Pesto
A Scanmarket Savings Snapshot on Retail
Cherry Picking eAuction results in 269 bids and savings of 417,000 EURO on pesto.
Challenge
A large Nordic retailer wanted to run an eAuction on different kinds of pesto products. Previously, one supplier had been used for all the pesto products, and the client was reluctant to switch suppliers as the existing relationship had been working fine. But a thorough RFP showed good competition between the suppliers and with a current annual spend of €1,450,000, the retailer decided to explore if there was money to be saved.
Solution
5 suppliers were pre-qualified for the eAuction based on a thorough RFP and product testing. The client conducted a Cherry Picking eAuction with the functionality Leading/Not leading including yellow light to motivate the suppliers to continue bidding during the event, as they will get a better perception of the closeness to the leading bid. The incumbent supplier was given an advantage of 2% in the eAuction to honor the good relationship and to take potential switching costs into account.
Result
High bidding activity - 269 bids submitted - 117 from the incumbent supplier. The eAuction lasted 63 minutes including 24 extensions of 2 minutes and generated savings of €417,000 (28%) compared to the current price.