Wednesday, July 20, 2016
PROCTER AND GAMBLE MOVES ONLINE
P&G goes online. Manufacturing is the big, unfolding story with omnichannel. They need the New Supply Chain to drive it. Who will lead the transition? And the to-be-told impact on retailers.
7-19-16 11:45 AM EDT | Email Article
For decades Procter & Gamble Co. has relied on retailers, from local groceries to giants like Wal-Mart and Amazon, to sell its razors, shampoo and diapers. Now the consumer-products giant is looking for ways to cut out the middleman.
Blindsided by the success of the upstart Dollar Shave Club, an online subscription service that chipped away at the dominance of Gillette razors, P&G executives say they are focusing not only on what consumers buy, but how they buy.
The results are experiments like one just launched in Atlanta called the Tide Wash Club, an online subscription service for the dissolvable Tide Pods capsules that are the company's highest-priced laundry detergent. It offers free shipping at regular intervals.
Another new offering: Tide Spin, an undertaking P&G is calling the "uberization of laundry," in which customers in parts of Chicago can use a smartphone app to order laundry pickup and delivery from Tide-branded couriers.
With the ventures, P&G is delving deeper into the business of connecting consumers directly with the products it makes, especially a new generation less loyal to the company's big brands. Last year, P&G began promoting its Gillette Shave Club to compete with Dollar Shave Club and similar services.
Privately, P&G executives acknowledge the company was caught off guard by success of Dollar Shave Club, which started in 2011 and says it now has 3.2 million subscribers. "It was probably on the radar but we weren't necessarily having the right conversation around what might disrupt us," said a person familiar with the company's thinking.
P&G's share of the men's razor and blade businesses in North America fell to 59% last year from 71% in 2010, according to Euromonitor. Dollar Shave Club had 5% of the market last year.
A P&G spokesman said the company uses "every opportunity we can to learn about consumer habits and practices and our experiences on Tide are consistent with this." He declined to say how many users signed up for either service.
In recent months P&G's $2 billion, 7,500-person research-and-development operation has been remaking itself to respond to a new wave of competitors. The company is hiring more industrial designers and is seeking out workers with entrepreneurial backgrounds, the person familiar with the company said.
P&G's annual sales growth has sputtered since the recession, hitting a four-year low of $70.7 billion in 2015. The company has cut more than 20,000 jobs since 2012 and sold off more than $20 billion in brands such as Clairol and Duracell it considered outside its core focus.
Like many big consumer products companies, P&G has struggled to tap into younger consumers more prone to brand hopping and picking up on trends via social media rather than through traditional advertising.
The Tide Wash Club challenges not only traditional retail partners like Wal-Mart Stores Inc. but also Amazon.com Inc.'s Subscribe & Save service, which offers free shipping and discounted prices on items like Tide Pods that are delivered at regular intervals.
P&G recently started the Tide Wash Club but has been working on the project for months. U.S. Patent and Trademark Office records reveal that in February the company registered trademarks for other potential names, such as "Dollar Laundry Club" and "Tide Dollar Wash Club."
P&G is testing prices that are higher than Amazon's subscription service. Tide Wash Club charges either $15.99 or $20.99 per delivery of Tide Pods, depending on the size of the containers, according to its website. For the family sized plan, P&G is charging 26 cents per Tide Pod, compared with about 21 cents on Amazon.
Tide Spin targets the wave of younger people moving to dense cities where apartments often come without washers and driers. In Chicago, the service joins a number of similar operations already under way, though none are specific to a brand of detergent.
Tide Spin charges $1.59 a pound for wash-and-fold laundry service with free pickup and drop-off that can be ordered up through an app. Its drivers also pick up items to be dry cleaned at Tide branded locations.
Nick Chapleau, founder of Chicago-based StarchUp, which provides the technology platform for Tide Spin, said the service has been "well-received." He declined to provide data on usage for the service, which P&G started testing in November.
Kelsey Gee contributed to this article.
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