A request for quote or RFQ is a process where the buyers of a product or service requests selected sellers/suppliers etc. to submit a price quote and bids for providing the requested number of products or quotes. RFQ is also known as an invitation for bid (IFB). To put it simply, RFQ is a request to know the prices of the products you intend to purchase.
The RFQ usually entails more than the price of the product or services under consideration. It generally also includes the details of the product or service along with its complete specifications.
In ecommerce terms RFQ is especially important in B2B marketplace scenarios where the buyers request for quotes from different vendors. Different vendors then submit their price quotes for supplying a specific number of standard products. Having the RFQ process in place is especially important for businesses that buy or sell bulk products and services regularly.
An RFQ is the first step towards submitting a RFP or request for proposal. Both these documents together provide the details of the products or services required to the buyers. However, RFQs usually deal mainly with price quotes. RFQ contains comprehensive details about prices of generic products which have clear specifications in terms of quantity, quality etc. RFPs on the other hand, are for unique or niche products or services which are difficult to quantify and specify.
For example, when a buyer requests a quotation for different licenses of a software, it can be easily quantifiable. However, when the scope of the software along with support specifications is required it can be provided through a RFP.
A request for quotation is categorized in different formats based on the way it is presented. Here are the main types of RFQ:
In an open bid RFQ, the response price quotes are visible to all participants. The suppliers have the option to update their submitted bids until the deadline. This type of RFQ visibility usually encourages competition between suppliers and helps the buyers negotiate a better price.
In a sealed request for quotation bid the RFQ is open to all bidders who can supply the product or the services. The buyer opens the responses once all the bids are submitted. This type of RFQ ensures transparency and reduces unwanted competition.
As the name suggests, an invited bid is actioned by sending invites to qualified participants/sellers. The bidding can be open or sealed and after receiving the invite the sellers send their RFQ. The invitation bid is targeted towards trusted vendors who are already reputed for their products or services. Invited bids reduce the overall selection time but may not be very competitive.
The reverse auction asks the vendors to submit their lowest quotes. This type of RFQ is usually initiated when no vendor meets the price target in initial bidding rounds.
The aim of different types of RFQs is to get the best price quotes from the vendors. This process helps buyers make an informed decision and helps sellers in projecting their cost in a profitable way based on the quantity ordered.
Enterprise brands can have the following advantages by adding request for quote to their processes:
Structure and gather bids in a formal comparable way.
Creates a sense of competition among vendors who then pitch in to offer best prices
Portrays the enterprise brand in a positive light as being unbiased towards dealers/suppliers etc.
Boosts buyer trust as they get options to choose from
Reduces the overall time of the sales cycle
Request for quote helps enterprise B2B brands make their overall sales process faster, efficient and profit-oriented. By replacing the manual RFQ process with automated RFQ forms brands can gain a competitive edge and modernize their processes for greater transparency.
StoreHippo has an inbuilt RFQ module with a host of features and flows to make the whole bidding process faster, streamlined and efficient. With the request for quote feature of StoreHippo your B2B brand can make the whole price negotiations process easier and faster for both the parties, i.e, the sellers and the buyers. While the buyer can simultaneously request quotes from multiple buyers, they can also approve or reject quotes themselves. They also have the feature to re-request quotes. Buyers can place orders directly with the sellers based on their RFQ. Also , buyers, sellers and admin are informed at each step of the process via unified notifications.
With the Request For Quote feature StoreHippo empowers B2B enterprise brands with an influential-tool to modernize and improve their business processes.