P&G Experiments With E-Commerce in China

Mainland's Largest Advertiser Says Digital Media Is 'Changing Product Sales Dynamics'

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P&G's e-commerce site is part of Taobao.com, the business-to-consumer arm of Alibaba Corp.
P&G's e-commerce site is part of Taobao.com, the business-to-consumer arm of Alibaba Corp.

GUANGZHOU (AdAgeChina.com) -- Procter & Gamble Co. is experimenting with e-commerce in China, the world's largest internet market.

Many of P&G's top brands in the mainland, including Olay, Pantene, Rejoice, Illume, Head & Shoulders, Gillette, Max Factor, Oral B, Braun, Pampers and Crest, are now sold on Taobao.com (shop57895461.taobao.com).

Taobao.com is the business-to-consumer arm of Alibaba Corp., the country's largest e-commerce retailer, often called the Ebay of China. The P&G section of the site, which launched in April 2009, is operated by one of P&G's largest customers in China, the Beijing Yishang Yujie Trading Co.

Many of the products are sold slightly below the normal retail price, said Charles Zhang, a P&G spokesman at the company's greater China headquarters in Guangzhou. "Pricing of P&G products, both online and in traditional stores, is at the sole discretion of the retailers," he said.

Since the products offered on Taobao are often in bundled packs, discounts encourage multi-brand and larger purchases, he said. "The discount range offered on Taobao is similar to that in many offline stores."

P&G's brick-and-mortar retail sites in China include supermarkets, department stores, drugstores, and cosmetics stores. P&G is China's largest advertiser, spending over $1 billion on media in the mainland each year, according to Ad Age estimates.

China is one of the first countries where P&G is introducing e-commerce retailing. The marketer has stepped up its global emphasis on digital marketing since Marc Pritchard became global marketing officer last year.

Even as Procter & Gamble Co. cut measured U.S. media spending 18% overall in the first quarter, for example, the company more than doubled spending on internet display ads, according to data from TNS Media Intelligence.
Crest is one of P&G's brands on the e-commerce site
Crest is one of P&G's brands on the e-commerce site
The U.S. consumer goods giant is looking at e-commerce elsewhere on a "market-by-market basis, depending on the local markets' situation and consumer needs. For P&G as a whole, e-stores are new," Mr. Zhang said.

"We are in an experimentation stage globally. We realize the fact that e-commerce is developing rapidly in China, bringing changes to consumer daily life and changing product sales dynamics [and] work closely with customers in sales channel innovation, both online and offline."

P&G has also turned to digital media in China, creating local-language web sites for its products and using online media for branded entertainment. For example, P&G sponsors about two dozen lifestyle and fashion IPTV channels operated by Shanghai Media Group (SMG), China's second largest broadcaster after CCTV. Each channel is programmed with a specific P&G brand and its target market in mind. Brand include Olay, Whispers, Vidal Sassoon, Head & Shoulders, Pantene, Gillette, and Herbal Essences.

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