Two major UK retailers have knocked more than £100,000 off their annual electricity bills by co-buying energy over the internet.
Marks & Spencer and John Lewis combined their buying power to carry out a reverse auction in which eight electricity suppliers bid for the business. The result was that the companies were able to reduce their bills significantly, despite expecting to pay more this year.
The two companies, both members of the World Wide Retail Exchange, called in specialist energy e-procurement company Utilyx to manage the auction.
"To test the effect of co-buying, the two companies ran individual auctions and then we ran a third auction with their combined purchasing power," said Chris Bowden, chief executive of Utilyx.
"The combined auction knocked about 1 per cent off the price, which was a six-figure sum."
The exercise ran over several days with the eight suppliers submitting more than 40 bids in the process. But Bowden said the bidding process, which takes place annually, happened much faster this time due to being online. "In the past, the suppliers would send faxes," he said.
He added that WH Smith has now joined Marks & Spencer and John Lewis to buy their gas in a similar reverse auction.
"Collaborative buying is becoming very popular," Bowden said, "especially in the macroeconomic climate, where everyone is trying to reduce costs. And energy is one of the top five controllable cost in any business."
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