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Amazon workers shipping goods from inside P&G

  • Amazon (AMZN) has ensconced its workers in seven Procter & Gamble (PG) warehouses, where they ship consumer staples such as Pampers diapers and Bounty paper towels directly to consumers.
  • Under a program called Vendor Flex, Amazon has had this exclusive under-the-radar relationship with Procter & Gamble for three years. The e-commerce giant is also located inside, or is in talks to enter, the warehouses of other suppliers, including Kimberley Clark (KMB).
  • The deal between Amazon and P&G enables the former to cut the costs of shipping and storing goods, and better compete on prices, while P&G gets to boost its online sales.
Comments (16)
  • Paulo Santos
    , contributor
    Comments (17737) | Send Message
     
    This is weird, wasn't their diaper subsidiary the one using the Kiva robots?
    15 Oct 2013, 06:00 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (17737) | Send Message
     
    Yep - I confirmed it:

     

    http://bit.ly/GZ232B

     

    So here we have something funny. AMZN is shooting in all directions, buying robots for its own warehouses and then deciding that shipping from PG is cheaper (and not using the robots there for sure).
    15 Oct 2013, 06:03 AM Reply Like
  • wam350
    , contributor
    Comments (109) | Send Message
     
    Either way it sounds like a money maker for both.
    15 Oct 2013, 06:18 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (17737) | Send Message
     
    It's been in place for the last 3 years - whatever money it makes, cannot compensate for the rest of the enterprise, since earnings as a whole went to zero.
    15 Oct 2013, 06:24 AM Reply Like
  • FleetUSA3226
    , contributor
    Comments (672) | Send Message
     
    The ultimate "just in time" move. Amazon must have a lot of business in Pampers & Bounty in bulk.
    15 Oct 2013, 06:38 AM Reply Like
  • Gary J
    , contributor
    Comments (3506) | Send Message
     
    Yes a no-brainer win-win.
    15 Oct 2013, 07:27 AM Reply Like
  • Michael428
    , contributor
    Comments (695) | Send Message
     
    Gary

     

    You are correct...this is a win, win.

     

    It makes very little sense for P&G to ship something to an Amazon warehouse and then have Amazon ship it to the customer when we can cut out the middle step.

     

    No bear (of which I am one) can argue this is not good for Amazon.

     

    What is to prevent Amazon from doing this with many other companies?

     

    Mike
    15 Oct 2013, 07:49 AM Reply Like
  • Gary J
    , contributor
    Comments (3506) | Send Message
     
    They already are if you read the Wall Street Journal article.
    15 Oct 2013, 08:25 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (17737) | Send Message
     
    Exactly - this is already in the earnings. Or rather, in the lack of them.
    15 Oct 2013, 09:11 AM Reply Like
  • krk
    , contributor
    Comments (821) | Send Message
     
    Mike -

     

    "What is to prevent Amazon from doing this with many other companies?"

     

    Should the question instead be, what is to prevent P&G (and other brands) from employing any and all online retail platforms like AliExpress, eBay and even Google Shopping in a similar fashion?

     

    And the second question is, what is the edge for an online retail platform to invest and maintain warehouses?

     

    And the third is, wouldn't this model's natural progression be towards an "Agency Model" of the type Amazon fought (and won) against book publishers?

     

    And wouldn't it facilitate a UMRP (uniform manufacturer retail price) regime that brands prefer where it is their choice of pricing their products vis-à-vis their competitors rather than have its retail partners trying to outdo each other in discounting with no benefit to the brand and causing value erosion and also enhancing the clout of the most aggressive retailer?
    15 Oct 2013, 10:08 AM Reply Like
  • maknyc
    , contributor
    Comments (6) | Send Message
     
    How long till other retailers of P&G products revolt as P&G inevitably underwrites certain overhead (warehouse/distribution) expenses other retailers would have to assume in distributing their products and therefore partially allows AMZN to undercut them on price?
    15 Oct 2013, 09:21 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (17737) | Send Message
     
    Not to mention that for PG to allow shipping from its warehouses, then it might as well ship it itself and keep the distributor margin. What this implies is that this margin will, ex-warehouse and shipping, trend towards zero.
    15 Oct 2013, 09:27 AM Reply Like
  • Gary J
    , contributor
    Comments (3506) | Send Message
     
    "How long till other retailers of P&G products revolt as P&G inevitably underwrites certain overhead (warehouse/distribution) expenses other retailers would have to assume in distributing their products and therefore partially allows AMZN to undercut them on price?"

     

    P&G will tell them to get over it as their Amazon sales soar. (hint- they already are)
    15 Oct 2013, 10:08 AM Reply Like
  • User 10249651
    , contributor
    Comment (1) | Send Message
     
    P&G most likely can't sell direct . Pretty sure they have dealer agreements... and selling direct would not be allowed, especially if they were selling for less.who would want to sell there product.
    Renting Amazon space in there warehouse ... very smart .
    15 Oct 2013, 12:19 PM Reply Like
  • ARX Capital
    , contributor
    Comments (4) | Send Message
     
    Why can't P&G ship directly to consumers themselves? Or maybe they already do. Eventually, won't the Targets & Costco's of the world find an alternative to P&G products?
    15 Oct 2013, 12:19 PM Reply Like
  • Harewood
    , contributor
    Comments (2) | Send Message
     
    If Amazon ships P&G products outside the USA via this model, is this not encouraging parallel shipments? Will it not undercut non-USA P&G operations' overhead costs & marketing expense recovery? Amazon exports can circumvent import duties & local taxes, currency up/downsides etc. A particular issue for high value/low cube P&G products eg Gillette blades, perfumes etc.
    15 Oct 2013, 09:23 PM Reply Like
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