Procter & Gamble opens own online shop
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.
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.
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.
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