As pets solidify their spots as family members in the minds of their owners, technology is becoming an increasingly important way for consumers to gain information and take care of their animals. Among the many pet care segments affected by this trend is pet food: Between the desire for more access to a wider variety of options (particularly in more developing markets) and the “convenience is king” mentality prevalent in today’s shopping patterns, online pet food purchasing is seeing increasing growth that is only expected to continue its upward trajectory.
The global online pet food purchasing landscape
Globally, an estimated 5.3% of total pet care sales happened online in 2015, according to a Fung Global Retail & Technology report, Global pet e-commerce: A dynamic channel in a growing market. This number was up from 2014’s 4.4%, showing slow but steady growth overall. Several developed markets were above these percentages (see Figure 1), including the United Kingdom (9.4% of total pet product sales online in 2015), the United States (7.0% of total pet care sales) and Europe (6.5% of total pet product sales), all numbers which showed growth from 2014.
E-commerce is growing in popularity in the pet food market, showing steady increases in more developed markets, such as the US and UK, and exponential growth in some developing markets, such as China.
But perhaps more interesting to look at in the online purchasing trend is a more developing market, such as China. A country for the pet food industry to watch in the coming years for a number of reasons, China’s middle class is growing—and with that growth comes more disposable income and more pets, resulting in the desire to spend more money on those pets. The country is expected to represent 25% of global pet food market growth by 2020, and while offline pet food sales are showing modest growth (US$803.73 million in 2015, up 4% from 2014, according to GfK), online pet food sales are a completely different story. In 2015, roughly US$424.61 million in China’s pet food sales came from online purchases, showing 36% growth from 2014 numbers and representing about 38% of total segment sales.
Further highlighting China’s development in the market, natural pet food in particular saw a significant boost in the country’s online pet food sales—51% of the natural pet food purchased in China was bought online, reflecting 49% growth from 2014 online numbers, according to GfK. So not only is China looking for more access to pet food, it’s using that access to take part in the more mature trends familiar to other markets.
In the US, the growth of pet care e-commerce is easily outgrowing total pet care sales. According to Forrester Research, between 2010 and 2014 pet care e-commerce in the US grew by 76%. In contrast, the American Pet Products Association (APPA) reported 20% growth for the total pet product industry over the same time frame. According to Fung, pet e-commerce not only substantially outpaced total pet care sales from 2010 to 2014, but also grew faster than total e-commerce or total retail (see Figure 2).
Pet care e-commerce actually showed greater growth (CAGR) between 2010 and 2014 than e-commerce overall, total retail and total pet care sales.
How consumers are shaping the pet e-commerce trend
In the US, there are two dominating outlets for consumers’ desires to purchase pet food online. According to 1010data, Chewy.com and Amazon.com controlled 85.4% of the online pet food purchasing market share in the first quarter of 2016 (see Figure 3). These percentages include both direct sales and subscription services, which are also becoming increasingly popular: Both Chewy and Amazon saw their subscription sales of pet food nearly triple year-over-year in the first quarter of 2016.
There are clear winners in the current online pet food purchasing landscape (Chewy.com and Amazon.com), but there are other outlets sharing smaller pieces of the pie that present plenty of options for savvy consumers.
There are other players in the e-commerce game, however: Petfooddirect.com holds 5.7% of the market share, Petco.com claims 3.1% and Petsmart.com holds 2.2%. Other outlets, such as Petflow.com and Walmart.com, also have small shares in the overall trend.
What percentage of pet product buyers are actually making use of these outlets? According to Packaged Facts survey data (see Table 1), 68% of pet owners in February and March of 2016 purchased pet products online sometime within the last month of their taking the survey, while another 17% had purchased products online “within the last 3 months.” These numbers held fairly steady from 2015, but showed marked increases from years before that, showing a fairly recent but significant growth in online pet product purchasing.
Well more than half of pet product purchasers said they purchased pet items online “within the last 7 days” or “within the last 30 days,” showing significant opportunity for companies considering an expansion of their online presence.
And what are these consumers purchasing? According to 1010data, specialty brands currently dominate the online pet food market (see Table 2). In the first quarter of 2016, Blue Buffalo held 12.3% of the total online market share, followed by Wellness (9.0%), Hill’s (7.5%), Purina (7.2%) and Royal Canin (6.8%) rounding out the top five.
Nine of the top 10 pet food brands purchased online are categorized in the specialty segment, showing a trend among those consumers looking to diversify their pet food options regardless of the choices in their immediate, brick-and-mortar areas.
“In Q1 2016, Blue Buffalo was the number one pet food brand sold online, moving up from number two in Q1 2015,” said a 1010data report. “An interesting characteristic of the online pet food market is that consumers tend to favor specialty brands online, as nine out of the top 10 brands produce specialty pet food. In Q1 2015, Wellness was the number one selling brand, followed by Blue Buffalo and Taste of the Wild. In Q1 2016, Blue Buffalo had captured enough market share to become the number one selling brand, with Hill’s and Purina also growing their share year-over-year.”
When considering the online pet food market, the industry should expect continued growth as consumers look more and more towards diversity and convenience for solutions. In developing markets, where domestic production can no longer meet demand; the specialty food segment, where consumers are willing and able to spend more time and money to get their pets the very best options; and in subscription services, which provide a convenience factor difficult for many busy pet owners to pass up; it makes particular sense to take a closer look if a company is aiming to include e-commerce as part of its business model.
The latest pet food market data