When the going gets tough..
Aug 09, 2018
Independent suppliers have been making waves in recent years, with over 2.2m customers switching from the big 6 in the past 12 months and over 40 suppliers in the market overall. But with prices on the rise, some commentators are arguing that it’s going to get harder for smaller suppliers to compete.
This week we take a closer look at some of the concerns raised, and what independent suppliers can do to tackle them.
The positive impact that the increase in competition has had on the market can’t be overstated, with municipal suppliers like Robin Hood energy forcing prices down throughout the region, and consumer champions such as OVO challenging the public’s perception of the traditional energy supplier.
But whilst competition continues to heat up and more customers continue to switch, there are still some commentators warning that it’s going to become more difficult for independents to compete.
First off, they point to the increasingly volatile energy markets and the steady rise in prices away from the record lows.
At the time, the decline seen over the last few years created an opportunity for the smaller and nimbler suppliers to react quickly to the drop and pass-on savings to their customers – leaving the big-6 behind.
But now that prices are rising, there’s no denying that this will make it more difficult for the smaller players to compete. The more established suppliers are able to hedge much more volume and for a longer duration, meaning they’ll be able to weather the storm easier.
This combination of factors – a rising market and limitations in hedging capabilities – means that the smaller players may struggle to compete on price alone.
Another perceived risk to smaller independents is technology – as suppliers grow, their IT systems need to grow with them, and this can involve significant costs and potentially damage the customer experience during a transition.
The concerns raised above aren’t unfounded, so what can be done?
Addressing the technological concern first, and the challenges associated with business growth – there is already a solution out there that allows for scalable IT infrastructure, and it’s revolutionised the way large tech organisations operate: the cloud
Cloud computing has revolutionised the world of IT system scalability, with giants like Amazon, Netflix, Microsoft, and Google all relying on cloud based systems to run their online businesses.
For energy suppliers, the ENSEK Solution provides a comprehensive and fully scalable infrastructure that can be hosted in the cloud, giving you on-demand access to world class scalability and performance.
Our technology roadmap also looks ahead to ensure that our solutions will continue to evolve as the industry morphs, meaning a supplier will never have to worry about aging infrastructure or the disruption caused by a change in systems.
In terms of pricing, and the challenges presented by a rising market, the core ENSEK solution set and the evolution of our ecosystem gives any supplier the best possible chance of being successful.
With a rising market putting significant pressure on a supplier’s ability to compete, it’s more important than ever for suppliers to focus on operational and financial improvements wherever they can be found.
Our focus on finance that has always been a differentiator for ENSEK is a great example of this – our unique ability to reconcile industry costs to the customer level can unlock 2-4% against turnover.
Combine this with innovative trading options that have been developed with some of the leading providers in the space, ENSEK clients will have a unique position and opportunity to take advantage whilst others adopting older, less flexible and less capable solutions will continue to struggle
So, want to find out how ENSEK could help your supply business stay ahead of the competition?
Have a query? Click the link below to get in touch.