Will consumers buy subscriptions for Tide from P&G?

Discussion
Source: tidewashclub.com
Jul 20, 2016
George Anderson

Procter & Gamble has launched a test of a new online subscription service — Tide Wash Club — that enables consumers to receive regular deliveries of the company’s Tide Pods laundry detergent.

The pilot is not the first time that P&G has sought to gain deeper insights into shopping behaviors by selling directly to consumers. It has sold products through its own e-store, on shopping walls using QR codes, pop-up stores, on Facebook and in a variety of other online and physical environments.

A Wall Street Journal article suggests that P&G has launched its subscription service test in part because it was unprepared for the impact that Dollar Shave Club would have on its Gillette shaving business. The CPG giant has seen its share of the category decline in recent years while Dollar Shave Club and other competitors benefitted.

P&G is testing the price elasticity of its Tide Pods with its Wash Club program. The Journal article, for example, found that the price per pod on Amazon was roughly a nickel lower than the subscription price offered directly from the manufacturer.

“We know that consumers are increasingly seeking new ways to purchase our products, especially online,” a P&G spokesperson told Internet Retailer.  “We expect this service will serve our consumers who don’t wish to venture out to replenish their supply of Tide Pods for their ongoing laundry needs.”

DISCUSSION QUESTIONS: How do you expect Procter & Gamble’s retailer customers to react to its Tide Wash Club pilot? Do you think there are opportunities for P&G and other CPG companies to market brand subscription services to consumers in addition to or in place of traditional trading partner relationships?

Braintrust
"Given that Unilever is buying Dollar Shave Club, it’s clear the CPG companies are working aggressively to expand their channel reach to the consumer. "
"I don't think retailers are going to be happy about P&G's Tide Wash Club, but I don't think they have to worry about it."
"Is the CPG company going to undercut its retail distribution partners on price or will they hold the line?"

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11 Comments on "Will consumers buy subscriptions for Tide from P&G?"

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Keith Anderson
BrainTrust
Important story, particularly in parallel to Unilever’s acquisition of Dollar Shave Club. Technology has lowered barriers to entry for DTC models, enabling brands to drive awareness, build brand equity and target shoppers with precision more quickly and cost effectively than in decades past. But shoppers still value the convenience and choice of shopping for full baskets of diverse categories, brands and products, capping the scalability of pure DTC models. Incumbent brands are experienced at managing real or perceived channel conflicts. DTC can be a powerful way to build direct connections with consumers and learn by doing. But retailer partnerships still… Read more »
Sterling Hawkins
BrainTrust

Retail partnerships will always matter to companies like P&G. I think Keith is exactly right in that the DTC model is a great learning lab to test new pricing, formulas, packaging, etc. before they are generally available. There’s definitely a sweet spot here between a retailer’s best customers and a brand’s best customers that can and should be leveraged.

Dr. Stephen Needel
BrainTrust

I’d be pretty unhappy if I were a retailer — P&G could talk all they want about being my partner, but this would belie that claim. What makes the Dollar Shave Club work is, among other things, the price. I don’t think we’re so lazy that we’d pay more for a subscription than we would at another online venue like Amazon.

Max Goldberg
BrainTrust

I don’t think retailers are going to be happy about P&G’s Tide Wash Club, but I don’t think they have to worry about it. It’s not going to succeed. Why would a consumer want to subscribe to a one-product club for an item she uses a few times a week, when she can get a Dash button from Amazon that comes with Prime delivery and is backed by great customer service?

Ron Margulis
BrainTrust

Given this morning’s announcement that P&G rival Unilever is buying Dollar Shave Club, it’s clear the CPG companies are working aggressively to expand their channel reach to the consumer. The two companies will continue to duke it out for share of wallet through an increasing number of channels and I expect traditional retailers like supermarkets, drug stores and mass to do everything in their power to keep the shopper coming back to the store.

The more interesting question is, who wins in the battle between the CPG companies and Amazon?

Bob Amster
BrainTrust
I concur with with colleagues’ preceding comments regarding the spirit of competition. This is yet another example of suppliers and manufacturers seeking an opportunity at the expense of their still biggest customers: the retailers through whose channel these manufacturers sell the vast majority of their products. This type of competition is going to create enmity between retailers and their suppliers. “Collaboration” and “partnership” will become meaningless soundbites. This is happening with the likes of HP who will replenish your ink cartridges at the expense of moribund Staples and Office Depot, major ski apparel brands competing against already stressed retailers and… Read more »
Cathy Hotka
BrainTrust

Dollar Shave Club didn’t win because of its DTC model, it won because it has a superior product that costs much less than mainstream brands.

Do we really think that consumers are going to be dealing with manufacturers of the 400+ different products they keep in their homes? While certain products make sense for regular home delivery — think: diapers — DTC isn’t going to be the dominant model for household purchases, now or ever.

Brian Kelly
Guest
1 year 4 months ago

Hope so. For Unilever sake after buying Dollar Shave Club for $1 billion.

There are Apple, Nike and many other free-standing manufacturer stores. Grocery will have to adjust as the mall stores did when manufacturers moved off the reservation.

Remember: “retail ain’t for sissies!”

Robert DiPietro
BrainTrust

Many interesting dynamics going on with this — the first is channel conflict. Is the CPG company going to undercut its retail distribution partners on price or will they hold the line? I do believe the subscription economy is a growing one and will lead to higher profit margins for CPG. The Dollar Shave Club wasn’t built on quality but on price (in my user experience) but just sold for $1 billion. They had about 2 million customers so that is a steep price to to pay per customer, isn’t it?

Kenneth Leung
BrainTrust
There is a difference between the dollar shave club (which is about value and a high frequency item) and Tide Wash Club which for me is more about market research. Is there a niche audience of die hard Tide users that would join the club and hope for additional benefits? Yes. Do I think it is a broad play? I don’t think so…. Considering you can get subscription from Amazon and it isn’t something that is difficult to replicate, I don’t see a huge audience except for the fans. The convenience is no better than going through other online subscription… Read more »
Brittain Ladd
Guest

There will be limited interest in Tide’s pods for the simple fact that the majority of consumers who purchase Tide pods do so during their weekly grocery shopping excursions at their local grocery store. Their detergent pods and not a product with a high-level of importance to consumers. For example: “I ran out of Tide pods, alas, now what shall I do?” is more than likely a sentence few consumers think or say. I believe in the value of the DTC model but only for the right products and Tide pods aren’t on the list.

wpDiscuz
Braintrust
"Given that Unilever is buying Dollar Shave Club, it’s clear the CPG companies are working aggressively to expand their channel reach to the consumer. "
"I don't think retailers are going to be happy about P&G's Tide Wash Club, but I don't think they have to worry about it."
"Is the CPG company going to undercut its retail distribution partners on price or will they hold the line?"

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