Procter & Gamble launches direct-to-consumer subscription business

Author: BI Intellegence   Source: Business Insider

Procter & Gamble Co. (P&G) recently launched an online, direct-to-consumer, subscription business for its Tide Pods, according to The Wall Street Journal (WSJ).

The consumer packaged goods (CPG) giant has branded the service Tide Wash Club, and offers free shipping of Tide Pods (its highest-priced laundry detergent) at regular intervals. The Tide Wash Club is currently only available in Atlanta. 

P&G is moving away from its traditional method of selling through local and big-box retailers, such as Walmart or Target. Consumers who use Tide Wash Club will no longer have to go to a physical store or separate online retailer to refill on laundry detergent. Tide Wash Club costs either $15.99 or $20.99 depending on the size of the order.

P&G has also been testing its delivery laundry service — Tide Spin — in Chicago. Tide Spin is a service that will pick up, wash and fold, and then deliver laundry. Tide Spin costs $1.59 per pound for wash-and-fold service, but offers free pickup and delivery. 

P&G is trying to compete with other online subscription services in order to boost sales. Consumers' buying preferences are shifting online, hurting P&G's traditional business, and forcing it to rethink its selling methods. For example, the company's share of the men’s razor blade market in the US fell to 59% last year, from 71% in 2010. In response, P&G launched Gillette Shave Club to compete with the success of online subscription service Dollar Shave Club.

But P&G faces steep competition in the online space — Amazon launched Amazon Subscribe & Save in 2007, which allows its customers to set scheduled deliveries of thousands of CPGs. Amazon’s Subscribe & Save program offers free shipping, much like the Tide Wash Club. However, consumers are offered a discounted price on CPGs through Subscribe & Save, while Tide Wash Club members are left paying higher prices. Keeping up with Amazon will be a real feat, but P&G likely hopes these new selling methods will boost its overall performance in the CPG industry.