Amazon Shares Warehouse Space with Proctor & Gamble

Nov 06, 2013 2:20 PM  By

Since 2010 Amazon has shared warehouse space with Proctor & Gamble, the parent company of such products like Pampers diapers, Bounty paper towels, Tide laundry detergent among others, according to the Wall Street Journal,  a move many are saying is a beneficial arrangement for both companies.

Since Amazon began sharing space with P&G, it is now in at least seven P&G distribution centers worldwide, including Japan and Germany.

The Wall Street Journal reported that Amazon is going out to its suppliers with a program it calls Vendor Flex.  With Amazon using suppliers warehouses and distribution networks, it is able to reduce its own costs of moving and storing goods,  compete on prices with Wal-Mart and club stores like Costco Wholesale Corp., and cut the time it takes to get items to consumers.

According to the Wall Street Journal, Amazon is in talks to enter the warehouses of companies including Seventh Generation Inc., Kimberly Clarke Corp, and Georgia Pacific Corp.

According to a video by Fox Business  this move cuts out the middle man costs for Amazon, and saves the consumers money at the checkout.  Amazon also saves on shipping.

According to the Wall Street Journal,  for Amazon, sharing space with P&G will reduce the cost of storing bulky items like diapers and toilet paper and free up space for the web retailer to stock high-margin goods in its own distribution centers.

In the video, Pravin Vazirani, managing director of Menlo Ventures, said  “there really is no downside” to Amazon sharing warehouse space with P&G.

“They are reducing their own fulfillment costs and it improves the customer experience because the customer gets the product faster and cheaper, at the same time they box out their competitors by creating a privileged relationship, all in one move,” said Vazirani in the video.

For P&G, it saves on transportation costs that it would have incurred trucking products to Amazon’s regional distribution centers and it gets Amazon’s help in boosting online sales, according to the Wall Street Journal.

Amazon is also expanding its reach in Canada with the launching of grocery and automotive online stores on Amazon.ca.  With the addition of these new online stores, Amazon.ca has launched 14 new categories in 2013, according to a press release by Amazon.

Consumers will find top brands like Betty Crocker, Ghiradelli, Folgers, Ocean Spray juices, Skippy Peanut Butter, Kashi, Enfamil and more that may not be found in every Canadian  grocery store.