Maskota, the largest pet food retail chain in Mexico – measured by number of stores – announced the launch of its cutting-edge new online platform on May 15. According to press sources, the upgraded online store aims to increase the share of online and telephone sales up to 20% of the company’s total income in 2019. As of May, online sales for the company accounted for just 3% of its total revenue.
A year earlier, the retail chain acquired Petsy, a Mexican pet food e-commerce startup. As stated by Maskota in a previous press release, the acquisition was intended to improve the omnichannel buying experience of its customers.
For long time, this retailer has been dealing with limited sales space and saturation of its current 300 physical stores nationwide. Most Maskota outlets are generally compact, and stores are overloaded with products.
Therefore, instead of increasing the number of physical stores and incurring additional sunk costs, the family-owned company decided to further digitize its operations while strengthening the omnichannel experience.
What is the impact of Maskota’s new business strategy?
Online sales in Mexico are still negligible. However, digital marketing strategies and, particularly, e-commerce sales are shaping the pace for competition among the biggest pet food brands and retailers in the country. With Maskota increasing its stakes in the digital pet food arena, competition will likely become tighter as online players, like Petco, rely on fierce pricing strategies to attract new consumers to the online environment.
According to estimates, the increasing digitalization trend has already impacted industry performance. The premium pet food market segment posted single-digit growth in current value terms in 2018, due in part to the ongoing online strategy to maintaining low prices. Contrarily, volumes grew at a higher rate.
Outlook for online pet food pricing
Maskota’s eagerness to become a larger digital store will help further stimulate online pet food sales which, it is worth noting, are expected to rise rapidly in the coming years.
Eventually, the industry and especially online retailers may realize that premium pet food products cannot compete indefinitely using low and contested prices. Traditional pricing strategies used to stimulate online sales will likely hinder the industry’s value and brand equity gained throughout the years.