500 GB, a specific NVIDIA 10 card, etc. By filling in all the parameters in the Auxionize search engine, the buyer can see that 50 machines meet his requirements. Then he can create an IPS "Design Computer" and choose the best offer more easily.
Easier comparison of offers for similar products
"While auctions are suitable for larger business orders and events, such as the construction of a building, for example, and the live nomenclature is for products that I buy, i.e. I need them all the time," explained Ivaylo Penchev.
The nomenclature is inspired by the option for the buyer to receive offers from multiple sellers in real time without having to send inquiries or invitations for a tender.
"By adding to my nomenclature all the products I'm looking for, all the sellers who offer these products in their nomenclature will be notified - they will see who I am, what exactly and how much I would like to buy. They come to me and start announcing prices for the products I'm looking for.", explained Ivaylo Penchev. Thus, the live nomenclature provides buyers with access to current market prices without having to waste time searching and negotiating, and constitutes, in fact, an endless reverse bidding auction.
New Options for Concluding Deals
See Who Buys How
Auxionize's product catalog, which contains more than 100 000 formalized products, develops a common communication language for both sellers and buyers, says the platform's creator. It allows an automatic link to be made between demand and supply and saves time for refining the details of a product or service needed for a specific project, department or business process.
This approach solves the problems in the supply departments of customers, whose employees do not have time to get to know every product in the world and to carry out negotiations. At the same time, it makes it easier for sellers to reach new potential customers - all the seller has to do to ensure good positioning and visibility of his products is to describe them objectively.
"At Auxionize, suppliers are talking to buyers in a more targeted way than anywhere else," says Ivaylo Penchev. "Buyers are here on business, to buy - and they are open to all the information that sellers can provide them."
SMART SUPPLY
The platform’s objective is to solve several problems that, according to Ivaylo Penchev, are faced by all organizations
Each company has a few people in the supply departments, responsible for the purchase of lots of products, Ivaylo Penchev explained. "We have two people involved in this process, and our business requires ten thousand products. Two buyers could never comprehend the qualities of so many goods and make the right choices, even if they are the smartest people in the world." The entrepreneur believes that these departments almost always face the problem of time or negotiation skills shortage"
All Offers at One Place
What can you do if you are unable to delve into the details of all products and you don't have bargaining power in the team? You don't need to hire a hundred buyers, you have to look for an option where only two buyers would be effective," Penchev commented.
"For example, I'm looking for computers for the company designers. There are probably a hundred types that could do the job, but I'm not an expert and I can't choose the best one at the best price. In an analog environment, the X brand supplier will tell me that all great designers in the world work with this model of X’s portfolio. I will listen to what he has to say, bid him farewell and meet with the Y brand supplier who believes the X model is overpriced and he has to offer me something much better for designers at a better price. However, the best way to educate myself would be to gather many suppliers of computers suitable for designers, who would talk to me at the same time at the same location - thus they will avoid lying and will convince me of the benefits of their product based on the actual values."
Lost in Translation –
Never Again
The first way Auxionize solves this problem is the so-called formalization. One of the main ideas of the platform is based on this term - the possibility of making an informed choice and ensuring comparability of offers. Formalization on the platform constitutes a process of objective and structural description of products through their important features (properties) and the definition of values for each feature.
An example of a feature in the computer category is the memory, with its measuring unit - GB, and the possible values are a countable list of numbers. A certain computer class has dozens of other features, each having a different value. Therefore, it can also define dozens of end products (tree leaves).
"Thus, the formalization allows me to compare computers based on the values of the parameters and get to those suitable for the design department of the company” explained Ivaylo Penchev. Using this model, we develop a global product catalog, where all materials and services are presented based on their objective values."
The formalization model is based on the categories and resembles a taxonomic tree. The trunk is the main category, where subcategories are located, the branches are the subcategories, their thinner branches are their own sub-subcategories, and so on - until we reach the leaves, which represent specific end products.
AUXIONIZE’S FIRST SEVEN
Today, Auxionize is much more than a reverse bidding tool with ambition to gain a foothold in the global field of digital procurement services.
The team’s vision for the platform is to turn it into a marketplace, improving the relations between clients and suppliers to the extent that everyone along the chain can be more efficient and profitable. This is happening through new features allowing more flexibility, information, fast and objective comparison of offers and, accordingly, the selection of the best ones.
"The marketplace created by Auxionize 2.0 is so radically different, that we couldn't proceed without a new word explaining it. I introduced the term 'client-centric'. At first
only I liked it because it's not considered melodious and glamorous," said Ivailo Penchev. Just like there are no glamorous slogans and colorful advertising slides in the communication and interaction between buyers and sellers. He maintains that Auxionize provides accuracy and real values. They allow people and teams, who have an impact on a company's financial state, to make the most informed decisions possible for each transaction in a transparent and competitive environment.
Quick, Easy, Transparent Negotiations
“Auxionize provides solutions to these challenges in the relations between contractors and suppliers”, says Ivaylo Penchev, who was the driving force behind the Auxionize project in 2013.
The platform was launched as a tool for automated B2B reverse bidding in order to optimize the purchases of companies coming from various sectors. Following the development and addition of new functionalities, Auxionize is becoming a well-organized digital market for all acting along the supply chain.
For example, a company is launching a project to build an office or a production building. It needs to buy a huge amount of quality cement mortar for waterproofing. By announcing an online auction through the Auxionize platform, which attracts a large number of competing suppliers to the deal, the company can obtain the best product for its purposes at a better-than-expected price without the need to hold difficult negotiations. Using the platform, the company can buy hundreds of different materials for its project.
Benefits for Both Buyers and Suppliers
This model allows significant cost optimization for companies requiring intensive supply, according to Ivaylo Penchev. This, however, does not result in compromising the qualities of the products sought, because the other important aspect of the platform is the ability to objectively assess and easily compare the qualities of products or services. This further shortens the path to the best offer in price/ quality terms.
On the other hand, for subcontractors, manufacturers and suppliers, Auxionize paves the way towards new customers and markets, providing a competitive environment. The platform automatically connects demand and supply - each time a new buyer of specific products offered by supplier X appears, the supplier is notified of the presence of a new potential customer. Then he gets instant access to such clients, just as buyers get automatic access to suppliers of products they demand.
B2B (R)EVOLUTION
I wanted to motivate people who buy products and services for all of our projects to make it as profitable and transparent as possible.
Special project for
Idea and realisation
There are over
products in the global Auxionize catalog. If the seller / buyer does not find the product he is looking for, he can create it and it will be available to all users.