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Ecommerce Competition in the Pet Industry

Ecommerce competition in the Pet Industry

Competition is fierce in the pet industry. You would not believe what my wife and I just received in our mailbox.

Chewy – the money sucking machine

Two flyers from Chewy addressed to each of us by name.

Chewy Flyer

Okay, you probably do believe it. Because, it is Chewy and they took the pet industry by storm. But seriously, think about that. They want my wife and I to both become customers so they sent us $15 OFF coupons addressed to us each by name. They weren’t satisfied with a general postcard. No, it was personalized. They weren’t satisfied with sending one to our residence. Nope, they sent one to each of us. They wanted us both to have Chewy accounts.

It’s no surprise. Since the rest of our apartment building here in Raleigh, NC seems to be teeming with Chewy boxes. Every time I walk down the hallway it seems like a Chewy box is outside of someone’s door.

Yup, Chewy has grown a lot. But, guess what?

They don’t make any money!

They never have!

In fact, they lose tons and tons of money every year.


That’s how much money Chew lost last year. I’ll repeat it.


Yup, that’s a lot of dog treats.

Contrary to popular belief. You don’t just get rich selling online. Actually, it takes a lot of time and costs a lot of money to drive sales online. Few are ever profitable without a plan.

Chewy is wreaking havoc in the pet industry by driving revenue and stealing customers. But they don’t make any money doing it. They take customers from small, independent pet stores and then lose money on them.

Now, they are going public. I guess so they can lose investors money now too.

The Big Dogs Sniffing Around

Now Walmart and Target are entering the pet industry fray.

Walmart will be opening vet clinics in their stores. Target will be doing subscriptions and offering new strategic partnerships. Everyone wants a piece of the pet industry.

In response, Petco is trying to add more services to its stores. It’s also partnered with Shipt to provide same-day pet food delivery.

Oh yeah, then there’s Amazon. Who? Oh yikes…

Amazon has plans to really beef up their pet department. Not only will they improve their logistics and product line. Also, they want to be the online resource hub for pet related questions and support. Wonderful. As if making money online in the pet industry wasn’t already hard enough.

Sharing the same Litter

There used to be a clear separation between pet specialty and mass retail. The small, independent stores carried the good-for-your-dog stuff. The big companies carried the mass produced, cheap garbage from China.

If both types of businesses played nice, we could all make money.

Well, so much for that plan.

You can now buy Champion pet foods at Petco and on Amazon. That’s right. Just Google Orijen or Acana. Petco and Amazon will come up in the search results.

I guess we may be starting to look back on the good old days of pet retail.

Pet Parents

Pet shoppers are valuable. They need to buy food on an ongoing basis. They also need ongoing services like grooming and veterinary care.

That’s why everyone wants them. Heck, even Hardware stores and grocery stores want pet customers.

Estimates vary, but it is likely that owning a dog or cat costs around $500 – $1,000 per year. These pet parents have to spend that money somewhere. Boy, that is a valuable customer.

So… How to make money?

Ever heard of Perfect Competition? It’s an economic term for when there are so many buyers and sellers in a market that no one makes any money.

Actually, in economic terms it means a lot more than that. But the point is that no one makes a profit because there are so many people buying and selling basically the same thing.

In our context, we’re talking about dog food.

The pet industry has a lot of people trying to figure out the best way to sell dog food.

Big stores. Small stores. Specialty stores. Cheap stores. Grocery stores. Hardware stores. E-Stores. Amazon the store.

Heck, I even know of people selling dog food online out of their garage.

Independent pet stores that want to compete have to think through what they are actually going to do and what their budget is.

So…about that making money piece?

The only people I care about are the independent pet stores. I really don’t care about the giants. I actually hope they go out of business or cannibalize themselves.

For the pet stores I care about. Let’s take a good hard look at the situation. From a customer’s standpoint.

How the Pet Parent Sees the World

A pet parent has needs they need to meet. Let’s pretend they own a dog and a cat. What do they need?

Regular Basis

  • Food
  • Treats
  • Grooming
  • Litter & Waste Disposal Supplies

What do we know about these products? We know that pet parents buy the same exact version of each of these products/services every time.

They buy the same cat litter every month. They feed their dog the same foods. The same groomer takes care of their dog regularly. Maybe they like to switch up the treats, maybe.

Irregular Basis

  • Veterinary Care
  • Toys, Leashes, Collars
  • Cat Boarding, Dog Sitting

What do we know about these products? Well, it may be years in between shopping for a new leash or collar. There are regular check ups with the vet. But those are once a year. Not once a month.

So these products get purchased at random and involve a shopping experience of selecting from various options.

How a Pet Parent Sees their purchase options

For their regular purchases why do they need to go to the store over and over again? They buy the same thing every time. This is easy enough to buy online, preferably on a subscription. If trips to the store are necessary then they can be quick. In and out with the item they needed in hand.

When it comes to irregular purchases it may be fun to take your pet to the store to help you pick out the item. Or, there’s always Amazon. That’s easy to do from an iPad at 11pm on a Wednesday.

So… a pet store should do what then?

A pet store should meet their customer’s needs and buying habits. Instead of trying to combat them. There are forces at work that are too large to contend with. Namely, technology and logistic superiority of competitors. Not to mention, consumer habits.

For regularly purchased items, consumers want convenience.

Don’t make your customers go to a separate groomer and store. They may end up going to the groomer at Petco. If that happens then you lost them forever. Find a groomer. Hire her/him. Offering grooming in your store.

Let the regular scheduled grooming appointments happen in your store. Maybe that is when your customer would like to pick up their food, treats and litter.

Customers don’t want to drive to the store all the time. Deliver products to your customers. Let them order on your website and deliver the pet food to their doorstep. Charge them something for delivery if you need to. But, create the option for home delivery.

If you don’t want to deliver products then work with a drop shipper. Have the drop shipper deliver the products to your customers doorstep.

You have to offer this convenience. Your consumers has too many other options of people who will do this if you don’t.

For irregularly purchased items, consumers want selection.

Consumers want a variety of purchase options. Different colors, different price points and different ways of product fulfillment.

Again, work with a drop shipper. Be selective about the products you have in your store.

Build out a boarding department for cats and dogs. Create relationships with your customers and their animals through these departments.

Host store events. Namely, vet clinic days. Have the vet to your store and promote the heck out of it.

Hold lots of events. Encourage people to come to your store for fun, unique events that fulfill their irregular purchase needs.

Conclusion – What to do, what not to do in the Pet Industry

Gone are the days of opening a store, packing it with products and opening the door to a rush. There’s too much competition for that. Don’t do that.

Think through your online and offline strategy. You have to. Think through how you will make your products and services convenient for your customers.

How will you meet their needs in a way that Walmart, Target, Chewy, Petco & Petsmart can’t? Or, at least, as well as they can?

Owning a pet store means competing on convenience. Be prepared to out convenience the competition.

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