UPDATE: P&G Launching Online Store To Sell Key Brands

Procter & Gamble Co. (PG), looking to ramp up its U.S. sales in the face of retailer and consumer cutbacks, is launching an online store that will sell key brands.

P&G's new "eStore" comes as traditional retailers have reduced the variety of brands they carry and pushed their own private-label products. P&G spokeswoman Tressie Long said the company sees the new online store as more of a "learning lab," where it can study consumers' online buying habits, rather than as a direct source of sales growth. P&G, which already sells its products online through the Web sites of such retailers as Wal-Mart Stores Inc. (WMT), says it will share what it learns with its other retailers.

The eStore will start as a pilot using 5,000 consumers in coming days. The site will carry only P&G products but will be owned and operated by PFSweb, an e-commerce service provider. Product prices on the site will be at the discretion of PFSweb, P&G says.

Not every P&G product will be available via the site initially, although big brands including Tide, Pampers and Olay will be sold there. The new site--pgestore.com--is not yet publicly accessible but will up for use in the spring. There will be a flat $5 shipping fee for all orders.

Procter & Gamble has increasingly been looking for new avenues of growth as consumers have cut back. In recent months the company has pushed to sell more online, an avenue that has grown as consumers turn to the convenience of the Internet to buy even daily goods.

Despite P&G's push into the online medium, sales at traditional retailers will remain key to its business. P&G gets about half a billion in online sales, a fraction of its roughly $79 billion in annual sales. Researcher Nielsen estimates online sales of consumer packaged goods including food, beverage, health and beauty aids and household cleaners increased 20% to 25% between 2004 and 2008, hitting roughly $10 billion in 2008.

P&G shares recently rose 1 cent at $61.52.

-By Anjali Cordeiro, Dow Jones Newswires; 212-416-2200; anjali.cordeiro@dowjones.com

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