The Financial Times reports that Procter & Gamble 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.”
Now, technically this is not a disintermediation strategy, since P&G is treating the third party-owned website as a retailer. But it certainly is not a traditional or mainstream retail outlet, and it most certainly is competing with such retailers.
FT notes that “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.” Bulk sales of brands are being done by site such as Amazon.com, which can take traditional brick-and-mortar retailers out of the market in specific categories. And, Ft writes, “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.”
“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.”
Now, technically this is not a disintermediation strategy, since P&G is treating the third party-owned website as a retailer. But it certainly is not a traditional or mainstream retail outlet, and it most certainly is competing with such retailers.
FT notes that “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.” Bulk sales of brands are being done by site such as Amazon.com, which can take traditional brick-and-mortar retailers out of the market in specific categories. And, Ft writes, “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.”
- KC's View:
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This is something that traditional retailers need to take very seriously, especially because the next generation of consumers – the young people who do not remember a world before Amazon.com or iTunes – is completely open to purchasing products through alternative sources, especially online sources, that will give them what they want, when they want it, where they want it, how they want it, at a price they believe is appropriate.
To ignore or underestimate this trend is to risk irrelevance.
