Tuesday, October 28, 2008

P&G: On-line channel conflict?

Procter & Gamble has opened a website to sell its products on-line, risking possible unhappiness among its channel partners. The website is owned independently, so P&G is not itself competing with its customers.

In an indication of the sensitivities involved, the site is being operated by a third party, which owns the inventory. “We treat them like any other retailer as they buy product directly from us,” said Paul Fox, a company spokesman, of the site, which is still covered by P&G’s legal terms and conditions.

However, as e-commerce expands, manufacturers of electronics, clothing and other goods have shown themselves increasingly ready to overcome traditional concerns over potential conflicts with their retailers.

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.

If the site is successful, will P&G start selling direct?

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