As lockdowns arising from the COVID-19 pandemic continue, consumers are getting more comfortable purchasing pet food online. It is expected that such a trend will persist and further expand even as the crisis passes.
Surprisingly, the biggest short-term collateral impact of the current pandemic on the Mexican pet food market is a price reduction for premium products, caused by the increasing competition online. Such lower prices online are possible because of fewer intermediaries being involved.
As e-commerce increases, so does overall competition in the Mexican pet food market, displacing other sales channels such as veterinary clinics. Although veterinary services are considered essential in the context of the COVID-19 pandemic, the lockdown may be hindering a side business of veterinarians: pet food sales.
In general, veterinarians in Mexico are likely to experience three negative effects from the pandemic. First, the lockdown itself reduces the demand for veterinary services in the country. Because of that, pet food sales at veterinary clinics are falling due to a decreasing number of visits to these outlets. Lastly, the fierce price competition of online pet food platforms makes it less attractive for pet owners to purchase pet food from veterinarians, who usually add the largest markups in the industry.
The first two shocks are temporary, yet the third will likely remain after the lockdown eases.
Petco Mexico is offering the lowest prices in the online marketplace. For example, its best-selling product, Proplan Optiderma for adult dogs in the 13-kilogram package, costs 115 pesos (US$4.7) per kilo. Such a price level is lower than that of two years ago.
Perhaps, sooner rather than later, pet owners will further embrace online shopping, as there are no incentives to continue paying 40% or 50% more for the same product in a veterinary clinic. A large shift from traditional stores to the online environment may have a few additional impacts, not only on prices but in reshaping the entire pet food business in Mexico, including a reallocation of market share by channel.
That makes it increasingly important for pet food manufacturers to further explore and exploit the digital marketplace.
View our continuing coverage of the coronavirus/COVID-19 pandemic.
Iván Franco is the founder of Triplethree International and has collaborated on hundreds of research projects for several consumer goods industries. He was granted the Global Consultant of the Year award by Euromonitor International and authored the book 17 Market Strategies for Growth (in Spanish).
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