Chinks in the Amazon Armor?
Amazon’s May 2018 launch of Wag private label dog food didn’t exactly take the world by surprise. In its annual U.S. Pet Market Outlook report, published in early March, Packaged Facts speculated that “Shortly after its Whole Foods acquisition, Amazon began offering the retailer’s Whole Paws pet food online, and in short order, Packaged Facts expects to see Amazon extend its cross-category AmazonBasics brand—which already includes a wide selection of nonfood pet products—into pet food and launch a new superpremium pet food brand.”
The day of the Wag debut, One Click Retail founder Spencer Millerberg told Retail Dive (on May 3) that “The way Amazon entered pet food was predicted and makes complete sense. Pet products on Amazon grew over 40 percent last year and now make up over $2 billion in sales annually. Amazon has also selected the highest moving categories within pet. Pet food is a logical place to start, and we predict next Amazon will move to other fast moving categories such as pet treats, pet crates/habitats, and pet health care products.”
Bloomberg reports that Amazon had, at the time of the Wag launch, sold upward of $2 million in AmazonBasics pet carriers, so additional private label entries seemed like a no-brainer, and that went double for pet food. Besides being the largest pet category—accounting for approximately two-thirds of all pet product sales and half of Amazon’s pet product sales—pet food is, more than any other pet category, what keeps pet shoppers coming back.
Established pet food purveyors are keeping a careful eye on Wag, and rightly so. Amazon has transformed the pet industry by more or less erasing the once sacrosanct distinction between pet specialty and mass channel pet food brands by putting almost all of the most desirable products at the e-commerce shopper’s fingertips.
Starting with books, Amazon has a long and bloody history as a category crusher, and the company has already built out private label in categories including soap and diapers. Like brick-and-mortar-based retailers, but with vastly broader analytics, Amazon is able to identify and incorporate the cachet of best-selling products into brands of its own, as seen in Wag features like real meat and no added grains. Through craftily plotted algorithms, the company is able to self-promote on the Amazon shopping pages of competitive brands—roughly one out of two times I clicked on a similar pet food brand, an advertising banner for Wag popped up. Most disturbingly, perhaps, many times in the past has Amazon demonstrated the wherewithal and willingness to sacrifice short-term profits for long-term customer loyalty, and that strategy will likely go into overdrive in private label pet.
Still, I wonder: Will a dollar’s worth of savings (or even a few) convert a conscientious pet food purchaser from a tried-and-true brand to a neophyte private label? Walmart has excelled with Ol’ Roy, but the online shopper is a different breed, less susceptible to a price-first pitch and more committed to the health-first fare driving the pet food market today. In its Wag positioning—“Feel-good food for your best furry friends”—Amazon is clearly hip to the pets-as-family pitch, but will pets-as-family pet owners breezily entrust their pets’ health and wellness to an e-commerce behemoth with no history in food production (aside from its Whole Foods inheritance), much less pet food? Are established pet food brands such as Purina Beneful, Blue, Iams, Merrick, Nutro, Rachael Ray, Science Diet, Solid Gold and Taste of the Wild (and the list goes on) really so vulnerable?
Amazon has found success in other areas of private label, but pet food isn’t soap or diapers or batteries. It’s a consumable, and more than a few pet owners may balk at entrusting their pet’s nutrition to a website, even if the URL is Amazon. Already, consumers online are calling for more transparency from Wag, which is somewhat tone-deafly touting “ingredients from around the world.” The pet food market’s current intensive focus on safety, transparency, limited ingredients, etc., suggests that Wag might need fine-tuning, as does the name.
As Petfood Industry editor-in-chief Debbie Phillips-Donaldson notes in her “Adventures in Pet Food” blog ( published May 7), there are already numerous “Wags” in the pet industry space, and it’s not clear that assigning the name of a defunct website (Amazon acquired Wag.com in 2011 and rolled it into Amazon.com in March 2017) to a high-end pet food is the most intuitive move. The timing, too, might have been better. These days in the online space, not all that glitters is gold, thanks in no small part to the trust-busting antics of Facebook.
Never underestimate Amazon, which is probably über-confident it can once again wag the dog. But also don’t rule out the possibility that issues including nebulous ingredient sourcing, no pet food pedigree and a repurposed brand could dog the Wag.
David Lummis is the lead pet-market analyst for Packaged Facts, a division of MarketResearch.com, and author of Packaged Facts’ U.S. Pet Market Outlook, 2018-2019 (packagedfacts.com).