In the five years leading up to 2016, revenue from online purchasing of pet food and supplies has increased at an annualized rate of 8.9 percent to total US$4.9 billion, according to a report from IBISWorld. Rising pet ownership in the United States and growth across the e-commerce sector have caused the industry to experience overall growth, despite the recession, concluded the report.
The IBISWorld Online Pet Food and Pet Supply Sales report reviewed sales of pet-related items ranging from dog treats to bird cages to cat carriers.
IBISWorld Industry Analyst Anya Cohen said in a press release that "rises in per capita disposable income and consumer spending have allowed shoppers to splurge on price-premium goods for their furry friends, which has driven revenue growth."
Online sales of pet food and products increases included growth of 7 percent in 2016, driven primarily by a 10.7 percent increase in the number of broadband connections, which increases consumer access to the online-based retailers that operate in this industry.
While many factors have contributed to industry growth over the five years to 2016, one of the strongest drivers has been the increased acceptance of pets as full-fledged members of the family. Consumers who adopt this mentality, or "pet parents," are likely to splurge on price-premium goods and supplies, such as organic dry and wet food and designer-brand collars. As demand for these premium goods has increased, so too have industry profit margins. In 2016, IBISWorld estimates that industry profit will account for 4.4 percent of industry revenue, an increase from 2011 when margins stood at 3.7 percent.
Over the five years to 2021, IBISWorld forecasts that industry revenue will continue to rise. Throughout the five-year period, stores will benefit from an increasing number of pets in the United States and rising per capita disposable income. These drivers will increase overall sales volume, as well as the average cost per sale as cash-rich customers continue to splurge on price-premium goods.
However, online pet retailers will experience increasing competition from the brick-and-mortar stores that sell pet food and supplies, including grocery stores and big-box retailers. According to Cohen, "such stores are able to offer additional services, such as grooming and training, and use these value-added offerings to siphon consumer demand from the online-based companies that operate in this industry."
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