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Vadim
Struk
Product Manager at Relevant Software

How to Build a Bidding Website or System (Based on a Real-Life Case Study)

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If you’re in the market for creating online auction websites, you may have picked just the right time to jump on the bandwagon. Web-based bidding platforms like eBay, Copart, and Etsy are growing in popularity, selling goods and services by the millions. Art-dealing behemoths such as Sotheby’s and Christie’s also moved much of their business to auction web applications long ago. 

But online auctions aren’t limited to selling consumer goods or luxury items. There’s another huge market where deals follow a similar process—construction bidding. Competing contractors submit their highly detailed offers (tenders) under tight deadlines, and a system then manages them and selects the best ones. 

So how to build a bidding website?

Relevant has recently completed building a bidding system for a client involved in the construction industry. In this article, we’ll share our insights and first-hand experience, so stay tuned for lots of valuable info. A short case study will conclude the piece, listing the challenges and their respective solutions.

But let’s start by looking at the reasons online auctions are trending. 

Why there’s a need for custom bidding system development

The cumulative size of the US e-commerce and online auctions market is estimated at $645,2 billion in 2021, having grown at a 12,1% rate since 2016. Numerous reports confirm this positive trend, listing the rising millennial population and the increased use of the internet for auctioneering among the contributing factors. But in general, there are two main explanations why the popularity of auction systems is rapidly climbing. Let’s look at them.

The cumulative size of the US e-commerce and online auctions market is estimated at $645,2 billion in 2021, having grown at a 12,1% rate since 2016
Source: IBISworld

The reasons people like auctions

As is often the case with us humans, there are rational and emotional factors at play:

  • Pragmatic benefits. The auctioning system has been around for ages. It has established itself as the gold standard for buying goods and services at the best price for value—or finding the highest bidder to sell them to—under time-sensitive conditions. 

For example, in Q1 of 2021, eBay reported passing the astounding mark of 187 billion active buyers, coupled with achieving a better-than-expected revenue of $3 billion, a year-over-year growth of 42%. 

  • The psychological component. This is another reason so many companies are looking to create auction websites. An auction reflects the barely explicable and highly elusive element of haggling, of almost cheating your way through the transaction. Research suggests that both buyers and sellers are susceptible to these phenomena and are likely to engage with systems that possess such attributes. 

These characteristics make online auction websites attractive and viable enough to be applied in many areas, including construction bidding.

Bidding software for construction businesses

Вidding is an integral part of a construction project. General contractors outsource some of their work to subcontracting firms by sending out bid documents. The subcontractor with the most competitive offer wins the bid and is hired to do the job. Managing multiple bids and comparing rates and material costs can be tedious and time-consuming. So, the primary function of bidding systems is to streamline and automate this process.  

There’s no lack of construction bidding software on the market, and many companies choose to adopt a ready-made solution into their workflow. This approach, however, has a few minor drawbacks and limitations, including gaps in functionality specific to your needs, inconvenient or expensive subscription plans, and infrequent updates. That’s why many construction firms opt for custom bidding system development, knowing they’ll get exactly the features they need while receiving proper support from their software partner.  

Due to the gaps in functionality specific to their needs, inconvenient or expensive subscription plans, and infrequent updates, many construction firms opt for custom bidding system development.

Before we discuss how to build an online auction site, let’s look at the features a bidding system should include.

Must-have features of bidding software 

Below are some of the essential bid management functions that you may want to consider when creating an online auction website:

  • Creating templates and bid forms. The main purpose of having a bid management solution is to streamline and simplify the process of compiling and submitting bids. Templates help with this.
  • Forming requests for proposals (RFPs) and requests to tender (RTTs). When working with suppliers and contractors, it’s essential to have the tools for formal inquiries at your disposal to facilitate the exchange of estimates and other project-related information.
  • Including a database of material and labor costs. An updatable library is indispensable when you need to create an offer quickly.
  • Managing communication with contractors and suppliers. This allows you to send notifications and receive updates in real time to keep track of changes in requirements and circumstances.
  • Performing all calculations and creating financial reports. These bid management software functions will help speed up workflow and eliminate human error in calculations.

As to some additional features that are interesting and/or trending, here are a few worth noting:

  • Mobile app. Because having quick and convenient access to basic features of your bidding software is a necessity, not a luxury.
  • CRM module for existing clients and new leads. Having an effective communication management tool is critical to keep your clients happy and is a key that opens doors to more business.
Essential Functions of Bidding Software

And now, let’s move on to the actual process and talk about how to make a bidding website.

8 steps of custom bidding system development

The basic logic used in creating auction websites applies to construction bidding systems as well—with a few tweaks that we will mention. 

Define your goal

The auction system can be used effectively for many purposes, from selling goods and services to commissioning complex construction jobs. For your online bidding solution to be a success, you’ll need to get a good grasp of the business objectives it will serve and the specific tasks it will perform. 

Choose an auction model

One of the decisions you’ll need to make when you set up an online auction website involves defining the rules of bidding and closing the deal. You can adopt one model or mix and match several models:

  • The English auction: bids start with a reserve price and go up until the item is sold to the highest bidder.
  • The Dutch auction: the price starts at a high point and is lowered until the item gets an acceptable bid above the reserve price.
  • The Vickrey auction: the highest bidder wins the item but only has to pay the second-highest bid amount.
  • The Double auction: multiple sellers and buyers submit their offers to the auctioneer who determines the clearing price. All buyers with offers higher than the auctioneer’s price can buy, and sellers whose bids were below it can sell.    
  • The Sealed bid auction: buyers are allowed to make one bid only, the offers are not disclosed, and the highest bid wins.
  • The Penny auction: starting at a minimum price, participants bid in fixed increments until there are no more offers. The lot goes to the highest bidder.

With construction projects mostly relying on the lowest, sealed, and two-step bidding models, you’ll need to pay strict attention to the value of the proposal and the bidder’s qualifications. Project delivery method is another important variable when making the decision.

Choose your monetization approach

This item is crucial if you intend to distribute your solution. You can monetize your online bidding platform in a number of ways, for example:

  • Subscription. As one of the simplest and most transparent monetization models, it involves charging a monthly or annual subscription fee. 
  • Paid functionality. Also called a freemium model, it describes a strategy where users have to pay for extra features that are not included in the free basic version.
  • Seller fees. This can include a fixed percentage on successful sales or sellers paying for exceeding a limit of listings in different categories.
  • Payment and financing options. By partnering with a payment system, you can collect commissions related to paid transactions and financing plans.
  • Advertising. Last but not least, this is a very popular option for monetizing traffic on bidding websites.

But if you want to apply your solution strictly for internal use, this step should be skipped.

Outline features and design

Once you’ve decided on your niche, business model, and target audience, it’s time to give some serious thought to the way your website will function and look. 

Will it have a mobile app counterpart? If so, will you require mobile app development services, or can your in-house team cover it? What functions will be available to users with a basic subscription? How will authorization and payments be handled? What will the bidding portal look like? What’s the best way to display and group service and material costs? How do you go about comparing the overall value of proposals?

There will be many more questions you’ll need to answer before you can shape the initial look and feel of your bidding solution. At this crucial stage, we recommend you proceed slowly and work closely with your development team to convey your needs and expectations.   

Select development methods and the right tech stack

This is where your team’s experience in custom web development really starts to pay off. Seasoned pros won’t spend ages thinking about how to create an online auction. They’ll choose the best approach, along with the technology most suited for the task at hand.

The tech stack choices will mainly depend on the functionality you plan to implement. But you’ll also need to consider how future-proof you want your solution to be. Once again, consulting with your tech experts is absolutely vital at this point.

Assemble your team

As mentioned earlier, you’ll face the decision of relying on your internal resources vs. hiring remote developers. Consider your time and budget constraints, assess possible gaps in expertise, and choose the approach that guarantees achieving your business objectives in the most efficient way.

Develop an MVP

A Minimum Viable Product is the first iteration of your future bidding software, the first step towards achieving the actual finished product. It should comprise just enough functions and features to work, giving you a chance to receive feedback from prospective users—be they customers or your employees. 

Without this step, you risk running into problems during later stages of development, which could result in a total change of direction and costly re-work.

Finalize the product, test, and launch

Of course, this won’t be as easy as it sounds. The project will go through backend and frontend development—covering both the server and client side of things. With the help of thorough testing, your QAs will find bugs that crawled into your code. 

And then, one day, your development team will report that a fully working, thoroughly tested version of your software has been released and is ready for launch. Your company can finally start reaping the benefits of using the new solution—or make a profit from its sales. 

8 steps of custom bidding system development

Now that you know how to create an online auction, we’ll tell you how we built a bidding solution for a client of ours not long ago.

How we developed bidding software

Relevant’s diversified expertise comes from the hard and rewarding work we performed in delivering more than 200 successfully concluded projects to our clients. Our seven years of overcoming obstacles, finding elegant solutions, and exceeding expectations have granted us priceless experience and a five-star Clutch rating.

When our client shared their vision of Biderator with us, we knew from the start that this project was going to be both fun and demanding. Charged with the task to create a bidding website that would connect contractors with projects and remove the common hurdles of unclear estimates and vague deadlines, we swung into action.

Here’s what came out of it.

Biderator and its features 

Biderator’s location-based listings are dynamic, with short page load times and reliable control of multiple flows by the users. Sorting available contractors by region is easy and convenient.

Managers can post and change jobs on the fly, with lots of supporting documentation for prospective contractors.

Should the bidders require additional details, they can quickly obtain them through the RFI (Request for Information) section of the website.

The heart of the service, its bidding engine, allows the contenders to post their offers, modify them according to changes in project requirements, and see their contenders’ bids—all in real-time.

All of this was made possible by the meticulous selection process and flawless implementation of various technologies, along with effective project management. 

Here’s how we did it.

The methods and technologies we used

Thanks to clearly assigned responsibilities (the RACI matrix) and a proposal to switch to user testing, we were able to accommodate the client’s budget without cutting corners. We tackled the time difference challenge by recording our team’s meetings, so the stakeholders could view them at their convenience.

Biderator’s pages load blazingly fast with server-side HTML rendering. The use of RxJS (Reactive Extensions for JavaScript) allows for simultaneous handling of multiple asynchronous data streams. The same technology ensures the auction web application is fine-tuned for each type of device it will be displayed on.

So, what resources does it take to complete a project like this? Let’s find out.

The costs of bidding system development

Depending on your project’s scope and complexity, you’ll need different numbers of developers and QA engineers to achieve your goals and meet production deadlines. But before you fire the starting gun, you’ll have to decide on how to hire your team. The two most common options are in-house employees and outsourced developers.

If you opt to build your own auction website in-house, you need to factor in salaries (anywhere from $80 to $150 an hour per team member), the cost of accommodating your new employees in an office and/or buying equipment, as well as benefit packages and bonuses.

By choosing to outsource, you gain the benefits of a larger talent pool combined with considerably lower hourly rates. Another perk of outsourcing is that your software partner will take care of both assigning their employees to your project and taking them off the job when you don’t require their services. This means you can leave scaling the team up or down to the vendor. Hiring a software development team is also a great choice if you need more time to focus on your core business.

The time your software development team will spend on your project will differ significantly in proportion to its scale and complexity. If you need a more precise estimate, contact your software partner.

The bottom line

Online bidding systems are here to stay and will continue gaining popularity, particularly in the construction industry. Given the complexity of the process of submitting tenders on the one side and selecting the best bid on the other, bidding solutions must be built with efficiency and reliability in mind. To create such software, vendors need to have sufficient experience and a strong technical background.

If you’re ready to create your own online auction website but aren’t sure where or how to start, Relevant will gladly come to your rescue. We’re prepared to build your custom product end-to-end or help scale your existing teams with our hand-picked developers—right when you need them and for as long as your project requires.

Let’s connect and get your bidding system on its feet as soon as we can.

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Written by
Vadim Struk
Product Manager at Relevant Software
For more than 6 years, I've been working as Business Analyst and Product Manager at Relevant. I'm responsible for requirements engineering and management and solution implementation control.

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