Finding success in the pet e-commerce space

Three e-commerce experts provide insights into what you need to know when considering your online market strategy for the pet food space.

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As e-commerce accelerates its growth as a vital trend due to the pandemic, it becomes more important than ever to understand your options. | (oatawa | Shutterstock.com)
As e-commerce accelerates its growth as a vital trend due to the pandemic, it becomes more important than ever to understand your options. | (oatawa | Shutterstock.com)

E-commerce is here to stay, and in a big way. Already a strongly growing sales avenue (with US$343.15 billion in online retail sales of physical goods in the U.S. alone in 2019, according to Statista data), the COVID-19 pandemic has caused a significant acceleration of the trend that is impossible to ignore.

“E-commerce made enormous strides between 2015 and 2019 and will grow to 27% of the market in 2020 and to 35% by 2024, which will make the internet the top channel for pet product sales,” said Packaged Facts in its June 2020 report, “U.S. Pet Market Outlook, 2020–21: The COVID-19 Impact.” In fact, according to Packaged Facts, Chewy.com is estimated to reach US$6.5 billion in sales in 2020, and Amazon will reach US$5.7 billion in the pet products category, accounting for 75% of online pet product sales. At the same time, brick-and-mortar-based retailers are expected to continue moving a growing share of sales to online platforms, whether as one-time sales, home delivery or “buy online, pick up in store” options.

Whether you’re looking to create a niche consumer experience, a manufacturer-retailer partnership or have a presence with the e-commerce juggernauts, it’s important to know how to make the most of these platform opportunities.

The premium, curated online experience

In 2019, after a frustrating and unsuccessful search for pet grooming and food products that worked with his dog Kaia’s allergies, Les Palmer asked himself the question: What if there was a Sephora for pets that offered trusted brands and delivered a better product and experience for dog owners like him? He answered the question himself by founding Dogphora, an online retailer of pet food and other pet-related products (headquartered in New York, USA) that offers both established and emerging premium brands as well as its own proprietary products and services.

“More and more consumers are finding e-commerce the ideal solution to buy the food and treats they need and grooming items to make sure that their dogs are healthy and looking great in the convenience of their own homes,” said Palmer, who is also the founder and CEO of SoHo Modern, the parent platform for Dogphora as well as a home furnishings retailer on the human side. “Dogphora makes it even easier by curating products of the highest quality. The need for a one-stop shop for high-quality products that delight consumers will become more important as the pet industry and e-commerce evolves and the buying behavior of pet parents continues to shift online and to healthier pet products.”

Dogphora has grown in importance during the pandemic, said Palmer, both because pet ownership has accelerated in the wake of COVID-19 and because pet owners just can’t shop the way they normally would in the physical space.

“This increase has had a positive effect on our sales and the e-commerce space in general,” he said. “Pet parents can’t take the usual walk to their local store for pet treats or for their furry friend to be groomed.”

Products selling on Dogphora’s site are guaranteed to hold up to the quality, safety, ethics and overall value they promise to provide to the wellbeing of pets — all trends of significant value in the premium pet space. For pet owners looking to maintain those shopping habits without having to worry about wading through larger spaces such as Amazon or Chewy, an openly curated platform like Dogphora might be a big draw. And if that’s the primary segment your products aim to capture, being part of a curated platform might be the way to go.

Maximizing the brand-retail partnership online

In 2014, Berenice Giannini, who already had experience in the pet space as the chief financial officer/chief operations officer for Dogswell, co-founded a retail chain called Protein for Pets. Her first inkling of consumers’ desires to purchase pet products online came when she noticed that people who lived within walking distance of her store were still receiving boxes from e-tailers like Chewy.com. Wanting to capitalize on the convenience factor, she implemented curbside pickup into her business strategy.

Once we did that, I realized a lot of people could benefit from this,” said Giannini. The success of her curbside pickup implementation eventually led her to co-found eTailPet, a platform that facilitates online sales for independent pet retailers, in 2018.

“My whole mission is to digitize the inventory of all these independent pet stores, to become little warehouses to compete with Chewy and Amazon,” said Giannini. “Because there are a lot of people out there, especially the people who can afford to pay more, who really don’t want to go into a pet store. They want to shop on their phone, at night, in the morning, whatever.”

eTailPet allows retailers to connect with customers online while maintaining their sales autonomy, as well as offering both home delivery and curbside-type options for consumers.

“A lot of times, I think retailers are afraid of losing their customers, or thinking that because it’s online it’s not the store,” said Giannini. “But what we see is that even when retailers offer both (curbside and local home delivery), 70% of orders are curbside pickup. Customers don’t always want home delivery. They just want to know that the product is there.”

There are definitely barriers to creating an online presence, many of them financial — but the pandemic has made overcoming those barriers vital to success. One way to do that, said Giannini, is through partnerships with the brands retailers are selling.

“Brands often have significantly deeper pockets than the retailers,” she said. The right partnerships can find pet food brands spending the initial money to attract pet parents into the retailers’ online stores, with the obvious hope of those pet parents then buying their products. Through eTailPet, a new Vendor Program allows manufacturers to provide informational, relevant advertising that retailers can post on their digital store fronts — the retailers get content for their sites while the manufacturers get exposure and brand awareness.

Is Amazon where you want to be?

Chewy.com and Amazon are the juggernauts of the online pet food presence. Chewy reported net sales of US$1.62 billion, representing 46% year-over-year growth, in the first quarter (ended May 3, 2020) of its 2020 fiscal year. The company also delivered its first-ever quarter of positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortization). Amazon, meanwhile, reported earnings for its second fiscal quarter of 2020 on July 30, 2020, including revenue up 40% to US$88.9 billion and a net income of US$5.2 billion — the largest quarterly profit in the company’s 26-year history.

Suffice to say, online shopping is the place to be.

“The main benefit of selling on Amazon is how big the marketplace is,” said Teddy Smith, co-founder of London, England-based Ace Listing, which creates optimized Amazon listings for clients looking to stand out on the platform. “There are around 235 million Amazon Prime members in the U.S. It’s quite a good place for small brands to compete with big ones, because many of the small homegrown brands or pet startups can be on the same listing pages as the big brands. It’s a really good way of getting national coverage, if that’s what you want to do, so you can scale, in a much faster way than you would be able to by going through [a smaller platform]. You can reach a huge audience with relatively little effort.”

You can also get a solid brand presence built on Amazon, something becoming increasingly important to all shoppers, even those using a digital site that is well-known for its bargains.

“The days of people going to Amazon just for a cheap bargain are over,” said Smith. “People are really looking for a brand story now, and on Amazon you can, relatively cheaply, do things with advertising and create pages to tell the story of your brand.”

The size of Amazon is both its biggest asset and its biggest liability to brands, said Smith, and you do have to know what you’re doing within the system to be truly successful.

“Because it’s such a massive marketplace, it can be quite competitive,” he said. “One of the main things you’ve got to do is make sure you understand the keywords you want to try and appear for, because Amazon’s basically a massive search engine. ‘Dog food,’ for example, is quite competitive. Something like ‘organic chicken dog food’ would be a more niche keyword phrase.”

The fees for various services on Amazon can also add up quickly, so Smith said it’s crucial to have a handle on your finances — there’s no point in paying Amazon’s 15% sales fee, for example, if you’re not able to absorb that cost and still make a profit.

Finally, you need to be able to fulfill all the orders you’re going to get, something that has been increasingly problematic during the pandemic.

“A lot of companies have struggled to stay in stock because of the amount of sales going through Amazon, especially during lockdown,” said Smith. “You need to be on top of your cash flow and your product flow before you get into [selling online]. It’s straightforward, but it’s also easy to get wrong.”

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