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Adventures in Pet Food

Debbie Phillips-Donaldson, editor-in-chief of Petfood Industry, shares her insights and opinions on all things pet food, addressing market trends as well as news and developments in pet nutrition, food safety and other hot topics for the industry.
Pet Food Market Trends
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Pet food success now depends on strong online presence

October 20, 2016

Online sales of dog food have reached 4 percent in the US, with cat food at 3 percent – representing a doubling of online pet food sales since 2010. Overall, about 40 percent of pet food purchases in the US are made online or are digitally influenced. So, a robust online presence is crucial to pet food brands’ continued success in this increasingly digital economy.

These data and conclusions come courtesy of the Clavis Insight Index via its recently released “US Pet Food Report.” Citing 2015 data from Euromonitor, the report said that of the US$27 billion in dog and cat food sales, US$11 billion was purchased online or “digitally influenced.” This means that because pet food is a high-research product category, pet owners are frequently searching for, reading about, rating and reviewing brands online. (Note that the Euromonitor data is a bit outdated; figures released more recently put US pet food sales at US$29 to US$31 billion for 2015.)

That digital influence is key; the report also included a data point from Deloitte that 35 percent of US in-store pet food sales are impacted by online activity. This tends to give a boost to smaller, niche pet food brands, because they can “level the playing field online with strong search results and almost perfect availability across their portfolio,” Clavis said. It helps the smaller brands compete against larger brands that typically have higher volumes and stronger offline distribution networks.

Conducted in March 2016, the research collected data on 90 dog food brands and 76 cat food brands – more than 8,000 products – on seven online stores, including Amazon.com, Target.com and Walmart.com. The index used a proprietary formula to rate pet food brands’ online position in terms of product availability, content integrity, image presence, search, ratings and reviews.

Based on those criteria, the dog food brands indexing the highest included Orijen and Acana from Champion Petfoods, Fromm, the Honest Kitchen and Evo from Natura/Mars Petcare. For cat food, top brands included Stella & Chewy’s, Cats in the Kitchen (Weruva), Orijen again, Purina Kit & Kaboodle and Rachael Ray (Ainsworth Pet Nutrition). Other brands showed up under individual categories; for example, under search, Nature’s Variety ranked first among dog food brands. It had 137 items appear in online searches, with 34 percent showing on the first page of search results, compared to the industry average of only 6 percent.

With a few exceptions, most of these are smaller, premium brands, often touted as natural or in formats such as freeze-dried. These brands, believing that e-commerce helps them compete with larger brands and companies, are paying a lot of attention and focusing resources on following best practices for search keywords, monitoring and (when able) responding to ratings and reviews, and ensuring product descriptions and images are complete, accurate and showcase the product at its best.

What about actual online sales?

It’s worth pointing out here that the Clavis index is designed to highlight brands “best positioned to win in the growing online pet food market.” Does that translate to actual sales? Clavis didn’t reveal that, so we have to turn to another source, 1010data. Among the top 10 selling brands in its “Online Pet Food Category Report” for the first quarter of 2016, only two were also among the high-indexing brands for Clavis: Orijen (number eight in sales) and Fromm (number 10). Purina was at number four in the 1010data report, but that seems fairly vague and misleading considering that the name really applies to an entire company, not an individual brand such as Kit & Kaboodle on the Clavis cat food list.

Even where the Clavis report broke out brands performing best under different criteria, no others of the top-selling list from 1010data appeared. Without seeing Clavis’ full data for all brands surveyed (which I’m sure is available for a price), it’s impossible to know how the other top-selling brands – including Blue Buffalo at number one, followed by Wellness, Hill’s, Royal Canin, Taste of the Wild, Natural Balance and Merrick, in addition to the three already named – fared in terms of search, ratings, reviews and the other factors. We also can’t say whether 1010data and Clavis define or categorize “brand” in the same way; from the broader company and brand family names on 1010data’s list, my guess is that quite a few products are rolled up into those brands’ sales.

In other words, it’s difficult to connect high scores on the Clavis index with sales. Still, the report shared good tips for pet food companies to consider when assessing their online strategy. For example, as more and more consumers research products online, content and image will only grow in importance. “Enhanced content will be necessary; brands should look to recreate the experience of holding and seeing a product in person by using rich digital media such as lifestyle images and videos and content that communicates the value of the right pet food: a healthy pet and happy family,” the report said.

Clavis also pointed out that the high-indexing brands also make sure their products are available for online purchase. Average availability for the top five dog food brands was 100 percent, and 97 percent for the top cat food brands – versus 88 percent and 87 percent, respectively, overall. Nine of the top 10 dog and cat food brands combined had all items in stock during Clavis’ analysis.

“Some major offline brands enjoy strong consumer engagement but were outclassed when it came to the amount of items available for shipping,” Clavis found. “In the US pet category, being out of stock is not an option. Given the competition, consumers can easily find another high-scoring product to switch to if you are not in stock. Brands will need to monitor availability daily and be prepared to react quickly to outages.”

I’m not sure I buy that concern over sudden switches; most pet parents in tune with their pets’ digestive systems know that abrupt changes from one food to another are not a good idea. But not finding the product you need or want, either online or offline, is always a frustrating experience that usually turns consumers off and may eventually lead them to another brand or retail source.

If brands sold online are reliably in stock, it gives them a leg up on the competition. Also consider that for pet owners who regularly buy pet food online, subscription services are becoming more popular, with Chewy.com and Amazon.com both seeing their pet food subscription sales triple year over year, according to 1010data. Those two sites are running away with online pet food sales in the US, with an 85.5 percent market share combined.

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dphillips@wattglobal.com

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