The impact of e-commerce on the pet sales landscape

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Pet product e-commerce is growing globally, with its strongest yr occurring in 2020. In accordance with Euromonitor International, a worldwide market research company, e-commerce channel share in the worldwide pet care market grew from greater than 10% in 2017 to over 20% in 2020.1

Smaller household sizes, urbanization, social distancing measures, and public health concerns have led to a shift in consumer behavior. There may be a heightened preference toward online stores, which is driving consumers away from physical stores to fulfill their pet product needs. The increasing pet population, pet ownership, humanization of animals by their owners, and spending per pet have also contributed to the rapid growth of e-commerce pet product sales in 2020 and 2021. Furthermore, with technological advancements, there isn’t a indication of this digital industry slowing down any time soon. In accordance with Euromonitor International, almost one-third of world pet sales are expected to return from e-commerce by 2026.1

The evolving pet care e-commerce landscape and business models

Pet care e-commerce includes the sorts of retailers as follows:

  • Online generalists comparable to Amazon
  • Pure online retailers of pet products offering a variety of pet services, in addition to pet pharmacies, comparable to Chewy, PetMed Express, and Zooplus AG
  • Brick-and-mortar retailers that sell through their web sites comparable to PetSmart, Petco Health and Wellness Company, and Pets at Home Group Plc
  • Big-box retailers that sell through their web sites comparable to Walmart, Goal, and Tesco
  • Veterinarians who sell through their web sites

As online retailers and e-commerce grows, brick-and-mortar pet product specialists within the US are expanding their online offerings. For instance, in 2021, PetSmart unveiled The Pharmacy at PetSmart, an internet portal for pet owners that permits customers to fill veterinarians’ prescriptions and have them shipped on to their door.2 Petco also offers to pet parents access to medications their pets need online via petco.com.

Zooplus AG is Europe’s leading specialist online pet supply retailer. Like Chewy within the US, Zooplus has built up a major online market share in Europe (about 50% in 20203) in comparison with Amazon (with its pet business a fraction of Zooplus3) and the normal brick-and-mortar pet supply stores.

Pet care retailers are implementing revolutionary strategies to realize a competitive edge over others. Providing a personalised and seamless shopping experience, information on pet behavior and illness, pet education content, omnichannel success, presence on social media, and mobile apps have develop into a vital a part of online stores. Furthermore, the retail incentives, competitive pricing, wider selection, ease of finding product details and reviews, and convenience offered by online retailers are attracting increasingly pet product shoppers to online stores.

Examples of the business models geared toward meeting the surging online demand for pet care products include the next:

  • Latest customer growth:The management of Zooplus views recent customer growth as a priority.3 The corporate has enhanced its marketing technique to increase brand awareness with online and offline shoppers. It’s expanding its addressable audience through additional marketing initiatives.4 Efficiently adding recent customers and increasing its share of consumer spending are critical components of Chewy’s growth strategy. Chewy reportedly has a complete energetic user base of 19.8 million.5
  • Customer centricity and deal with customer retention: With regards to bolstering customer loyalty, services comparable to autoship, subscriptions, and buy-again dashboards could be powerful tools. Major online retailers provide these services, comparable to Chewy’s Autoship program, Zooplus’ Subscribe and Save service, and Amazon’s Subscribe and Save program. Nearly 70% of Chewy’s sales reportedly come from its Autoship customers.6 The Autoship program provides further convenience to shoppers, and nearly half of Chewy’s products can be found for Autoship.7 In Q1 2021, Zooplus’ loyalty program, Subscribe and Save, accounted for 54% of its energetic repeat sales. Its energetic repeat customers grew to five.4 million in June 2021 (in comparison with 4.8 million in June 2020).8
  • Omnichannel interface options: Besides direct-to-consumer models, the demand for click-and-collect at retailers comparable to Walmart, Kroger, Tesco, Carrefour, and Goal has significantly increased.9 Many pet stores are also providing recent e-commerce pick-up services comparable to the contactless curbside pick-up by Petco. Partnering with third-party logistics providers is one other revolutionary way retailers are increasing their customer reach. In 2019, Petco and online grocery delivery company Shipt partnered to supply members of Shipt same-day delivery of pet supplies from Petco stores across the US.10
  • Telehealth and medicinal compounding:Chewy is specializing in making pet health care cheaper and accessible by expanding its services to incorporate medicinal compounding and telehealth. In October 2020, Chewy launched Connect-with-a-Vet, a telehealth service that permits customers to ask licensed veterinarians questions on their pets’ health.11 The service is free for purchasers enrolled in Chewy’s Autoship program11, which could possibly increase sign-ups and boost customer retention rates. Chewy’s medication compounding service, launched within the US in November 2020, offers custom medications to fulfill pets’ specific needs, comparable to providing medicines in several formats to its pet-owner customers.12 Roughly two-thirds of the corporate’s compounding customers are recent to Chewy Health, including over 20% who’re recent to Chewy overall, in keeping with a 2021 report.5
  • A one-stop shop for pet services: Chewy focuses on delivering a multi-dimensional customer experience that comprises food, treats, personalized accessories, health care, and services. Zooplus caters to above 8 million pet parents across Europe with a big product offering in pet food, pet care accessories, veterinary medicines, and services comparable to insurance, grooming, veterinarians, day walking, and pet keepers.8 In 2020, Walmart launched Walmart Pet Care as a central online hub for the sale of pet services. Walmart Pet Care includes Walmart PetRx, in-store, and online pharmacy services, as a lower-priced alternative to rival services marketed by drugstores and specialty chains.13
  • Private label: In 2018, Chewy’s private label sales were about 5% of its business. By the next yr, the corporate was looking for to extend that to greater than 15%, consistent with private label sales levels typical of enormous retailers.14 Zooplus’ share of orders with not less than 1private label product has grown yr on yr, highlighting the increasing popularity of Zooplus’ own brands with pet parents across Europe.8
  • Pricing: Amazon offers lucrative deals to customers who enroll for its version of the autoship program, while it and other retailers also provide discounts on some pet products.

Implications for pet care product manufacturers

The brand new online models and shifts within the retail landscape have vital implications for pet care manufacturers. Manufacturers must begin to prioritize partnerships with leading e-commerce retailers to best leverage product sales. They should adapt to the next opportunities and trends in pet retail:

  • Lead in digital: It’ll be critical for manufacturers to call out “winning in e-commerce” as a key digital priority. They may need to construct, test, and scale recent business models at pace with shoppers who’re already making the transition to online channels. Meeting customer expectations can be critical for achievement.
  • Create an omnichannel shopping experience:Online shopping continues to grow rapidly, but brick-and-mortar stores still account for most of the retail sales. Manufacturers and retailers must create a seamless omnichannel shopping experience to bridge the net/offline gap and maximize market basket dollars.
  • Goal recent pet owners:The primary purchase is important for autoship or subscription-based programs. The stickiness of those programs discourages product changes. Also, for brand spanking new pet owners, veterinarians and breeders are key influencers for brand selection.
  • Goal customers with the best message: Manufacturers might want to deal with mining shopper insights, mapping the consumer journey, developing different shopper personas, and targeting them with the best message at the suitable touchpoint to optimize the client journey.

The way in which forward

The web channel is increasing the reach of animal health firms. The necessity for data and insights, together with understanding the dynamics of the net channel, is becoming urgent. Nevertheless, digital transformation—data monitoring, data mining, cloud-based management, and predictive modeling—continues to be emerging within the animal health industry.

Effectively aggregating and harmonizing data in addition to identifying and connecting probably the most relevant data variables and key performance indicators to derive meaningful insights to tell the net strategy of animal health firms is just not a simple process. Animal health firms face several challenges to getting a transparent view of the e-commerce market. One in every of the largest challenges is capturing and reporting sales data since there aren’t any national data aggregators. Subsequently, animal health firms must forge data partnerships with retailers/data aggregators which might be sustainable with a commitment to offer data recurrently.

Country-specific regulations, product variances across regions, and ranging concentration levels of e-commerce players across the market worldwide, further add to the complexities. Subsequently, it has develop into imperative for animal health firms to be certain that they’re prepared for the challenges involved with deriving meaningful insights from e-commerce data to drive their online strategy.

Scott Jacobovitz has over 30 years of experience within the life sciences industry, with 12 of those years including animal health services. His expertise includes industrial excellence, marketing, and sales strategy. Currently, Scott is a director in Axtria’s Business Excellence practice. He leads global engagements in each animal health and human pharma. Scott has an MBA from Seton Hall University and is a licensed PMP.

Nidhi Jolly, MA, is senior manager, marketing, at Axtria. She has over 15 years of experience within the research and consulting industry, with about 10 years of experience working across various facets of content development, offering management, business development, and consulting services for the life sciences and consumer health industries. Nidhi holds a master’s degree in promoting and marketing from Leeds Business School, United Kingdom, and a bachelor’s degree in business and management studies from the University of Bradford, United Kingdom.

References

  1. Almost one-third of world pet care sales to return from e-commerce by 2026. Euromonitor International. April 29, 2021. Accessed March 8, 2022. https://www.euromonitor.com/article/almost-one-third-of-global-pet-care-sales-to-come-from-e-commerce-by-2026
  2. PetSmart debuts online pharmacy. PYMNTS.com. September 20, 2021. Accessed March 8, 2022. https://www.pymnts.com/news/retail/2021/petsmart-debuts-online-pharmacy/
  3. Diaz EYQ. Zooplus AG: multiple growth opportunities. MarketScreener.September 17, 2020. Accessed March 8, 2022. https://www.marketscreener.com/quote/stock/ZOOPLUS-AG-3015215/news/Zooplus-AG-Multiple-growth-opportunities-31314051/
  4. Patt C, Maueröder A. Investor & Analyst Presentation. Zooplus. January 2020. Accessed March 8, 2022. https://investors.zooplus.com/wp-content/uploads/2020/02/2020-01-07-IR-presentation-January.pdf
  5. Johnston L. As Chewy sales soar, labor shortages throw wrench into growth plans. RIS News. June 14, 2021. Accessed March 8, 2022. https://risnews.com/chewy-sales-soar-labor-shortages-throw-wrench-growth-plans
  6. Tyler J. Positives’ greater than outweigh’ the negative impacts of COVID-19 in pet care. Pet Food Processing. January 27, 2021. Accessed March 8, 2022. https://www.petfoodprocessing.net/articles/14429-positives-more-than-outweigh-the-negative-impacts-of-covid-19-in-pet-care
  7. Tatevosian P. 3 Underrated Aspects Driving Growth for Chewy. Nasdaq. June 17, 2021. Accessed March 8, 2022. https://www.nasdaq.com/articles/3-underrated-factors-driving-growth-for-chewy-2021-06-17
  8. Zooplus AG: Half-year sales surpass one-billion-euro mark. Zooplus.com. August 17, 2021. Accessed March 8, 2022. https://investors.zooplus.com/wp-content/uploads/2021/08/210816_zooplus-AG_Press-Release-H1-Results-2021final.pdf
  9. Koerten J. Coronavirus Will Change the Way forward for Pet Retail. Euromonitor International. July 24, 2020. Accessed March 8, 2022. https://www.euromonitor.com/article/coronavirus-will-change-the-future-of-pet-retail
  10. Shipt Launches Same-Day Delivery from Petco. GlobeNewswire. April 10, 2019. Accessed March 8, 2022. https://www.globenewswire.com/news-release/2019/04/10/1802152/0/en/Shipt-Launches-Same-Day-Delivery-From-Petco.html
  11. Chewy Expands its Proprietary and Popular Telehealth Service ‘Connect with a Vet’. Chewy, Inc. May 21, 2021. Accessed March 8, 2022. https://investor.chewy.com/news-and-events/news/news-details/2021/Chewy-Expands-its-Proprietary-and-Popular-Telehealth-Service-Connect-with-a-Vet/default.aspx
  12. Chewy Launches Compounded Medications for Pets, Plans to Offer it as a Service to Veterinarians in Future. November 12, 2020. Accessed March 8, 2022. https://investor.chewy.com/news-and-events/news/news-details/2020/Chewy-Launches-Compounded-Medications-for-Pets-Plans-to-Offer-it-as-a-Service-to-Veterinarians-in-Future/default.aspx
  13. Walmart Launches Latest Pet Care Services, Continues to Expand Full Suite of Pet Offerings. News release. November 12, 2020. Accessed March 8, 2022. https://corporate.walmart.com/newsroom/2020/11/12/walmart-launches-new-pet-care-services-continues-to-expand-full-suite-of-pet-offerings
  14. Verdon J. Profitability? Chewy Has a Plan for That. Forbes. July 19, 2019. Accessed March 8, 2022. https://www.forbes.com/sites/joanverdon/2019/07/19/profitability-chewy-has-a-plan-for-that/?sh=6ac2b9bd7b3a