Shell is to replace the number of existing margin share dealer contacts currently active in the UK market with new Platt Plus deals.
The deal is constructed from the bottom up, using the cost of product as a starting point. This cost will be made available to dealers on a daily basis using a rolling seven-day price average. Additional costs will then be added, as outlined in the dealer contract.
These costs include a proportion of Shell’s overhead; distribution costs; a series of miscellaneous costs including merchant service fees and pluspoints etc; plus Shell’s profit.
The oil company claims that the difference between this and the dealer pole sign price will cover the dealer’s costs and profit.
Simon Grimsell, sales & operations manager for the UK and Ireland, said: “I believe we have been right to spend the time to ensure our dealer contract compares extremely favourably with competitor contracts.”
Length of contracts will be five years, subject to earlier termination rights, and there will be no significant changes to either the payment or credit terms currently associated with the margin share deal.
The Platts Plus deal will be the only one available to Shell dealers, and the oil company hopes all contracts will be converted by the end of 2007/8.
“The new contract no longer requires the business to second-guess future cost of product when determining the dealer’s share. This new methodology gives us the confidence to sign long-term deals, which gives us the opportunity to grow strong and trusting dealer relationships.”