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De Beers Presents Supplier of Choice: The Sequel
January 4, 2007
The market talk is that, at its next sight, De Beers is set to unveil "Supplier of Choice 2," its follow-up to its not-very-popular predecessor. Chaim Even-Zohar has a good summary of what happened with SOC 1 here (no, no more Boiler-Downers), and includes the fair point that, for all the grumbling SOC has caused in the market, from the company's point of view it has been largely a success.
For the last few days, I have been trying to get a sense of what SOC2 will be, and this is what I've learned. Keep in mind most of this is speculation, but in some cases, informed speculation:
- The process will be more subjective and less run by a computer program. For instance, many companies were scoring high on "financial strength" simply because they had an operation in Dubai. That was tilting the process considerably.
- De Beers will aim for a diversified group of companies on its list, of different sizes and places in the chain. Some have been speculating that, under SOC1, the list could end up all non-traditional companies like Tiffany and Stuller. There will be less talk about cutting out the middleman (especially with middlemen being cut out regardless.)
- Marketing and going direct to retailers will be less emphasized than they were under SOC1. The widespread failure of most sightholder brands has made it apparent that vertical integration and marketing does not necesarily work for every company, nor for every market (especially so-called "mature" ones, like the U.S.). Already, many sightholders have cut their marketing budgets.
That's all I have heard so far. As you see, it's easier to find out what SOC2 isn't (meaning, like SOC1), then what it is changing into. Most also think that De Beers will have a far smaller client list in the future, with its diminished intake and new demands to open factories in Africa.
By the way, the second Supplier of Choice contracts expire this year.
Posted by Rob Bates on January 4, 2007 | Comments (0)
