Editor’s Note: This article is an excerpt from one of RetailWire’s recent online discussions. Each business morning on RetailWire.com, retail industry executives get plugged in to the latest news and issues with key insights from a “BrainTrust” of retail industry experts.
After focusing on cross-channel promotions and online info-sites for years, Procter & Gamble is working with a third-party operated website, theEssentials.com, to sell its brands directly to consumers, thereby bypassing traditional retail outlets.
TheEssentials.com, which only sells P&G products, is part of a larger movement by consumer packaged goods (CPG) brands to test direct sales to consumers. P&G rivals L’Oreal and Estee Lauder, for example, have operated websites that sell beauty brands to consumers.
While it supports the operation of theEssentials.com, P&G spokesperson Paul Fox told The Financial Times, “We treat them like any other retailer as they buy product directly from us.”
P&G’s direct sales test is still somewhat uncommon among CPG manufacturers but is something that companies in apparel, electronics and other categories have used with varying degrees of success. Some retail experts were underwhelmed by P&G’s move and skeptical of its success.
While an interesting experiment, one has to ask why consumers would feel the need to buy these products directly from Procter & Gamble, when most of the products are available at either Drugstore.com, Amazon.com, or other online retailers. While it is a great way for P&G to gain insight from their consumers, they will have a difficult time providing a compelling reason as to why people should shop on this site. Unless on the other hand, they start to offer products or variations of products that are not available from other online retailers,” said Joel Warady, principal of the Joel Warady Group. “Let’s not forget that P&G has sold directly to consumers before through their Reflect.com site. And that ended up in a failure, although it was a completely different model. Let’s see where P&G takes this, and how they can make this work.”
“It’s highly unlikely that CPG vendors will make significant sales directly to consumers over an Internet channel. For the bulk of P&G’s products, it is far more convenient for consumers to buy them from a retailer that offers a broad assortment of products that can be purchased on one shopping trip. theEssential.com appears to be focusing on P&G’s more expensive and complex products, such as OralB toothbrushes, Braun coffee makers, and Crest Whitestrips, not toothpaste and detergents,” said University of Florida professor Barton Weitz. “For these more expensive products, consumers might purchase them from an Internet channel with theEssentials.com being one of many Internet retailers offering the products. theEssentials.com does provide parts for P&G consumers that might be hard to buy through traditional supermarket channels. By offering these parts, theEssentials.com can provide a service to P&G customers–a service not offered by its retailers.”