P&G Starts Online Subscription Service for Tide Pods -- Update
July 19 2016 - 12:44PM
Dow Jones News
By Sharon Terlep
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.
Write to Sharon Terlep at sharon.terlep@wsj.com
(END) Dow Jones Newswires
July 19, 2016 12:29 ET (16:29 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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