ABOUT
BACKGROUND
Cooking with traditional biomass stoves is still the predominant way of cooking in Cambodia, Laos, and some regions of Vietnam. Higher quality and cleaner biomass stove options are not available in each of the three markets, leaving a gap for stove producers of higher quality products to enter the market.
However, international stove producers are focused on much larger markets in Africa, South Asia and other parts of SE Asia and local production of higher quality biomass stoves is limited in Vietnam and non-existent in Laos and Cambodia.
Having a regional program, combining Cambodia, Laos and Vietnam together, makes for an interesting and scalable opportunity for stove producers. However, there would be much investment required from stove producers to enter these markets and identify and secure distribution channels.
However, international stove producers are focused on much larger markets in Africa, South Asia and other parts of SE Asia and local production of higher quality biomass stoves is limited in Vietnam and non-existent in Laos and Cambodia.
Having a regional program, combining Cambodia, Laos and Vietnam together, makes for an interesting and scalable opportunity for stove producers. However, there would be much investment required from stove producers to enter these markets and identify and secure distribution channels.
WHY AN AUCTION?
The Stove Auction is a market mechanism developed by SNV Netherlands Development Organisation and funded by GIZ Energising Development (EnDev) that facilitates the local sale of advanced biomass stoves between stove suppliers ("Sellers") and local distributors and retailers ("Buyers").
To stimulate the supply of advanced biomass stoves, The Stove Auction provides a platform that aggregates a number of Buyers to buy stoves. The initial need for Sellers to make these direct relationships and investments is not there.
The Stove Auction also stimulates interest from Buyers by giving them a chance to bid on low to large volumes at competitive prices and providing them a cash incentive for each stove they sell to a end-consumer that can be verified.
Without such a scheme, the majority of local distributors and retailers would not be able to afford to purchase directly from international stove producers/suppliers due to their lack of working capital as well as perceived high risk to invest large sums of money when the market for advanced biomass stoves is still quite new and uncertain to them.
To overcome this price risk that the Seller would be taking with potentially low bidding prices at auction, The Stove Auction guarantees the Seller the price of the stove that is agreed between the Seller and The Stove Auction's Market Regulation Committee no matter what the winning bidding price is. The guarantee is backed by a results-based financing scheme funded by GIZ/EnDev.
To stimulate the supply of advanced biomass stoves, The Stove Auction provides a platform that aggregates a number of Buyers to buy stoves. The initial need for Sellers to make these direct relationships and investments is not there.
The Stove Auction also stimulates interest from Buyers by giving them a chance to bid on low to large volumes at competitive prices and providing them a cash incentive for each stove they sell to a end-consumer that can be verified.
Without such a scheme, the majority of local distributors and retailers would not be able to afford to purchase directly from international stove producers/suppliers due to their lack of working capital as well as perceived high risk to invest large sums of money when the market for advanced biomass stoves is still quite new and uncertain to them.
To overcome this price risk that the Seller would be taking with potentially low bidding prices at auction, The Stove Auction guarantees the Seller the price of the stove that is agreed between the Seller and The Stove Auction's Market Regulation Committee no matter what the winning bidding price is. The guarantee is backed by a results-based financing scheme funded by GIZ/EnDev.
HOW DOES IT WORK?
The Stove Auction pre-qualifies a number of stove models according to selection criteria determined by SNV Netherlands Development Organisation and the GIZ administered Energising Development (EnDev) Programme.
The Stove Auction then reaches an agreement with stove suppliers ("Sellers") for consigning their stoves to The Stove Auction at their own cost (including shipping). This agreement includes the price per stove that The Stove Auction is able to guarantee the Seller no matter what the stoves are sold for at auction.
The difference between the guarantee price and the auction price is covered by a Results Based Financing Scheme financed by the GIZ/EnDev, and implemented by SNV Netherlands Development Organisation.
Sellers who wish to establish their own distribution channels can consign their stoves to The Stove Auction with the option to sell their stoves directly to Buyers and bypass the auction all together if they wish. The Stove Auction then plays a warehouse/market aggregator role.
Local distributors and retailers ("Buyers") who purchase the stoves also get an incentive for every stove they sell to end-consumers, which can later be verified by an independent auditor.
The Stove Auction concept will first be tested in Cambodia in early 2016, and rolled out to Laos and Vietnam afterwards.
The Stove Auction will be piloted by SNV in Cambodia and eventually run by a third party yet to be selected by SNV.
The Stove Auction then reaches an agreement with stove suppliers ("Sellers") for consigning their stoves to The Stove Auction at their own cost (including shipping). This agreement includes the price per stove that The Stove Auction is able to guarantee the Seller no matter what the stoves are sold for at auction.
The difference between the guarantee price and the auction price is covered by a Results Based Financing Scheme financed by the GIZ/EnDev, and implemented by SNV Netherlands Development Organisation.
Sellers who wish to establish their own distribution channels can consign their stoves to The Stove Auction with the option to sell their stoves directly to Buyers and bypass the auction all together if they wish. The Stove Auction then plays a warehouse/market aggregator role.
Local distributors and retailers ("Buyers") who purchase the stoves also get an incentive for every stove they sell to end-consumers, which can later be verified by an independent auditor.
The Stove Auction concept will first be tested in Cambodia in early 2016, and rolled out to Laos and Vietnam afterwards.
The Stove Auction will be piloted by SNV in Cambodia and eventually run by a third party yet to be selected by SNV.
