March 23, 2014

Procter & Gamble opens own online shop

Procter & Gamble webshop (photo: P&G)
Learning Laboratory: Procter & Gamble has joined the increasing number of fmcg players who are researching consumer online habits
Procter & Gamble's recent opening of its first German online shop has been conspicuously low-key. The US consumer goods giant now offers a broad spectrum of its brand portfolio to internet customers. This includes big names such as Pampers, Gillette or Pantene as well as electronics lines under the Braun label.

At least for the time being, P&G's recommended sales prices have been pitched high enough not to unduly worry local retail partners. And the world's largest fmcg manufacturer is clearly at pains to emphasise that the new site is not intended to compete with retailers. Instead, P&G stresses that pgshop.de will serve as a market research tool to study customer buying behaviour and to communicate product information.

To date, German retailers have seemingly reacted with nonchalance. So all is hunky-dory, right?

Well perhaps not quite. Although P&G has reiterated that it will provide retail partners with the data it gleans on customer purchasing behaviour in order to help them with their own online activities, pricing could soon become a contentious issue. In Germany, the global fmcg player is already testing rebates on multiple orders and offering a gift box on shopping baskets over €15. At home in the US, where its online shop has been running for a few years, P&G has gone a good deal further. The Americans now give coupons on a large number of their products and offer price deals on assorted packages.

Brand diplomacy

However diplomatically P&G now plays pgshop.de, the fact remains that yet another manufacturer heavyweight has entered the online arena. Retailers are surely aware that an increasing number of suppliers are testing the internet as a sales channel for their products. Beiersdorf runs an online shop for its Nivea brand, and L'Oréal is testing the sale of cosmetics in France. Perhaps more worryingly for the trade, Nestlé has already proved with its fabulously successful Nespresso coffee brand that a manufacturer can bypass retailers when selling products to consumers.

Doubtless suppliers will use their online shops in the first instance to strengthen their brands. But trade experts see considerable potential in subscription models similar to the one Amazon is testing for nappies.

Uncertain times

The growing number of brand online shops comes at a time of intense debate and uncertainty among retailers. Cross-channel is now generally seen as the holy grail of retailing, but it increases complexity and puts further pressure on prices. As internet sales increase, customer frequency in the stores declines and expensive floor space has to be reallocated; and the more customers have their expectations raised online, the less loyal they become.

The web may be a brave new world for the consumer, but it is certainly a hard one for the retailer.  


Related article in German: Lebensmittel Zeitung, Nr. 10, 21.03.2014 von Manuela Ohs & Bernd Biehl


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1 Comment (Write a comment)

  1. Ruth Raphel
    Created 26 March, 2014 15:32 | Permanent link

    Dear Mike,
    Another excellent newsletter pointing out another source of competition for the retailer…which makes knowing your customer and over-the-top customer service still prime.
    As my husband Murray always said in his seminars: "Find out what customers want…and give it to them."
    Best regards from Murray and me, Ruth
    Ruth Rap

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