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P&G Opens Online Shop: Should Retailers Worry?

Posted by Barry Silverstein on May 20, 2010 11:09 AM

Arguably the greatest and most prolific branding organization in the world, the Procter & Gamble Company is renowned for its test marketing prior to launching any product. The company's new eStore, an online shopping hub for its brands which just launched in beta, is no different.

P&G says it enlisted 5,000 shoppers to help guide the design and development of their "ideal" online shopping site. The eStore features many of the bells and whistles of such leading e-commerce sites as Amazon.com, including product ratings by consumers, purchase recommendations based on products placed in the shopping cart, and free shipping over $25.

While the eStore sells P&G's household, beauty, and grooming brands directly to consumers, it serves another even more valuable purpose for the company. Its main function, says P&G, is to act as a "living learning lab," both to develop e-commerce innovation, and to garner continuous feedback and what consumers like and want.

That's all well and good, but with lower prices and direct-to-consumer sales, what about its retail distributors?

We envision the eStore will help deliver new tools, services and features that can ultimately be shared with retailers to provide a real convenience and value for shoppers, while also delivering innovation for the industry and specifically for our product categories," says Kirk Perry, P&G's VP for North America.

Needless to say, retailers are a pretty key constituency that P&G could easily alienate by selling products directly. With P&G's marketing muscle, online and brick-and-mortar retailers are understandably concerned. They'll be watching closely to see what online tools P&G develops and intends to "share" with its retail distributors.

Even prior to the site's launch, George Lawrie, a Forrester Research analyst, told Adweek that P&G might "have a tendency to underestimate the size of this because of course they can't afford at the moment to offend their main [sales] channel, which is through the big retailers. But [what] they really want is to get away from paying those listing fees. They want to get away from paying for end caps and the lobby displays."

Recognizing that its skill is in marketing brands and not building e-commerce sites, P&G engaged PFSweb to build and operate the eStore. In a novel arrangement, PFSweb will actually buy P&G products and re-sell them using its own warehouses, providing P&G with access to consumer buying data.

In many ways, it's a risky experiment, but if it works, the eStore could ultimately mark a major shift in the way P&G markets its brands -- and the manner in which consumers purchase them and retailers distribute them.

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Kelly Wys United States says:

Perhaps this will force retailers to do it better. For example, many grocers have online stores, however a lot of times there aren't any images of the products or they are out dated. When it comes to the final purchasing decision, many argue it all comes down to the package. With P&G's e-store, they are able to maintain brand essence, like Apple. If retailers could offer their consumers the same experience online that they get in the store, maybe they would have the upper hand; still plenty of choices, but with a "voice". Let's call it the "e-mall". Cheers…

May 20, 2010 03:29 PM #

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