Frozen food buyers have started to reduce their use of on-line auctions as a procurement tool after finding them increasingly less effective, manufacturers have claimed.
British Frozen Food Federation director general Alf Carr said: “Retailers have made some significant savings in the last three to four years, but they are not seen as such a necessary instrument as before.”
Savings had originally come from “driving down incumbent suppliers, bringing in more competition from overseas and switching business to suppliers producing the products to a lower specification”, he claimed.
In many cases, however, this had proved counterproductive as sales dropped on key own-label lines as consumers spotted a decline in quality and retailers ended up going back to their original suppliers.
In one notorious case, when a contract switched to an overseas supplier offering a price no UK bidder could match, he claimed, product sales of the item in question dropped by 50% as the winning bidder was not producing the product to the same specification.
While problems like this were primarily due to a lack of spadework conducted before the auction to ensure that all participants were able to meet a basic specification, it highlighted the inflexibility of auctions as a buying tool, he claimed.
Pioneering Foods md Simon Spence said his Icefresh frozen food importing business had participated in 15-18 online auctions in recent years, with mixed results. He said: “To be honest, most manufacturers despise them, especially when the buyer, [rather than the opening bidder], sets the starting price. But I think retailers are using them more sparingly now.”