A reverse auction is when an item first appears at full price but when the auction starts, the price decreases steadily.
The dream scenario is that you are the only one watching the auction so you can wait until the item gets to $0.01 before you press the Buy Now button.
But most likely there are hundreds of other people watching too.
They are all trying to guess how long they can wait before someone else will click the Buy Now button before them.
For example, if a pair of sunglasses starts at $100, you’ll watch the price start to drop.
$99. $90. $80. $60. $40!
You are might have the target price of $20 in your head, but someone else was going to buy those glasses tomorrow so they think 60% off is a great deal, so they click the Buy Now price before you do.
Or maybe it’s $100 Subway credit and you go there all the time. You are happy to get 20% off and so you’re the first to click the Buy Now button when the price gets to $80.
This is distinct from “Penny Auctions” or “Bidding Fee Auctions” which I think are pure evil.