E-commerce Trends: Buying Pet Products Online and What It Means for Your Business
How much do you think the average pet owner spent online on holiday pet gifts?
Consider this: The New Age pet owner went online to buy an aromatherapy kit for Fido—some lavender and sage scent to gently calm the nerves and soothe whatever Yuletide emotion caused all that barking.
And the indulgent cat lover logged on to buy a high-tech, self-cleaning litterbox for Whiskers, complete with an adjustable timer for raking and a privacy hood for the most modest of pets.
These are just two examples of consumers who have used the e-commerce channel to buy gifts for pets during the holiday shopping season, a time of year when 64 percent of pet owners in the U.S. buy a special gift for their animal companions.
According to the National Retail Federation, each owner spent an average of $30.43 on holiday pet gifts in 2014, up 14.2 percent from a year earlier. And in the U.K., it’s a similar story of indulgence, with an average expenditure of £34.634 per owner in 2015, and a collective holiday spend of £739 million.
“There is a lot of momentum behind the growth in pet during the holidays,” said James Russo, senior vice president of global consumer insights at Nielsen. “The pet is an important part of the family, and many people think, ‘We should be buying a gift.’”
Online, Off-line Year-round Spending
It’s not just during the holidays when people spend big on their pets. It’s a year-round affair, driving a $60.59 billion per year pet product/care industry in the U.S. that serves 79.7 million pet-owning households.
According to Forrester Research, online sales accounted for $3.7 billion of the U.S. pet care total in 2014, approximately 6 percent of the total, and an increase of 76 percent since 2010. (Comparatively speaking, the total for all online and off-line pet product/care sales in the U.K is £4.6 billion.)
The increase in online sales has been noted by Andrew Bucher, co-founder and chief veterinary officer at MedicAnimal, who makes the point that not only are retailers and brands profiting, but pets and their owners are benefiting as well—with better access to products that improve pet health.
“In the past five years, pet owners have become far more informed and savvy in the content they consume and the products they purchase online for their much-loved, four-legged furry friends,” Bucher said. “Add this to the convenience and price transparency of e-commerce and you end up with our pets benefiting greatly in terms of increased longevity and quality of life.
“The nonsurprising side effect of this increased awareness is that both preventative health care products and accessories have experienced a surge in sales in the last couple of years. As more owners become aware of a healthier online alternative for their pet care, it is not surprising to see that the growth of e-commerce in the pet sector will continue to grow at 15 to 20 percent in 2016-17.”
Making the Healthy Choice
The focus on healthy online alternatives is a direct result of the attitudinal shift brought about by pet-owning baby boomers.
“Baby boomers are the generation responsible for humanizing our pets,” said Kristen Levine, president of Fetching Communications, PetPR.com and Pet Living. “They helped to bring pets from a dog house or porch in the yard, to sharing all the comforts of home indoors. The average boomer sees their pet as an extension of themselves.”
Indeed, given this sentiment, it’s no surprise that according to a recent Harris Poll, 95 percent of all U.S. pet owners consider their pets to be members of the family, up four points since 2012 and seven points since the question was first asked in 2007.
These pet parents want the finest for their pets, including pet food, to the point where 79 percent of pet parents say that the quality of their pets’ food is just as important as their own. Furthermore, according to a Euromonitor survey, gourmet pet food brands now sell more than low- and mid-priced brands combined, with the greatest percentage of sales coming from households that earn in excess of $70,000 per year.
Many of these sales come from the aforementioned boomers, 90 percent of whom use the Internet, 52 percent of whom have interacted with a brand online and 70 percent of whom use social media on a daily basis.
Millennials are right there with them, in terms of sheer demographic numbers and in their humanizing attitude toward their pets. In fact, studies conducted by the research firm, GfK, indicate that millennials have now supplanted boomers as the largest pet owning population in the U.S.
Mike Nairn of Thistle Insight (and formerly of Mars Petcare) explains why boomers and millennials are finding the web such an appealing, health-oriented option.
“E-commerce helps pet owners through giving them choice, particularly for those who need specialist diets that are difficult to source,” Nairn said. “Pet owners also need to buy a high volume of product compared to other categories, so e-commerce allows them to harness direct delivery and this facilitates sourcing products through the specialist pet trade rather than through normal supermarket shopping trips.”
Convenience Is a Major Factor
Nairn’s comments also point to the importance and convenience of direct delivery. The fact is, the bulk of larger pack sizes is one of the key drivers in ordering pet food online. Buying with a single click and arranging for home delivery can seem like a clever life hack to the consumer, as opposed to lugging a bulky bag of food home from the store.
Taking the purchasing model one step further—it also makes sense that subscription programs are playing an increasing role in the procurement of pet products online. Consumables such as pet food and treats are excellent fits for auto-replenishment programs, which is why several leading pet brands have been among the early adopters of programs such as Amazon’s Subscribe & Save and Dash.
And it’s not only the bulk of larger pack sizes that are coming into play—it’s how the weight affects their shipping price via air delivery. When a household is on a regular subscription schedule, online retailers can get a head start, enabling them to deliver products by ground and still meet delivery deadlines.
These online benefits generate results—most notably, they lead to product loyalty. According to a January, 2015 survey data from Packaged Facts, 19 percent of dog owners who had switched dog food brands online within the last three months were choosing regular, subscription delivery of dog food, compared to only 12 percent of all dog owners. Likewise, for cat food, the figures were 17 percent and 14 percent respectively. It’s what David Sprinkle, Research Director of Packaged Facts, calls “sealed with a click.”
The pet category also holds the potential for even more “passive” auto-replenishment programs as the Internet of Things matures. Intelligent storage bins or food dispensers within the household could soon auto-detect when a household’s supply is running low, enabling automatic re-ordering without even the push of a Dash button. So Fido’s treats arrive automatically, with no human action required by the pet owner, except for carrying in the shipping box after it’s delivered to the front door.
A Look to the Future
Convenience and choice are two key elements of the online experience that younger consumers have come to expect as a “given” in making purchases today. It’s why the pet supplies industry needs to be particularly attentive to the online channel as millennials and gen X’ers emerge as the leading pet supplies consumer segments.
Looking at 2016 and beyond, as baby boomers continue to age and find it increasingly difficult to care for pets, their level of pet ownership will decline. That will likely lead to a levelling off period in the pet supplies and services industry.
Still, that’s not to say all growth in the category will stop. According to a study by the American Pet Products Association, nearly 10 percent of pet owners are new to ownership in the past year. That’s approximately 8 million pet owners, most of them millennials and gen X’ers, and it helps account for the $2 billion growth in the industry over the past year.
Opportunity still abounds. Whether online brands and retailers are selling aromatherapy kits for Fido, high-tech litterboxes for Whiskers, or any other pet product or service—they’re meeting demand in a big way.
“Pet care is a wonderful opportunity to start an eCommerce business because it isn’t just a trend or seasonal sale,” said Todd Handler, owner of Hot Dog Collars. “There’s a wide range of specialized pet products and care that entrepreneurs can specialize in, such as organic food and healthcare, luxury pet accessories and gift boutiques. People who treat their pets as family are usually willing to give their four-legged friends the best of the best—and that’s something that can be capitalized on.”
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Keith Anderson leads the continuous innovation and development of Profitero’s online insights solution for retailers and brands, helping global companies gain a deeper understanding of their online presence to optimize both online and in-store sales. For more than 10 years, Anderson has been a trusted advisor to global retailers and CPG companies including Walmart, Target, Best Buy, P&G, Unilever and Coca Cola. Prior to his role at Profitero, Anderson was vice president of the advisory practice at RetailNet Group. Anderson’s insights have been featured in the Financial Times and Forbes Magazine among other publications, and he is a frequent speaker at retail, technology and media conferences.