Professional Documents
Culture Documents
customers than its profits. Following its international policies it decided to take action against
people who were not abiding by their set rules and regulations. From 2009 to 2014 64
fuelling stations were de branded in Pakistan (Exhibit 1). There were three main reasons due
to which shell cancelled retailers license. 1) Dumping competitor products 2) Short
measuring 3) Non-compliance.
Dumping
Shell is an International brand known for its premier quality products. According to
contract retailers could only keep branded products provided by Shell. However some of the
retailers were offering competitors products. For example one of the filling station on
M.M.Alam Lahore started keeping ZOOM products which was a directly imported from china.
The reason behind keeping them was firstly they were cheaper than the market; secondly they
could earn higher profit margins on those products. Shell was concerned about it as its brand is
at stake any harm done using that particular brand, shell would be blamed as it was sold at its
branded fuelling station. Shell notified the retailer that if it did not discontinue the other product
line Shell would not be able to lend their brand name, after various litigations and case pending
it court for two year shell was able to DE brand that fuelling station and its now running under
ZOOM.
Another major concern for Shell is to maintain its quality various stations in remote
areas were engaging in malpractices of mixing Shell premier oil with lower quality oil.
Filling stations in smaller cities like Jaranwala, Sadiqabad, Nankana, Taunsa and Sahiwal
were involved in mixing smuggled petrol and diesel from Iran with the fuel provided by shell.
The quality of these petroleum products is really poor thus Shell conduct random Audits to
check the quality, it also uses statistical analysis to study the potential demand in that area
and if there is some serious deviation it tries to look into it the possibilities of such practices.
As figure 1 shows 41% of the de branding was mainly due to Dumping competitors
products.
Reasons for DE branding (Figure 1)
8%
noncompliance
33%
19%
short measuring
other
41%
Short measuring
Shell has a dedicated team for quality assurance, which is responsible for bi monthly
audits of all fuelling stations. These Audits are done randomly to ensure transparency and
prevent any possible bias. They are responsible for checking quality of fuel, whether all
safety standards are being followed and if there is any presence of short measuring.
According to law there is an allowance of 0.2%, this means if the mismeasurement is within
this deviation is to be ignored due to machine error. Anything beyond this is not tolerated for
Shell customers comes before Profit, Thus they ensure that customers are not exploited in any
way.
As it could be seen from (figure 1) 33% of the De-branding took place due to this reason.
There have been incidents where Shell received complaints from customer about such issue.
For example at Shalimar filling station in Gujranwala a customer came to get his tank full,
the capacity of the tank was 42 litres but they employees at the station managed to fill in 50
litres this led to a case being filed against the fuelling station and shell reputation was
harmed. Soon after shell cancelled the license and made sure these sorts of incidents does not
happen again. This led to negative word of mouth campaigning as people for a long time
prefer competitors over Shell due to such events.
Non-compliance and others
Shell provides a credit period of 3 days to its retailers; it requires them to hold up an
inventory up to 15 days forecasted demand. Failure to pay within the allowed credit period
results in a yellow card being provided to the retailer which is sort of a warning and he has to
bear a fine for late payment if it happens again he is given a red card and the license is being
cancelled.
When a new license is given it goes through rigorous screening, looking at the
demand in the area, retailers profile and history, whether there is any externality attached to
it. After all the checks are done my the network planning department its given a go ahead.
Shell tries to look into reasons why there has been a sudden fall in decline or retailer is unable
to pay the credit on time. The usual reasons are false demand calculations, bad customer
experiencing leading to lower sales or poor onsite services. Thus Shell has to intervene and
ask them to either improve or stop using their brand name.
Another main reason was customer loyalty card fraud. Telecom companies like
Telenor gives post-paid cards to its employees to get fuel for generators at signal towers. The
card usually has a limit of Rs. 1,000,000 whenever an employee gets fuel the card is
supposed to be charged. What actually happened was workers at these towers started dealing
with the retailer that they could charge the card for fuel and give them money instead; a profit
ratio was agreed between the two parties. A huge fraud was caught at Faiz Filling Station at
Dera Ismael Khan where a transaction of Rs, 325,000 was done. It was a huge transaction for
a single day so they looked into the matter and got to know what actually is happening. Thus
due to non-compliance and fraud license was cancelled.
Non-compliance with companies contract SOP (add the name I frgot) led to DE branding of
12 fuelling stations which is 19% of total de branded (figure 1). There are few other reasons
for de branding of fuelling station that were due to new government policies or widening or
road that lead to the closure.
De-Branding A special Case
Shell has a list of its top 10 leading retailers called Gold Customers they are invited
to shell global growth event every year. It is a platform for retailers from around the world to
gather at one place and discuss their best practices and try to work towards a mission for next
year focusing on customer centric approach to retailing. Its a two day event followed by an
Award ceremony.
2014 global growth event took place in London on 23rd and 24th June. Top 10
Pakistani retailers were present at the event. In an after party one of the retailers got really
drunk and misbehaved with a fellow female retailer from another country. This became a
serious issue as she charged a sexual harassment case against the retailer. That retailer was
the biggest retailer in terms of volume for Shell Pakistan. Without even considering its
profitability it decided that they could no longer allow that retailer to work under Shell brand.
Shell lost a huge chunk of market share to its competitor but it took a decision based on
ethics.
Exhibit 1
Sr.
#
Site Name
Difficult
y Level
Year
Abbaseen
High
2009
Low
2009
Medium
2009
short measuring
Ubaru
2009
Dumping
competition
product
Shah pur
Jehania
Nawab shah
High
Reason for
termination
Dumping
competition
product
Dumping
competition
product
City
Dadu
Jahania f/s
High
2009
Dumping
competition
product
Medium
2009
non compliance
Saeed Abad
Hyderabad
New Saeedabad
High
2009
Dumping
competition
product
SHAHRUKH FILLING
STATION
Medium
2009
short measuring
FRONTIER WAZIRISTAN FS
High
2009
10
HUSSAINI AUTOMOBILES
SERVICE (KARACHI)
Low
2009
Dumping
competition
product
came under road
widening
National High
way Karachi
Karachi
Dumping
competition
product
Dumping
competition
product
11
MUKHTAR PS KARACHI
Medium
2009
Karachi
12
AA FILLING STATION
High
2009
13
LYALLPUR FILLING
STATION FAISALABAD
Medium
2009
short measuring
Faisalabad
14
CHENAB PETROLEUM
SERVICE (FAISALABAD)
Low
2009
Dumping
competition
product
Faisalabad
15
HUSNAIN FILLING
STATION
Medium
2009
short measuring
Jhang
16
High
2010
Dumping
competition
product
Lahore
17
AL-MADINA PETROLEUM
SERVICE LAHORE
High
2010
non compliance
Lahore
18
High
2010
short measuring
Lahore
Distt Nankana
Jaranwala
Lahore
19
High
2010
Dumping
competition
product
20
Syed Wala FS
High
2010
short measuring
21
Medium
2010
22
High
2010
23
IQBALABAD FILLING
STATION
Medium
2010
non compliance
RY khan
24
High
2010
short measuring
Multan
25
METRO PETROLEUM
SERVICE
Medium
2010
short measuring
Sahiwal
26
MOTORWAYS (RAHIMYAR
KHAN)
Medium
2011
Dumping
competition
product
Sadiqabad
27
High
2011
non compliance
Sahiwal
28
SANGAM PET.SERVICE
BWP
High
2011
non compliance
Bahawalpur
bahawalpur
Bahawalpur
29
SUPER HIGHWAY
PETROLEUM SERVICE
High
2011
non compliance
Sahiwal
30
TAUNSA TRUCKING
STATION
High
2012
non compliance
Taunsa Sharif
31
ZED EM FUELS
Medium
2012
non compliance
Khanpur
32
High
2012
short measuring
Buner
33
High
2012
short measuring
Peshawar
34
AKHUNDZADA FILLING
STATION
Medium
2012
Dumping
competition
product
Rangpur
Chashma
35
New Mardan
Medium
2012
non compliance
Mardan
36
ABBASABAD FILLING
STATION
High
2012
Dumping
competition
product
Karachi
37
KHAN MOHAMMAD
AKRAM KHAN
High
2012
short measuring
Dargai
38
GRAN BADSHAH FS
2012
short measuring
Faisalabad
39
Medium
2012
40
High
2012
41
Timergara
Medium
2012
42
Warsak
Medium
2012
short measuring
Warsak
43
Al Sadaat
High
2012
short measuring
Ranipur
44
FATHEULLAH FILLING
STATION
Medium
2012
short measuring
Hassan abdal
45
Medium
2012
46
SARDAR FAIZAN S S. DO
47
New Sadaf
2012
Medium
2012
Dumping
competition
product
came under road
widening
Dumping
competition
product
Dumping
competition
product
came under road
widening
Dumping
competition
product
Bajur
DI Khan
Timergara
Hassan abdal
Jhang
48
Aman
Medium
2012
short measuring
Kohat
49
Kalyar - DO
High
2012
non compliance
Sheikhupura
50
AL MADINA FILLING
STATION HYD
Medium
2012
short measuring
Hyderabad
51
BHURKHUND FILLING
STATION
Medium
2012
52
PIRSHAH TRUCKING
STATION
Medium
2012
53
HARIPUR PETROLEUM
SERVICE
High
2012
54
High
2012
55
High
2013
short measuring
Kamra
56
Shalimar GUJ
High
2013
short measuring
Gujranwala
Dumping
competition
product
Dumping
competition
product
non upliftment of
product
Dumping
competition
product
57
Haider
Medium
2009
58
Medium
2010
59
BABAFARID FILLING
STATION
60
Hafeez
Medium
2013
Dumping
competition
product
came under road
widening
Dumping
competition
product
short measuring
61
Janjua FS
Medium
2014
short measuring
62
Sargodha Khushab FS
2013
non compliance
63
Abaseen Motorway
2013
64
2010
2009
Dumping
competition
product
Dumping
competition
product
Mansehra
Gujranwala
Hari pur
Rawalpindi
Okara
Faisalabad