Groupon says its focus is on the bottom line, rather than top-line growth.
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Zelikovsky has said Reflect is “hovering around profitability.” But even when that point is reached, its contribution may not move the needle for a company on the scale of P& G, which has total annual revenues of about $42 billion. Even if Reflect were to become as large as a billion-dollar business, it would still represent only one forty-second of sales for P & G, points out Bank of America analyst Bill Steele.
Though Zelikovsky’s focus has been on building a new brand - with the Internet’s help - Wall Street’s take is that Reflect.com’s greater utility to P & G is as a test vehicle. “It gives them another avenue in which to explore the traits and habits of the consumer. Procter is looking to touch the consumer in many ways, and certainly the Intent is a viable channel. They can also look at the mass customization model and whether it has legs for other opportunities down the road. I’m positive they’ve learned a lot from the initiative. How they chose to apply that knowledge, we’ll see over time,” says Steele.
From web to store
More than a few retailers have found the web to be a cost-effective way to launch new businesses or initiatives. Reflect plans to leverage its web success into brick and mortar stores. It already has two, located in San Jose, Calif., and Chicago, and more are on the way, though Zelikovsky is for now keeping the details of that rollout close to the vest.
In the retail stores, called retail labs, customers can order custom products, have them formulated and packaged at the store, and take them away at the end of their store visit. “It’s a different process than in the manufacturing plant, but the principles are the same,” says Zelikovsky. “We’ve been able to scale the process from production size to the retail level, and we’ve been able to take our learnings from the web and apply them to other channels.” l