P&G challenges retailers with Tide detergent subscription service

Dive Brief:

In the face of disruption from Amazon’s subscription services, startups like Dollar Shave Club and the surging demand economy, Procter & Gamble is responding with its own subscriptions and services.
On Tuesday P&G launched the Tide Wash Club, an online subscription effort that delivers Tide Pods detergent capsules to customers' homes. The service, introduced in Atlanta, charges either $15.99 or $20.99 per delivery, based on the size of the containers. P&G is also promoting a family-sized plan with pods priced at 26 cents each. Shipping is free.
P&G is also leveraging its Tide laundry brand with the introduction of Tide Spin, a smartphone app supporting on-demand laundry pickup-and-delivery services in Chicago.

Dive Insight:

Subscription startups like Dollar Shave Club (acquired Tuesday by global consumer products giant Unilever for a reported $1 billion in cash), Harry’s and others have nicked stalwarts like Procter & Gamble, Unilever and Schick. P&G, which manufactures and sells Gillette shaving products, has been blindsided by the success of startup dollar shave clubs, sources told the Wall Street Journal.

But P&G finally woke up to the challenge with its own Gillette male grooming subscription service, launched in June 2015, and is now rolling out Tide-branded detergent subscriptions and laundry services. P&G may have taken a while to embrace new platforms and technologies, but its moves pinpoint the problem facing many upstarts—their business models are often easily replicated by the very giants they seek to disrupt.

Beauty subscription company Birchbox is facing much the same problem, as rival Sephora has taken over its idea with its own subscription service, all the while also enjoying the advantages of its brick-and-mortar network and a successful concession partnership with J.C. Penney. Birchbox this year has already instituted two rounds of layoffs this year, halted plans for a Canadian expansion and an initial public offering, and scaled back its plans for more physical stores.

While the disruption and competition may be good for consumers (and the innovation may be good for P&G), it poses new challenges for retailers. At 21 cents per pod, Amazon’s subscription service for Tide laundry is somewhat less expensive (at least for Prime members, who already pay $99 per year) than Tide Wash Club, while retailers like Target and Wal-Mart at the moment offer no similar option. The difficulty in matching the convenience of subscription services makes it all the more crucial for general merchandise retailers to compete on customer experience and differentiated merchandise. Otherwise, competing on price is all they have.