E-commerce leads 2020 channel growth in human, pet spaces

There’s no doubt that the COVID-19 pandemic kicked e-commerce into (perhaps permanent) high gear in 2020 and into 2021, and the pet sector was not immune to this shift.

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(Michael Krinke | iStock.com)
(Michael Krinke | iStock.com)

2020 was the year of e-commerce. Certainly it wasn’t meant to be; while e-commerce was a strong, increasing trend in consumer shopping habits, brick and mortar was still very much a top method of shopping — getting out of the house, interacting with small businesses or experiencing the hustle and bustle of large chain stores, and in the case of pet food getting advice on pet products from retail workers, are all valuable parts of the consumer experience for most shoppers.

We know what happened to abruptly change all that. According to IRi, a data analytics and market research company, in the human space e-commerce, which saw total consumer packaged goods (CPG) grow 22% in the e-commerce ( which includes MULO, grocery and pure play) space from 2018 to 2019, jumped significantly from 2019 to 2020 with 58.6% growth, by far the highest channel growth. In part 3 of the company’s study on “discovering pockets of demand” focusing on “2020 Trends & Emerging Growth Pockets,” IRi broke down the categories that most benefitted from the e-commerce boom during the pandemic.

“Categories with highest existing e-commerce share continued to shift more share to the channel in 2020; e.g., more shelf stable in edible and pet care (see Figure 1) and personal grooming in nonedible,” said the report. Pet supplies, in fact, made up the highest share growth of the nonedible products space in e-commerce, at 15.9% — a 45.5% share of the nonedible space overall.


FIGURE 1: Among the top 10 e-commerce brands in 2020 were three pet food powerhouses.

E-commerce growth in the pet space

According to Grand View Research, an India and U.S.-based market research and consulting company, the global pet care e-commerce market was already valued at US$20.75 billion in 2019, and growth was expected to remain strong and steady due to technological advancements such as mobile adaptivity, single-touch purchasing options and user-friendly website interfaces.

And then COVID-19 happened, drastically shifting the way people were able to shop.

“Shifting purchasing preference from regular brick-and-mortar system to the online stores has put this market on expedited growth platforms,” said Grand View Research in a July 2020 market analysis report. “Market participants are adopting innovative strategies to gain competitive edge over others. Personalized shopping, providing information pertinent to pet’s behavior and illness, pet education content, multichannel access and mobile apps have become an integral part of the online websites in recent years.”

Grand View Research said it expects the global pet care e-commerce market to grow at a compound annual growth rate (CAGR) of 11.3% from 2020 to 2027.

The U.S. market specifically shows similar growth trends. In an October 2020 report, “Pet Humanization Accelerates through COVID-19,” Capstone Headwaters, a financial advisor to leading middle market companies, said that “COVID-19 has fundamentally altered the retail landscape and has accelerated sales trends toward the online channel. In Q2 2020, (overall) e-commerce sales reached US$211.5 billion, accounting for 16.1% of U.S. total retail sales (U.S. Census Bureau data). The robust growth represents a 44.5% rise from Q2 2019 and an increase of 31.8% compared to Q1 2020.”

That’s a lot of dollar space for pet food to make a mark in, and according to IBISWorld, an industry research firm that counts pet among its market focuses, the online pet food and supply marketspace should reach roughly US$15.5 billion by 2025.

2021 challenges in embracing the digital pet space

In the January 2021 issue of Petfood Industry magazine, we discussed the top trends for the new year — e-commerce was at the top of the list, and industry experts had plenty to say about both the possibilities and the challenges ahead.

“I think the new retail landscape is going to be one of the big challenges,” said Jared Koerten, head of pet care research for Euromonitor. “They’ve obviously gone toward e-commerce as the future and they were all investing in e-commerce, but I think there’s still a lot to be said for the role in store merchandizing and shopping habits played with pet food. People were, when they went to their neighborhood pet store, very open to exploring and sampling and spending time with their pet at the store, discovering new products. In this new online environment, if people have gone into 2020 and they’ve done subscribe and save, they’ve done set and forget, they get their automatic food shipment once a month, they might still go to the pet store on occasion to pick up a new leash or a one-off purchase.

“That’s still a reality, but I think the number of trips is going to potentially be less because food is the big driver of [in-store visits],” said Koerten. “When that migrates online, a lot of those in-store elements become less prevalent. So I think it’s going to be a bit of a challenge to rethink new ways to engage with pet owners when they’re not in the stores as often.”

According to Koerten, it may be worth looking to how other countries are handling their own digital revolutions.

“The Chinese market is the bellwether here for a lot when you look at digital trends and e-commerce,” said Koerten. “Livestreaming [was] the big takeoff in 2020 in the Chinese market. So maybe that’s the future — if we have less time spent in physical stores, maybe it’s engaging pet owners in an online environment. Or maybe it’s engaging with pet owners at dog parks or other social events.”



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