E-commerce and Internet of Things turn US pet market upside down

Internet advances and e-commerce are redesigning how consumers are shopping and interacting with their pets. Consumers are ready, but are retailers?

Pet e-commerce

Packaged Facts places US pet product sales at $52 billion (€45.8 billion) in 2018, up 4% over 2017. E-commerce has made enormous strides and will grow to 23% of the market by 2023, making it second in market share only to the brick-and-mortar sales of pet specialty chains. 

As the fastest growth channel for pet product sales, the internet has been disproportionately responsible for helping to keep the US pet industry on an upward track. During 2018, nearly $10 billion (€8.8 billion) worth of pet products were sold online. The number of US households purchasing pet products online is also on the ups, nearly quadrupling from 3.5 million in 2013 to 13.3 million in 2018, according to Simmons national consumer surveys. 

Some of the e-commerce gains are clearly coming at the expense of brick-and-mortar, but pet e-commerce is so strong that it is elevating overall market sales.

The result is that any serious pet product marketer needs to be thoroughly represented online.

Amazon continues its pet market march, reaffirming its commitment by financially backing HABRI (Human Animal Bond Research Initiative), adding additional private-label pet product lines, retooling warehouses to facilitate the handling of heavy pet food and litter, and positioning itself as a pet information resource. 

Brick-and-mortar fight back

Looking to offset additional losses to Amazon and other pureplay e-tailers, brick-and-mortar-based retailers are realigning as omnichannel operators via acquisitions and initiatives designed to integrate e-commerce. Specialty shops and mass merchandisers are implementing new forms of order fulfilment, including ‘click-and-collect’ (online ordering coupled with in-store pickup) and same-day delivery. 

Pet superstores are also emphasising smaller store formats (PetSmart launches Groomery, Petco introduces PetCoach,) and expanding petcare services.

Mass premiumisation

By accelerating the breakdown of the commercial and conceptual barriers between pet specialty and the mass market, moreover, the winds of internet change are also driving brick-and-mortar mass premiumisation. With super-premium/natural products accounting for more than 70% of sales in the pet specialty channel, much of the remaining potential for converting pet owners to higher priced fares lies in supermarkets and mass merchandisers. 

Within months of its 2017 cross-over into mass channels, Blue Buffalo became one of the top mass-market brands, which led to the company’s 2018 acquisition by General Mills. During 2017, both Nutro and Nature’s Recipe ‘went mass,’ and Mars launched CRAVE, a super-premium-type product created specifically for the mass channel. 

With entrenched super-premium-type mass brands like Rachael Ray Nutrish fighting back, Packaged Facts has observed a spike in advertising and promotional activity, including virtually back-to-back (and head-to-head) TV commercials during prime time. This heightened competition will further contribute to a natural pet food groundswell in the mass channel, even as super-premium brands continue to advance online.

Internet of Things

E-commerce is but one facet of a much larger tech trend that is changing how pet owners interact with pet products and services, as well as with their pets. With internet advances, much of the innovation in pet products and services involves the Internet of Things (IoT), or the interactions of tech devices without human involvement. 

Within the pet market, examples of IoT abound – in pet bowls that automatically reorder food for home delivery, cameras that allow pet owners to dispense food or medications remotely, and smartphone-linked trackers that monitor not just the pet’s location but also its vitals and behaviour, compiling data logs and alerting pet owners and veterinarians to potential health problems. 

Packaged Facts 2018 survey shows that 13% of dog owners purchased tech-driven pet products. Among these recent purchasers, 24% had purchased pet cameras and another 15% had purchased tech-based pet trackers. The beauty of such products is that they simultaneously automate humdrum tasks and encourage pet owners to be more involved with their pets, in the flesh and from afar. 

Technology-based pet product purchasing patterns, 2018

Pet camera/video system   24%  
Tech-based pet tracker or tracking collar (including activity monitors, GPS collars)15%
‘Smart’ pet door (microchip or automated door) 14%
Tech-based toys (Bluetooth or programmable ball launchers, fetch toys)12%
Bluetooth or microchip feeder/treat dispenser11%
Tech-based training device5% 
Other tech-based product31%

Source: Packaged Facts August-September 2018 Survey of Pet Owners

Author

David Sprinkle

Research Director, Packaged Facts
Year of the salmon, special Southern Europe, Zoomark