Publix, Ostriches and the Reverse Auction Debate

Jun 11, 2002
Warren Thayer

Last week, Publix announced that it had launched a Web site to support its
purchasing and reverse auction program. Suppliers of items other than consumer
packaged goods (CPG) that are interested in doing business with the chain can
register on
by clicking on the link, Publix Purchasing. In 2001, Publix conducted 59 reverse
auctions to purchase a variety of items.

Publix Spokesman Lee Brunson said, “The site enhances the process by providing suppliers with information about how to conduct business with Publix and how they can pre-qualify to participate in our auction process.”

The site provides pre-qualification forms and information for two of Publix’s purchasing groups: manufacturing and facilities.

Publix’ plans do include expanding this service to CPG purchases. According to Brunson, “Our current process requires suppliers of CPG items to contact our corporate purchasing department in Lakeland. But we are working on future applications of the Web site that will enhance the process for that purchasing group as well,” said Brunson.

Few issues in retailing today, seem to generate as much heated response as reverse auctions. In the March issue of Private Label Buyer, Warren Thayer, associate publisher/editorial director of PL Buyer and RetailWire commentator, wrote, “When it comes to reverse auctions, the most dangerous place to be right now is on the sidelines, watching. For totally valid reasons, you may love or hate auctions. But with leading retailers planning to make increasing use of this form of procurement, now is not the time to play ostrich. Kroger spent $500 million on reverse auctions last year (in total, not just private label) and plans to ramp that figure up higher in 2002. Ahold, H.E. Butt, Walgreen’s, Sears, Safeway and many more are using auctions, and are by all indications pleased with the results. Like it or not, early adopters on both sides stand to gain knowledge that ultimately will serve them well.

If knowledge is power, then lack of knowledge is particularly dangerous in
today’s environment.” (To download a complete transcript of Warren’s column,
click here.)

Moderator Comment: Is it possible for reverse auctions
to produce a win-win situation for suppliers and distributors?

Possible, yes. Probable, that remains to be seen. There’s
a lot of grumbling going on in the supplier community these days.
Anderson – Moderator

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