Is Amazon going to upset Procter & Gamble?

Things are getting interesting for old-school companies such as Proctor & Gamble. If you are a dividend investor, time to look for your quarterly income check elsewhere.

Amazon.com announced recently the acquisition of Whole Foods Market has retail stocks and companies such as Target Corporation and Walmart dropped nearly 5% of the announcement. Proctor & Gamble shares were also just a bit.

Amazon attacking the grocery means P&Gs consumer brands to nearly 65 is facing a battle, especially of Amazon is using the same gusto as it used for other merchandise. P&G sells nearly 44 percent products in North America and 15% product to Wal-Mart stores directly.

In February 2014, P&G announced with Amazon a deal to help cut costs. The company allowed Amazon takes up residence at few of its distribution centers so P&G products were directly shipped to Amazon customers instead of P&G shipping to or stock an Amazon warehouse. The relationship caused a tiff with Target, and it felt jilted as one of P&G’s prime outlets.

Even today, Amazon’s best-sellers turn up many P&G brands. Pampers, Crest, and Tide, to name a few, are all No. 1 in their respective categories on Amazon’s site. That is good news for P&G,
Amazon encourages P&G to sell its products through Amazon. Initially, it offers P&G access to all Amazon shoppers considering 52% of U.S. households now shop through Amazon Prime.

On the other side, this gives Amazon vast amounts of data as to what the shoppers are buying. Now, Amazon knows what you buy, how much, when and what you pay for the product. Now, it can control the relationship with the consumer, thus Amazon prevents P&G from knowing the buying habits of the end user and can begin to plot its own brand strategy about converting the consumer to buying private label brands of Amazon.

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