P&G to Launch Online ‘Learning Lab’

Discussion
Jan 15, 2010
George Anderson

By George Anderson

Procter & Gamble has built its business on consumer
insights and the company is looking to gain even more with a new “eStore.” Selling
directly to consumers, the online store will feature its top brands, including
Crest, Gillette, Olay, Pampers and Tide.

Company spokesperson Tressie Long told The Wall Street Journal that
P&G
is looking at its new venture as a “learning lab.” The company currently derives
roughly $500 million in annual sales from online, a small fraction of its $79
billion total. Most of those sales come from retailers, including Alice.com,
Amazon.com and Walmart.com.

Kirk
Perry, P&G vice president for North America, told The Associated Press, “We’re
not in the business of being a retailer and we don’t want to be.”

P&G has
sought to better understand consumer shopping behavior online in recent years
including taking a one percent stake in Ocado, an online grocer in U.K., back
in late 2008. Prior to that, Field Companies Inc. started theessentials.com,
an online site selling only P&G products.

In a December 2008 RetailWire poll,
80 percent of respondents said P&G’s
involvement with Ocado and theessentials.com would help it “somewhat” or “a
great deal” in understanding consumers.

The eStore will launch with a pilot test of
5,000 consumers and will be owned and operated by PFSweb, an e-commerce provider.
Consumers who buy from the site will be charged a flat $5 shipping fee on orders.
The site is expected to go live to the public in the spring.

Mark Layton, chief
executive of PFSweb, called the site a “giant sandbox for the brands to play
in.”

Discussion
Questions: Will the eStore enable P&G to gain consumer insights that it
is not currently getting by selling through the other e-tailers? Does the online
learning have practical value that P&G can share with traditional brick & mortar
stores, as well?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

16 Comments on "P&G to Launch Online ‘Learning Lab’"


Sort by:   newest | oldest | most voted
Marc Gordon
Guest
Marc Gordon
11 years 3 months ago

Who will really benefit from this experiment is beyond me. If P&G has yet to figure out shopping behavior, then they are in real trouble. While this might look good on paper, I would question what additional consumer information they hope to get unless there is some kind of survey feedback form incorporated into the buying process. I say give it 6 months to a year and this program will be a footnote in P&G’s marketing book.

Dr. Stephen Needel
Guest
11 years 3 months ago

I’m wondering whether they will get poorer information out of this eStore by only having P&G products available. Quite often, the most interesting information, and hence the best learning, comes from people who don’t buy your products. If I’m going to P&G’s eStore, odds are I want to buy their products. Less learning to be had.

Warren Thayer
Guest
11 years 3 months ago

Because it will be able to slice and dice its own tests with online shoppers ad infinitum, P&G surely should be able to gain some new and valuable insights–although I clicked “moderately valuable” in the poll, since I am not sure how well all that will translate to helping its retailer customers.

Got to confess that on reading this, my first instinct was to think back to the time a few years back, probably during the dot com debacle, that rumors were rife that P&G and others would start huge efforts to sell on the web, avoiding “the middle man” (retailers) more and more. About 6% of me still thinks this could be a precursor to such an effort. This will be interesting to watch.

Roger Saunders
Guest
11 years 3 months ago

There is little doubt that consumers have been, and will continue to shop more often, and make more purchases online. While online purchases may never exceed 3% of total P&G Sales (currently less than 1% of total), monitoring the trends of online purchasing of their products is critical to marketing, allocation, merchandising, and financial issues that P&G will want to address.

Knowing how consumers interact with P&G brands, vs. competitors brands, both online and at brick & mortar locations–now and in the future–is something that P&G has to address, in order to make this strategy a solid success. They have to find the right data points from this exercise and other sources.

They have the chops to pull it off.

Edward Weisberg
Guest
Edward Weisberg
11 years 3 months ago

By interacting directly with Consumers with their own ecommerce site, P&G will be able to set the standard for web-based emarketing of their products. One element of this effort will be for them to be able to test new marketing messages and new positioning. However, more significantly, it puts other retailers on notice, in a sense, that, if they can’t add value to the sales and distribution process, their business will erode away. Traditionally, brick and mortar retailers added tremendous value to the sales process by providing distribution channels. With Web efficiencies, why should P&G give away margins to other retailers when they can distribute directly? This will be a wonderful experiment, which will hopefully result in other retailers discovering new and better ways to add value to their distribution base, which they will need to do to survive.

Richard J. George, Ph.D.
Guest
11 years 3 months ago

I think this is less about consumer learning and more about consumer sales. With SKU reductions, payment on scan, more private label, and other plans of traditional retailers that will limit the effectiveness and efficiencies of national brands, P&G appears to be testing the waters for offering its own company store.

The pendulum has swung in the favor of retailers over manufacturers. P&G’s efforts in this area are meant to balance the pendulum and insure that the company understands the opportunities/threats/challenges that online shopping creates. I view this as a terrific preemptive move.

Mark Johnson
Guest
Mark Johnson
11 years 3 months ago

CPGs have always been dis-intermediated from their brands and this is a way to re-intermediate. They are tired of paying IRI, Nielsen, and others for consumer insight that is usually influenced HEAVILY by the store where they make their purchases.

Gene Hoffman
Guest
Gene Hoffman
11 years 3 months ago

“Who knows what future opportunities lie in the heart of eStore?” P&G possibly knows! With P&G’s huge dominance in many “frequently-repurchased-items” categories they must continue to build “learning labs” to gain the knowledge that will keep competitive wolves from biting their tails.

Doron Levy
Guest
Doron Levy
11 years 3 months ago

If your focus is going online, then I say this is a good way to test the waters. P&G products are the staple of bricks and mortar retailing. I’m wondering what the back angle is. And if I were a large retailer that carries P&G, I’d be looking for concessions because of this. The data they could mine could probably help them in the non-cyber world by identifying transactions and basket makeup which could be used in planning store layouts in the future.

Herb Sorensen
Guest
11 years 3 months ago
“We’re not in the business of being a retailer and we don’t want to be.” So says P&G. And that’s probably a good positioning statement for their retailer relations while they are figuring out how to be one themselves. I keep beating my drum about the “Amazonification of Walmart,” and will continue to do so as the selling ability of Amazon and their ilk, is progressively discovered to be far superior to that of the bricks-and-mortar retailers, who really do not SELL, but simply operate neighborhood warehouses where they welcome shoppers to sell to themselves (self-service.) After 100 years of this self-service retailing, retailers (and their talking heads) have so far lost sight of how to sell that they continue to imagine they really do know what salesmen like Amazon know. P&G is after learning what Amazon knows–how to SELL to people, one-by-one, but in the millions, online. That process can and will be moved into bricks-and-mortar stores, both with and without technology. Selling a PDA-assisted shopper in the store is very much like selling… Read more »
Jonathan Marek
Guest
11 years 3 months ago

This is the wrong investment. P&G would do better to focus on consumer behavior in the channels that really matter for them. Primarily, that’s the store and understanding what happens at the shelf.

If they really want to understand how the shopper behaves, and how to influence their shoppers, they (and other CPG companies) need to invest less in this type of “research” and more in actual real-world testing including deep collaboration with the retail partners that actually control the store environment. Yes, CPGs do some testing at retail today, but it is nowhere near the level it needs to be.

Ralph Jacobson
Guest
11 years 3 months ago

This effort by P&G is and will continue to be only one of multiple initiatives to define shopper behavior. I think this is a good experiment and we need to forget the failures of the past. Just because something didn’t work years ago, in this new economy we have to keep trying new, innovative approaches. P&G isn’t putting that many of their eggs in this basket. I think the risks are relatively low, while the return could be huge.

Bernice Hurst
Guest
11 years 3 months ago

As has been said, the customers shopping in this new e-store will be looking favorably at P&G products. They will want them and be open to persuasion. They will be self-selecting, however, not necessarily discriminating or objective. Not likely to be representative either. And hardly comparable to shoppers walking around either composite website or a supermarket comparing products and brands, warts and all.

Don Delzell
Guest
Don Delzell
11 years 3 months ago
Without seeing the layout and design of the eStore, and understanding the marketing intended for the site, it’s difficult to formulate an informed opinion on the value to retailers of the data being developed. On the surface, even with a sample of 5,000, this could be viewed as a virtual focus group for testing, in a realistic environment, differing messages, offers and promotions. This is of value to the retailer IF the data is relevant to how they operate their site. I can see P&G using the information to attempt to influence the products or product pairings that a retailer puts online and the promotions the retailer chooses to run online (for P&G products). I can see smart retailers using the same information and applying it to P&G competitors as well. However, I am skeptical about the overall value to a retailer of this information. What will drive the actual consumer to the eStore when it goes live to the public? Is it the same process/mindset/approach that drives a consumer to a normal retail site… Read more »
Jerry Gelsomino
Guest
11 years 3 months ago

I think this program has defined benefits. First of all, it puts a direct link between P&G and the customers. Responses are not filtered by the retailer. Second, it can give an immediate response from the consumer about how trends or events change customer behavior. No matter what P&G already knows about the customer, being responsive to change is necessary.

Finally, and most importantly, it is a HUGE R&D opportunity for product, service and sales technique innovation. Just as the Nike store learns new ways to sell products and benefits, making little difference whether or not their products are bought at their own stores or Foot Locker, the same can be said for P&G. They can experiment with techniques the retailer thinks is a waste of time or energy. If I was running the project, I would experiment with some very leading edge and revolutionary techniques, as well as evolutionary improvements.

Robin Brown
Guest
Robin Brown
11 years 3 months ago

I think those who suspect P&G is less interested in the academic study of shopper behaviour and more interested in learning how to evade the grip of retailers are correct. P&G has been testing the waters of non traditional channels in other areas too. Remember the Tide branded dry cleaners?

Why on earth would P&G not want to look for alternatives to selling a third of their brand through one retailer that squeezes them on margins and simultaneously promotes a private label competitor?

wpDiscuz

Take Our Instant Poll

Do you expect the insights gained by P&G online to benefit traditional brick & mortar stores?

View Results

Loading ... Loading ...