Japanese Auction

A Japanese Auction is a specialized auction format where the price decreases or increases at timed intervals, and participants must actively confirm their continued participation at each price point or drop out of the bidding. In procurement reverse auctions, the price typically decreases incrementally, requiring suppliers to accept each lower price level to remain in contention.

Key elements of Japanese auctions include:

• Pre-determined price increments announced at regular intervals
• Required active confirmation from bidders at each price point
• Automatic elimination of participants who don't confirm
• Clear visibility of remaining participants (but not their identities)
• Progressive narrowing of the competitive field

Procurement organizations often use Japanese auction formats when seeking to establish supplier commitment thresholds, ensure active engagement throughout the bidding process, or when dealing with categories where supplier quality and reliability are as important as price considerations.