In B2C supply chain environments, the term “Amazon Effect” has particular meaning, mostly all of which revolves around how to best compete against this online juggernaut. Sometimes, tactics can get a bit nasty, with strong gestures sent, even if it involves one of the most prominent collections of global brands. The field of competition has become much more acute.
Readers can recall that back in October, news leaked out that Amazon is partnering with global consumer product goods producer Procter & Gamble in an ambitious pilot program termed Vendor Flex that involved Amazon co-locating its online pick and pack customer fulfillment of bulk consumer goods such as diapers or household staples directly within a P&G distribution center. Goods literally move across the aisle from P&G to Amazon fulfillment.
Today’s edition of the Wall Street Journal provides additional information (paid subscription or free metered view) concerning the immediate response from one particular retailer, Target Stores, who happens to be a preferred customer partner to P&G. The WSJ quotes sources familiar with the situation as indicating: “Several months ago, the discount chain started to give some P&G products less-prominent placement in stores, including less space on “end-caps”- the coveted shelves where featured items are highly visible to shoppers and tend to sell quickly ….” Target additionally removed some P&G brands from their “category captain” status, and encouraged P&G competitors to work together on offering promotions on combined purchases.
The WSJ was quick to point out that its sources indicated the dispute among P&G and Target has since de-escalated with P&G products returning to their end-cap status and preferred status.
From our view, the recent credit card security breach that impacted Target removed Target’s clout, and perhaps the tables are turned.
None the less, this report gives us evidence that CPG companies who collaborate closely with Amazon can sometimes bear the chagrin from other influential brick-and-mortar retailers and that ugly tactics exist when it comes to competing with Amazon.
Would your company dare to take on a key partner who collaborates closely with Amazon?