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October 21, 2008

theEssentials.com — Will Procter & Gamble's 'Secret Official Online Store' doom retailers?

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Long story short: the giant company supports a website that exclusively carries its brands — and sells direct to the consumer, as little as a single tube of Crest toothpaste.

Here's Jonathan Birchall's front page story from the October 19, 2008 Financial Times, which seems to me to be a potentially huge deal but apparently didn't strike a similar chord with the major U.S. dailies, none of whom mentioned the news — at least not in the dead tree format delivered to my driveway every morning.

    P&G web move is challenge to retailers

    Procter & Gamble is testing its ability to use the internet to sell its toothpaste, household cleaners and nappies directly to US households, in a potential long-term strategic challenge to its retail partners.

    The company is supporting a website, theEssentials.com, that is exclusively selling its brands, with items such as single tubes of Crest toothpaste and bottles of Mr Clean cleaning fluid, to boxes of its Pampers and Luvs brand nappies and Gillette razors.

    The move brings P&G into direct brand competition with its retailers, underlining the extent to which e-commerce is contributing to changes in the way the two sides have traditionally worked with each other.

    In an indication of the sensitivities involved, the site is being operated by a third party, which owns the inventory. "We treat them like any other retailer as they buy product directly from us," said Paul Fox, a company spokesman, of the site, which is still covered by P&G's legal terms and conditions.

    However, as e-commerce expands, manufacturers of electronics, clothing and other goods have shown themselves increasingly ready to overcome traditional concerns over potential conflicts with their retailers.

    For consumer packaged goods companies, industry analysts argue that direct online sales are also a way to respond to lower prices from retailers' private label brands.

    In beauty products, P&G's rivals L'Oréal and Estée Lauder have been selling on the web for some time. Other leading consumer brands, including Kellogg's, have formed close partnerships with Amazon to drive bulk sales.

    In another indication of the flux, Wal-Mart, P&G's largest customer, is hiring a strategy executive whose tasks include assessing the potential effect of direct-to-consumer sales by its own suppliers.

....................

Detroit made noises in this direction some years ago, exploring the idea of bypassing its dealers and selling cars direct to consumers.

Now that the whole industry is crumbling and dealers are dropping like flies, look for another attempt to eliminate the shaky, embattled middleman.


October 21, 2008 at 04:01 PM | Permalink


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Comments

I just bought an electric kettle, Braun WK200, for $35. I did every comparison out there and found nothing less that 42 (the list price is 65). I think this is a great site for deals on particular items. Maybe stick to buying that toothpaste at a drugstore. Now, if you need an electric kettle...really, just try and find a better price for the model!

Posted by: Melissa | Nov 9, 2008 9:29:25 PM

The price they have listed for a single tube of Crest toothpaste is more expensive than I would pay in a store, especially with coupons or store specials factored in. So, unless they can compete with local groceries or with amazon in price cutting, I think this concept still needs some work?

Posted by: Suzanne | Oct 22, 2008 1:59:31 AM

Uh, what? Amazon aside (yeah, some of the stuff is great, but do I really want to buy a case of fifty 2oz bags of Cheetos®? Well, actually, maybe...) I buy lots of stuff online (partially disabled and no car) usually single-quantity items but several different items at a site.

I have some preferred sites. And use the FROOGLE.com part of Google. I've even learned a bit of comparison shopping (one Amazon affiliate offers a case of twelve of an item I actually go through about 12 of per month at $2.99/unit - but the local supermarket has had a "special" of this at $2.00/unit for at least six months running...).

I don't see anything all that new here. Panasonic, Zales, Hanes, all sorts have their own site which will sell online. Or heck, go to wallyworld (either Walgreen or Walmart) sites and buy a tube of toothpaste.

Posted by: teqjack | Oct 21, 2008 6:49:44 PM

The hell with all that, where can I git some of that garlick flavor Crust.
(I brush wunst a month but Ill excalate that to have purty teith like the guy on the lable.)

Posted by: Flossist | Oct 21, 2008 4:24:33 PM

Yeah...because consumers want to go to a dozen different online stores for toothpaste.

Me? I'm a maverick. I just go to Amazon and I'm done with it. But I'm weird like that...wanting to go and do one stop shopping. Me an Palin. Both mavericks shopping at boring old stores that anyone can remember and most likely already pre-bookmarked by every browser in existence with hundreds of stores in there using their front end, but nothing more.

Posted by: clifyt | Oct 21, 2008 4:10:38 PM

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