Selling Flowers with Analytics

Abstract: The proliferation of online auctions has attracted significant business and research interest in understanding real-life bidding behavior. However, most of the empirical work has focused on business-to-consumer (B2C) auctions. A natural question is whether the findings obtained from B2C auctions are applicable to business-to-business (B2B) auctions, which often involve much higher stakes. In this presentation, we examine how professional bidders choose their bidding strategies in multichannel, sequential B2B auctions. Using data analytics tools and an extensive data set from the world’s largest B2B market for cut flowers, we find a stable taxonomy of bidding behavior and identify five distinctive bidding strategies. In addition, we demonstrate that bidders’ choice of strategies is associated with their demand, budget constraint, and transaction cost. Besides bidder profiling and predictive modeling, laboratory and field experiments are used to redesign these B2B auctions. Based on data analytics and experimental results, auctioneers are able to make faster decisions and better tailor the auction to the bidders present.

Bio: Eric van Heck is Professor of Information Management and Markets and Chairman of the Department of Technology & Operations Management, Rotterdam School of Management, Erasmus University in Rotterdam, The Netherlands. His research concentrates on the use of business architectures and digital platforms to deal with complex societal and business challenges. At the moment, he works on digital business & architecture, big data & analytics, digital work, and energy markets. Research is carried out in collaboration with innovative companies and universities in Brazil, China, Europe, Indonesia, and USA. Eric van Heck leads the iFlow project in collaboration with the Dutch flower industry and sponsored by Top Sector Horticulture and Starting Materials.

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