Deal or no deal: what will price-comparison do to wholesale?

Deal or no deal: what will price-comparison do to wholesale?

Price-comparison websites have hit the wholesale channel, but what will the cost be of putting confidential price files in the public domain? ELIT ROWLAND reports

To be compared or not to be compared? That’s the question that wholesalers will need to consider as price-comparison websites hit the channel, promising retailers, caterers and foodservice outlets the chance to see which are the most competitively priced operators. But with wholesalers offering a complex system of price files and tailored price packages, will the concept really work?

There are currently two main price-comparison websites for wholesalers’ customers. The first, www.improve­thatprice.com, started out last year as a price-comparison site for professional caterers. Today, it has branched out into grocery and offers a price-tracking tool that emails you when the lowest cost of an item drops; it also features a report that comparesprices by key categories.

The second, www.comparethewhole­saler.com, which claims to have 20,000 pre-registered subscribers, is aimed at independent retailers and will launch this month. The website, which is free to join, will compare prices of 100 beacon brands across cash & carries in the UK.

 Lack of accuracy?

To the average person, comparing everyday pricing on key brands in the cash & carry channel could seem straightforward, particularly if you don’t have to consider the cost of delivery. But with tailored packages for different customers across different channels, price-comparison could start to get messy. It certainly sparked a heated debate on Better Wholesaling’s LinkedIn discussion group, where Jason Finch, director of Port80 Wholesale Technology, argued: “Many wholesalers have discount schemes and over-riders based on volume purchase. How, then, do any of these sites hope to be accurate?”

Commercial director of www.compare­thewholesaler.com Robert Morrison admits that the site won’t be able to offer every deal available, but it will offer a “true sense of who the really competitive wholesalers are”.

“There is a worry that price-comparison sites could lead to more cherry-picking on promotions or products that are cheaper… you will probably end up not selling any more or less but just selling what’s cheapest, which could impact margin.”

Martin Williams, managing director, Landmark

To respond quickly to changing prices in real-time, the site will rely predominantly on retailers. Robert says: “We hope they will be motivated by the benefits of having this shared information.”

And things don’t get any clearer when you cross over into the delivered foodservice channel. In fact, quite the opposite: “It’s difficult to create a like-for-like picture of pricing that takes into account the realities of the delivered [foodservice] market,” explains Nicholas Weber, head of ecommerce at 3663, adding that quotes are often based on volume, frequency of deliveries and other factors.

A simple website wouldn’t be able to compare these customised requirements. “It would take a lot of sophistication and know-how to get there,” Nicholas says.

3663 pulled its logo and pricing details from www.improvethatprice.com earlier this year, claiming the site had taken the information without permission. It has no plans to work with price-comparison sites in the future. “We are already transparent on price,” adds Nicholas.

 

Negotiations undermined

While it’s early days for both sites, wholesalers have already voiced serious concerns over the impact they could have on the wider supply chain. Paul Gray, communications manager at Bestway, says: “Depot managers have the freedom to ‘wheel and deal’ at a local level, but if everything becomes available online, all our wholesalers’ negotiations will become void and you’ve done a disservice to the supply chain.”

One retailer says that the sites would help push for better deals. Dean Holborn, manager of Holborns in Surrey, says: “I don’t know if price-comparison would change the way I shop but it would help me to negotiate with a wholesaler on price.”

Robert Morrison says that the site will help retailers to improve terms by at least 3%. He posted on the discussion group: “That could be an extra £11k to £26k per year contribution for a retailer – they could do a lot of good with those sorts of sums in their tills.”

Proprietors of both sites claim that most of the pricing is available in the public domain. “What we do is organise it into an easy-to-read format, make it accessible and thus help retailers to devote more time to other equally important tasks,” adds Robert.

Too price-oriented?

Perhaps one of the biggest concerns for wholesalers that find themselves listed on price-comparison sites is that, after ironing out the technical creases, these sites could encourage customers to become too price-oriented.

“From a wholesale perspective, price-comparison encourages customers to pick and choose what they buy a lot more,” says Martin Williams, managing director of Landmark. “You will probably end up not selling any more or less, but just selling what’s the cheapest, which could have an impact on margin.”

“Depot managers have the freedom to ‘wheel and deal’ at local level, but if everything becomes available online, all our wholesalers’ negotiations will become void and you’ve done a disservice to the supply chain.”

Paul Gray,communications manager, Bestway

This could be a problem for wholesalers expanding their offerings – from, for example, on-trade to general grocery or grocery to foodservice – to satisfy customer demand for a one-stop shop. Will the investment pay off if everything is about price?

Martin James, commercial director of www.retailersaver.com, an online buying group for retailers, points out that in striving for better prices, wholesalers risk falling short in other important areas of service.
He posted on the group: “Price is only part of the mix and often over-stressed – I have seen many examples of wholesalers pushed to meet unrealistic expectations of what price is actually achievable, and in doing so, compromising their ability to deliver on service.”

 

Do we need it?

Faced with fierce competition from the multiples, many retailers already have an idea of who sells what at what price. The same can be said of caterers and foodservice operators, begging the question of whether the channel really needs price-comparison sites at all.

It’s true that good retailers and caterers already know their prices. A few say that they wouldn’t use a site that compared price alone, but would be keen to use one that looked at other areas of service.

“It would be useful to have terms compared and the regularity of deliveries. Those are all the key questions you ask when you’re setting up with a wholesaler,” explains Dean at Holborns.

For Carol Stubbs of Dereham News in Norwich, availability is critical: “We already compare prices but it would be useful to have availability compared and to read reviews from other retailers.”
And the same is true when you cross over to foodservice – availability, service and on-time delivery are often just as important as price.

“Retailers tend to shop around – they talk to other retailers and have a good idea where you are as a wholesaler from the point of view of pricing. Will they really take the time to look at these sites when they already have an understanding of the market?”

David Grimes,managing director, Parfetts

Kieran Critch of The Park Pub & Kitchen in Bedford says: “Some of the deliveries we get are bang on, but some arrive in the middle of service, when we are rammed, so we would definitely use a comparison site for that.”

Addressing this, Yoni Cohen, one of three directors at www.improvethatprice.com, says that in the future, wholesalers could potentially be compared against other variables. “We appreciate that price doesn’t matter if availability is bad or if the delivery is late.”

His site offers a five-star rating system for wholesalers that’s similar to rating sellers on eBay. “If someone has a bad rating, you won’t buy from them, not matter how cheap they are.” But there could be more developments in time.

 

There’s only one pot.

The issue of supplier investment is also another important consideration when looking at whether to collaborate with these sites, according to Bestway’s Paul Gray.

“These websites may want to attract advertising from suppliers, but there’s only one pot and it could affect the amount that suppliers invest in other parts of the channel, like point-of-sale materials and trade advertising.”
Paul insists that Bestway will not give price-comparison websites access to prices and finds it unlikely that other big wholesalers will either. “If retailers share these prices, they could be negating their contract with their wholesaler.”

At the other end of the spectrum, JJ Food Service is happy to share prices on www.improvethatprice.com’s pages and general manager Terry Larkin told Better Wholesaling last year that the site was doing the company a great service in highlighting its competitive prices.

Another wholesaler who’s keen to take the price-comparison bull by the horns is Parfetts’ David Grimes: “If you’re a good operator, you shouldn’t have anything to worry about. At some point, we might like our prices to be on there.”

The wholesale channel is complex, but should that stop operators putting up either general prices or the cheapest available price as a starting point?

Particularly as the smart comparison site will take other key service areas into consideration, providing a more balanced review of a wholesaler.

Price-comparison in this channel is still in its infancy, but we’ve seen how quickly technology can move things. The know-how and sophistication we need to take it forward is probably not far behind.

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