e-Negotiations and e-Auctions in Retail
Whilst e-Negotiations for indirects are common across many industries, retail also has a considerable number of unique categories that have been successfully price negotiated through e-Negotiation. Examples include house brand products (the most common category), carrier bags, trades rates, security services, shelving, roll cages, supermarket trolleys, shopfitting, lighting and so on.
The bid charts below are a few examples of successful e-Negotiations that have been run for retailers using the ARCUS e-Auction system.
Loyalty programs are a permanent and growing feature of the retail industry. According to The Australian Centre for Retail Studies at Monash University, 63% of retailers now run a structured loyalty program, most of which incorporate an associated loyalty card.
The e-Negotiation shown above was for the supply of loyalty cards for a supermarket chain. There are two notable characteristics of this negotiation: First, the price drop of approximately 38% from opening to closing bids suggests an industry that is used to achieving high margins. Secondly, the aggressive bidding by all suppliers resulted in a considerable number of extensions and, combined with the significant price drop, points to a very competitive market place.
The most common category chosen for e-Negotiation by retailers is house brand products - both food and non-food. The example shown above is for tinned sweetcorn. Notice the 'true market price cluster' of 3 suppliers that have all finished within 1.5% of each other. This allows the buying organisation to make their final decision almost exclusively on the qualitative ratings of those three suppliers as pricing is no longer a differentiating factor. This 'clustering' is a common characteristic of e-Negotiations.
Bags, whether they be plastic, paper or cloth are an essential and costly component of retail. This bid chart shows a competitive market with a cluster of 4 of the 6 suppliers finishing within 2% of each other.