Magazine article Marketing

News Analysis: Airlock - Procter's Direct Gamble

Magazine article Marketing

News Analysis: Airlock - Procter's Direct Gamble

Article excerpt

P&G's Ocado stake signals an intent to gain greater insight into its customers.

Procter & Gamble's decision to invest pounds 5m in a 1% stake in home-delivery company Ocado gives it the opportunity to gain customer insight ahead of its rivals.

This is the first time P&G has bought into a retail business, and Ocado, which has yet to turn a profit, could seem like an unusual investment, given that it is best known for selling Waitrose products online.

The John Lewis Partnership handed its 29% stake in Ocado to its pension fund last month, allowing the delivery firm greater freedom to work with companies that compete with John Lewis and Waitrose.

Ocado's chief financial officer and marketing director, co-founder Jason Gissing, said: 'There was some confusion with John Lewis being both a shareholder and supplier, but Ocado has always been independent and this formalises that relationship.'

Unique shopper knowledge

'If Ocado's relationship with John Lewis is coming to an end, Ocado might be seeking to form other partnerships,' says TNS' consumer insight director, Matt Stalbridge. 'However, I don't think Ocado looks like a serious channel for sales. It would make more sense for research and getting customer information.'

A P&G spokesman refuses to be drawn on its relationship with the delivery company. 'It's early days in terms of defining our work together,' he says. 'We're interested in the unique shopper knowledge available with Ocado and we see its model as a fertile ground for new ideas.'

Moving sales online is an established strategy - web retailers seem to be flourishing in the current economic climate and more manufacturers of electronics, apparel and other goods are now selling directly to consumers online, despite the potential conflicts.

In May, for example, KMI, the umbrella company for brands including Ted Baker, Fish, King of Shaves and Hed Kandi, unveiled its own direct-to-consumer ecommerce site; it now receives about 100,000 visitors a month. If a company the size of P&G followed suit, the potential market would be enormous. …

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