Pet Tech is on the Rise, But is it Safe?
Wagz utilizes technology for its Explore Smart Collar, which can be connected to pet owners’ smartphones.
Pet products controlled with app-enabled smartphones as well as apps that connect pet owners to veterinarians, pet walkers and sitters were avant-garde a few years ago, but now they are coming into their own.
In fact, in its 2018 Pet Technology: Ownership, Use and Perception report, the Consumer Technology Association (CTA), a consumer technology trade association in Arlington, Va., forecasts that, in 2018, pet tech will earn $233 million in revenue in the U.S., an 18 percent increase year-over-year.
While the year-over-year growth is noteworthy, it is only 0.3 percent of the estimated $72 billion that the American Pet Products Association (APPA) is projecting for U.S. pet industry sales this year.
“Given that this category is so new to the pet industry, the growth over the last five years has been very large compared to the traditional pet categories,” said Nick Konat, senior vice president and general manager, merchandising, for Petco, which has headquarters in San Diego.
David Lummis, pet market analyst for Packaged Facts, a Rockville, Md.-based market research firm, predicts “healthy advances” for the segment for at least the next five years, perhaps a decade or longer, which will “be helped along by technology on the … service-provider side.”
“There’s a lot of potential for online consultations with veterinarians that could really be money-saving propositions for pet owners,” he said.
With more pet tech product introductions such as activity trackers and pet cams on the horizon, pet owners will likely turn to pet stores and other brick-and-mortar retailers for guidance in the category.
“In the early stages of a product, people like to go to the store, where [they] can experience the product, touch it, feel it, read the box,” Lummis said.
Many pet owners are finding out about pet tech products from their local retailers, according to the CTA 2018 Pet Technology: Ownership, Use and Perception report. The report finds that 43 percent of pet-tech owners are likely to have heard about pet tech at a pet store, while 72 percent are likely to buy it at a brick-and-mortar store in the future.
“While we can’t speak for the stores themselves, physical pet stores appear to be the biggest drivers for awareness and sales, according to consumers,” said Steven Hummel, senior research analyst at CTA.
Despite consumer interest and growing demand, pet retailers have been slow to embrace pet tech, according to industry insiders. However, Edward Hall, CEO of Petrics in Wilmington, N.C., said retailers are starting to warm up to the idea of stocking pet-tech products.
“Because the interest and awareness has grown for these types of products among consumers, and the prices are becoming more retail-friendly, we are seeing growth in these areas [distribution and sales channels],” Hall said. “The convergence for pet tech is finally starting to happen, and we could not be happier.”
Petco is one such retailer that has included pet tech products among offerings, and in 2017, the company added PetCoach, a veterinary advice app and online platform for pet owners, to its portfolio.
“In the last several years, we’ve continued to invest in the pet-tech space and maintain the ability to quickly make decisions to adapt our assortment to better meet our customers’ and their pets’ needs,” Konat said.
Best Buy was another early adopter of pet tech. The retailer “created pet-tech sections to show products like Petcube, Petnet feeders, Fitbark activity trackers and more,” according to Hall.
The Internet Factor
While some retailers are embracing the category in their stores, Lummis questions pet tech’s staying power on store shelves.
“I think [pet tech] is going to do what most other pet products are doing for the foreseeable future, which is migrate to the internet,” he said.
Lummis compares pet tech’s as-of-yet unrealized potential to the internet’s upending of the industry’s biggest segment—pet food—in the past five years.
The conventional wisdom among pet industry insiders a few years ago, according to Lummis, was that the industry’s cash cow—pet food, its biggest segment in 2017 at $29 billion in U.S. sales, according to APPA—was too bulky and too cost-prohibitive to ship direct to consumers.
“That was supposedly going to impede the internet from doing what it is doing right now, which is sort of taking over the pet retailing world and really changing everything in terms of the way retailers are having to do business,” Lummis said.
Roughly 14 percent of 2017 U.S. pet product sales were over the internet, a number that Lummis expects will increase to one in four, or at least 25 percent, of all U.S. pet product sales by 2022.
Even if sales of pet tech products migrate online, Lummis believes the category will continue to grow.
“It is still a little bit hard to imagine that the smart products that we’re seeing now are actually going to gain a whole lot more ground than they already have, but I think they will,” he said.
The Right Generation
The helicopter-parenting phenomenon is not lost on this generation of tech-savvy pet owners, many of whom have been swept up in the humanization movement and want to be intimately involved in every aspect of their pet’s life.
“Millennials tend to be first adopters of any new technology, but more and more pet parents are treating their pets like children and are willing to invest in products and devices to stay connected to their pet at all times,” Konat said.
In a perfect-storm scenario, research shows that millennials, many of whom grew up in the digital age, are set to become the largest group of pet owners by 2020, noted Terry Anderton, CEO of
Wagz, a Portsmouth, N.H.-based startup company that makes the Explore Smart Collar, Serve Smart Feeder, Petzi Treat Cam and Go Smart Door.
Lummis said there’s “a whole generational effect” that is contributing to the popularity of pet tech in that customers carry expectations of “products and services integrated into their lives” via the internet.
However, as pet tech grows in popularity, pet owners are becoming more concerned about the safety and cybersecurity of these products.
According to a recent survey by Kaspersky Lab, a global cybersecurity firm headquartered in Moscow, 23 percent of pet owners surveyed use some digital device with their pet—and 39 percent of those people reported a malfunction of some kind with their pet technology.
But are the risks overstated?
Vladimir Dashchenko, research lead at Kaspersky Lab, does not believe so.
While Dashchenko acknowledges that “a failing aquarium life system may be a bigger risk to a pet than a broken pet feeder or security camera,” breakdowns of all kinds “impact quality of life” for pets.
He points to quality-of-life examples such as malfunctioning feeder or nutritional apps leading to providing pets with too much or too little food as well as nonworking smart doors or electronic fences that allow animals to get loose and risk life and limb.
In addition to the potential for malfunctions, there are inherent cybersecurity risks that come with some of these devices, according to Dashchenko.
“One of the biggest security concerns of IoT [Internet of Things] devices is that many manufacturers fail to incorporate security into the design of these technologies, leaving them vulnerable to attack,” Dashchenko said.
Wagz is one company that takes safety and cybersecurity seriously. The company arms its products with a bevy of safeguards, including end-to-end encryption, third-party vendor tools, secret-key technology, near-field communication and Bluetooth technology, according to Anderton.
As pet consumers become more tethered to pet technology, the number of entry points into their personal data increases as well.
“People usually leave their personal data accessible within apps, such as location, passwords, emails, etc., and connect different apps with each other,” Dashchenko said. “This allows attackers to not only abuse one app, but also access other apps that are connected to the compromised one and harvest more data.
“The more insecure technologies surround us and those we love, the more entry points we give cybercriminals, and the more risks we face.”
Lummis likens the early stages of pet tech with other new technologies of their time.
“You have to look at this generation of pet tech as being in the early stages because these types of concerns were voiced about the invention of the radio and the invention of television,” he said. “There’s always going to be these kinds of fears at the early stage of any kind of technology.”
Lummis doesn’t believe safety and cybersecurity will be unassailable hurdles for pet tech on its upward climb.
“There probably will be some instances that will get some publicity about things going awry, but in the big picture, I don’t think that is going to stop pet tech from advancing,” he said.