Branded suppliers are increasingly being forced to take part in internet auctions if they want to gain listings with the major multiples.
The Grocer last week revealed how Tesco had outraged brand owners in the chilled yogurts and desserts category with plans to introduce an e-auction bidding process.
The buying tool, deeply unpopular with many suppliers, has traditionally been used for commodity own-label contracts and goods that are not for resale such as copier paper or store equipment.
However, auction hosts have now revealed that a raft of US retailers and some UK chains, including Tesco and Sainsbury, are increasingly using e-tenders to buy branded goods and sell promotional space.
Online exchange WWRE, which runs the WorldSOURCE auction platform used by Tesco, said members had run online tenders on branded cold meats, cheese, pizza, detergents, batteries and electronics.
WWRE’s auction volumes continue to rise sharply.
A spokeswoman said: “We’ve seen a trend in members running branded auctions in order to reduce the number of branded suppliers and for negotiating better budgets against promotional spaces.” A spokeswoman for GNX, which hosts auctions for Sainsbury and Carrefour, said: “Several customers use auctions for brands. Sainsbury has done so in the past.”
Suppliers said the practice risked commoditising brands.
One said: “I can see them working on, say, cheapest on display French wine, or something where there are lots of similar brands. But beyond that, it’s not clear.”
While auctions were now an established tool in any buyer’s armoury, there were still lingering concerns in the trade about whether they were being conducted properly, said British Frozen Food Federation director general Alf Carr.
He said: “I know of instances where buyers have contacted bidders while the auction is in progress. In most cases they are just there to beat down the incumbent.”
Tesco, Asda and Sainsbury declined to comment, but Somerfield, The Co-operative Group and Morrisons all said that they would not use e-auctions for branded goods.
A spokesman for Morrisons said: “Auctions are just an efficient process of collating prices, once all elements of the tender have been agreed.”
The Grocer last week revealed how Tesco had outraged brand owners in the chilled yogurts and desserts category with plans to introduce an e-auction bidding process.
The buying tool, deeply unpopular with many suppliers, has traditionally been used for commodity own-label contracts and goods that are not for resale such as copier paper or store equipment.
However, auction hosts have now revealed that a raft of US retailers and some UK chains, including Tesco and Sainsbury, are increasingly using e-tenders to buy branded goods and sell promotional space.
Online exchange WWRE, which runs the WorldSOURCE auction platform used by Tesco, said members had run online tenders on branded cold meats, cheese, pizza, detergents, batteries and electronics.
WWRE’s auction volumes continue to rise sharply.
A spokeswoman said: “We’ve seen a trend in members running branded auctions in order to reduce the number of branded suppliers and for negotiating better budgets against promotional spaces.” A spokeswoman for GNX, which hosts auctions for Sainsbury and Carrefour, said: “Several customers use auctions for brands. Sainsbury has done so in the past.”
Suppliers said the practice risked commoditising brands.
One said: “I can see them working on, say, cheapest on display French wine, or something where there are lots of similar brands. But beyond that, it’s not clear.”
While auctions were now an established tool in any buyer’s armoury, there were still lingering concerns in the trade about whether they were being conducted properly, said British Frozen Food Federation director general Alf Carr.
He said: “I know of instances where buyers have contacted bidders while the auction is in progress. In most cases they are just there to beat down the incumbent.”
Tesco, Asda and Sainsbury declined to comment, but Somerfield, The Co-operative Group and Morrisons all said that they would not use e-auctions for branded goods.
A spokesman for Morrisons said: “Auctions are just an efficient process of collating prices, once all elements of the tender have been agreed.”
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