Amazon has created a Vendor Flex program in order to become the go-to retailer for all of consumers’ daily product needs.  One of the first partners for Amazon with the Vendor Flex program is Proctor & Gamble.  Amazon is building fulfillment centers within P&G’s own warehouses.  This is creating a cost savings for both Amazon and P&G by eliminating an additional transportation cost.  However, not everyone is excited about this new partnership.  Companies like Target, who have had long-term relationships with P&G, are taking action.

Upon learning of the Vendor Flex program between Amazon and P&G, Target reacted by moving P&G products from prominent end-cap positions to less prestigious and visible locations.  Target also stopped considering some of P&G’s brands as “channel captains” and instead seek sales advice from competing brands.

Discussion Questions:

1. What is the supply chain relationship between Amazon and P&G?

2. Why do they do it?

3. Is this relationship good for Amazon and P&G’s competitors?  Its customers?  Explain your answer.

 

Source: Daphne Howard, Retaildive.com, February 26, 2014; Photodisc/Getty Images Extended Credit Required= N Business Unit Rights = MHE North America Asset Source= Getty Images