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Pet Care Ecommerce: A Rapidly Growing Market

Pet Care, an industry quite often overlooked in the consumer packaged goods market, and for what reason? Possibly due to its somewhat monotonous nature and habitual buying patterns among consumers.

Millennials and Gen Z have received increasing attention from marketers in recent years, but retailers must not underestimate Baby Boomers and their impressive spending power, especially in regards to buying Pet Care products. In fact, Boomers will shortly become even more affluent, as they’re expected to inherit a whopping $8.4 trillion by 2030.

According to research conducted by Google and Ipsos, online “is the top source for Baby Boomers for gathering information on topics of interest, outpacing TV and print media by a substantial margin”. Could this possibly be the reason for the rise of Pet Care brands going digital? We believe so.

Statista reported that eCommerce Pet Care sales grew by roughly 3.4. billion U.S. dollars, compared to approximately 317 million dollars for bricks and mortar sales. If that figure doesn’t jump out at you, then nothing will!

So where did it begin?

The prospect of buying Pet Care products online has a checkered past, thanks to Pets.com, who launched in 1998, with the idea to sell Pet Care products online. Users of the site could browse through different categories, choose products they liked and have them conveniently delivered to their home. Think Amazon’s original premise – books – but for pet products.

Interesting concept right? Sure. But Pets.com made a big assumption, assuming there was a demand for home delivered pet products and that pet owners knew how to buy online. But, this being 1998 consumers had little knowledge of how to do such online purchasing. This, along with a weak value proposition, left their success short-lived, becoming a poster child of the dot-com bust in 2000. Also the demand back then wasn’t anywhere as high as they had estimated.

Since when has this market shifted gears?

According to Pet Product News, baby boomers were the first generation to truly “humanize” pets in recent years. With more and more people considering pets as part of their family, their willingness to spend has shown a substantial increase. And, with 44% of Millennials unsure if they want to start their own families, showcasing their furry animals on social media makes a lot more sense than tiny humans. This growing pet population mainly being in developed markets where disposable income is a lot higher.

In general the online sales of consumer packaged goods is booming, as we saw in our recent blog “Rise of Consumer Packaged Goods”, however Pet Care ranked as the fastest growing online category, with a growth rate of 67% in 2016 alone. With pet lovers rapidly migrating to online channels over bricks and mortar stores, Pet Care brands can no longer overlook online channels and need to adopt a digital first approach.

It’s of no surprise that the big retailers Amazon, Walmart, Chewy.com and PetCo are looking to cash in on this space. These retailers are offering the convenience of direct delivery and speedy shipping, to give busy consumers easy, more convenience ways to purchase their products. No more lugging a pack of dog food over your shoulder for the long walk home!

Who’s dominating this online market?

Two companies that stand out in terms of Pet Care sales in the US are PetSmart and PetCo. However, if anyone has the power to make pet retailers nervous its Amazon. Combined they took a staggering 85% market share in the category in 2016, for pet food alone!

According to Packaged Facts, Amazon attracts more than half of those who purchase pet products online, passing Chewy.com, PetSmart.com, PetCo.com and Walmart by a noteworthy margin. Unsurprisingly, the retail giant Amazon appears to be gaining momentum in the battle. Due to todays ‘paradox of choice’, private label goods are becoming increasingly popular in the CPG industry, which Amazon has clearly cashed in on.

E-commerce analytics firm One Click Retail in its recent Amazon private-label research reported that Amazon’s ‘AmazonBasics’ private label goods are dominating with sales of over $250 million a year to date. And with Amazon having recently launched their own private label Pet Care products, ‘Wag’, this move is a huge threat to not only PetSmart, but the entire Pet Care industry.

How can Pet Care brands compete with this competition?

Embrace eCommerce

In today’s digital world, it is without question that Pet Care brands need to have a presence online. Even the large consumer packaged goods companies such as Perfetti Van Melle are driving digital transformation to build a better online experience for their consumers, to take advantage of the huge sale opportunities online presents.

However, embracing eCommerce does not necessarily mean a brand needs to set up their own DTC store and take on all the set-up costs that go hand-in-hand. A much easier option would be for Pet Care brands to connect consumers with more options to purchase from third party retail stores.

Strengthening retail partnerships and promoting your products in the likes of Amazon can increase conversion rates substantially! And, with over 197 million unique monthly users, there’s no question that brands have a lot more to gain than loose. Check out some more tips on how to win on the Amazon marketplace in our eBook ‘8 Clever Ways to Win In The Amazon Marketplace’.

Consider Subscription Based Services

Mckinsey reported that the subscription e-commerce market has grown by more than 100 percent a year over the past five years. With every month that passes, millions of consumers receive a box of subscription services delivered to their doorsteps – whether it’s a meal kit to bring out their inner chef, or a beauty box to sample skin care products.

Now it seems that our furry friends are receiving something too. Subscription services appear to be a good fit for the Pet Care category, given that pet food is typically a routine purchase for which shoppers can predict their need.

The Power Of Social Media

Social media for pet brands can be a little different to your usual run of the mill social media as you are catering for a very specific group of consumers: pet owners. Mars Petcare announced the results of a survey exploring how pets dominate pop culture thanks to the power of social media.

The survey found that about 65 percent of pet owners post about their furry friends on social media an average of two times per week. In leveraging the power of social media always keep a good variety of images, videos, offers, hashtags and animal related events throughout all your posts. Look to social media influences and celebs to showcase your products.

And, lastly, always remember where possible to link social media content to ‘Buy Now’ options to purchase products, ensuring no engagement goes to waste.

Smarter Digital Targeting

Like all brands, both big and small, the importance of digital marketing and smart allocation of spend is critical. Every brand wants to rank first page on Google however when competing with big box retailers, this brings with it many challenges and big costs.

If you don’t have the marketing budget to reach that number one spot, think about how you can coordinate spend with speciality retailers like Chewy.com who are investing big budgets on branded terms. Avoid bidding on branded terms and instead maximise your search efforts on smarter keyword bidding. With the aggressive spend big retailers like Chewy.com invest, it can be easier for brands to just follow suit or ensure your products are showcased at their best in the retailer store.

Where to next?

Looking to the future of Pet Care online it’s clear that convenience and choice are key trends transforming this sector. And, what consumers want and have come to expect is changing drastically due to the rise of digital.

For brands who have not invested in their online channels, the time for change has come. Simply selling online is not enough. Utilising emerging technologies, staying active and engaged on social media, embracing ecommerce and forming strong retail partnerships is key to winning in this highly competitive and growing industry.

Interested to learn more about how you can embrace your online channels and offer consumers more convenient ways to purchase your products without the need to implement your own DTC store? Or do you currently have a DTC store in place but want to utilise the power of your retail partners? Get in touch with the ChannelSight team today and we’d be more than happy to share some insights into how you can get a bigger a slice of this growing Pet Care market.

Melanie FitzgeraldPet Care Ecommerce: A Rapidly Growing Market

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