How and where to distribute its products is one of the major decisions facing nearly all product marketers. Most companies selling consumer products choose to sell through resellers, such as retail stores, or sell directly to consumers through their own online stores. Some use both distribution methods. In most cases, marketers using both methods try to clearly separate each channel in some way such as by offering products online that are not available in stores or by pricing products higher online while offering ordering convenience. By having different approaches for each distribution option the marketer attempts to avoid channel conflict, which in this case may be trying to avoid having resellers view the product supplier as a direct competitor.
Now one of the world’s largest consumer products companies, Procter & Gamble, is dipping its toe into the online selling channel. While this is identified as only being a “research lab” intended to help P&G learn more about consumer buying behavior, it nevertheless has to be making some retailers wonder what is next. The site will launch in the spring and is worth watching.
P&G wouldn’t say whether the eStore’s prices will beat those in stores or on Web sites that also sell competitors’ products, like Amazon.com. But shipping initially will be at a flat rate of $5.
Considering how many different P&G brands are found in the average U.S. home and the power this company has at the retail level, could P&G get away with direct distribution and not affect its status at the retail level?
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