Asda’s auction is a ‘blood fest’

14 April, 2009

Asda’s new blind online auctions for its own-label drinks suppliers have been branded a “blood fest” motivated by getting the lowest possible price rather than quality.

The controversial e-auction means buyers conduct an auction with competing suppliers simultaneously trying to offer the best price without knowing what rivals are bidding.

Suppliers have attacked the buying tool for pushing prices down to unsustainable levels.

One supplier told OLN: “If people taking part in this blood fest of e-auctions aren’t careful, their macho side will take over and prices will drop dramatically.”

He added that under Asda’s new plans, drinks are tested for quality after the auction takes place. “For me it seems the wrong way round, it shows they’re really looking at price. Price is a number one priority, and quality is secondary.”

Asda confirmed that buyers in all its departments will have the opportunity to use web auctions for existing and new suppliers. The system has been created to “save time and therefore help reduce operating costs”, a spokeswoman said.

“The quality of the products will not suffer, the specification of exactly what we want is outlined at the start of the bidding process. We will then start talks with the supplier who comes in with the lowest cost.”

She added: “The ‘winner’ of the auction is not necessarily guaranteed to get the business, we have to ensure that the product meets the highest possible quality we want to deliver.”

Steve Barton, director of Brand Phoenix – which supplies Asda’s own-label Champagne – said e-auctions were a way for supermarkets to gauge “the level of price that suppliers could go to” in such testing economic times.

“Supermarkets are playing the market conditions. Yes they are aggressive, but they provide an enormous opportunity to interact with consumers ,” he said.

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