The saying goes, “dogs are a man’s best friend.” So, it’s no surprise that Americans treat their pets as they do their children. From all-natural food offerings to cushy beds to high-quality booties and sweaters, some owners spoil their pets to the extreme.
Almost 85 million U.S. households have a pet, and over the last 30 years, pet ownership has increased from 56% to 68% of all households, according to the American Pet Products Association (APPA), Stamford, Conn.
What’s more, the global pet care market reached $125 billion in 2018, according to Euromonitor International, and 73% of that total was global pet food sales. While dog food was the biggest segment of the global pet food market, volume growth for cat food globally measured at more than 2% CAGR from 2013-2018, with value sales increasing at 5% CAGR, proving the pet food industry to be more robust than ever before.
While Baby Boomers account for 32% of pets owned, the APPA study reveals that the Millennials are taking over, accounting for a whopping 62% of pet ownership. That being said, e-commerce continues to experience the highest growth, at more than 25% CAGR from 2013-2018, compared to less than 5% CAGR for other channels such as warehouse clubs, variety stores, chemists/pharmacies, pet superstores and pet shops, according to stats published in Petfood Industry.
Online sales of dog and cat food alone reached nearly $9 billion in 2018 with a 10% share of global sales. “The shift to online is becoming a tidal wave,” says Jared Koerten, head of petcare for Euromonitor International.
It’s these cultural changes that are altering the way today’s consumers shop for pet food, preparing a path for well-known retail brands to collaborate with e-commerce pet food platforms such as Amazon, and Chewy.com to better capitalize on the ever-growing direct-to-consumer (DTC) trend.
But, moving from a wholesale/retail model to one that eliminates the middleman requires strategic planning and due diligence. Couple that with the spike in pet startups, and the semi-saturated pet food market is in position to innovate.
Don’t roll over and play dead. Here’s how pet food manufactures can deploy a DTC model while still playing a part in the ever-growing pet food market.
Partner with retailers to sell DTC brands in store
Much like the meal kit delivery market, the DTC pet food industry experiences the same opportunities with regards to partnerships with retailers for more share of market.
For instance, Walmart, Bentonville, Ark., announced plans to open 100 veterinary clinics over the next 12 months in the Dallas-Fort Worth, Texas, area. With these clinics comes Walmart Pet Rx, the retailer’s first online pet pharmacy with over 100 prescription medications.
Meanwhile, Target Corp., Minneapolis, offers monthly curated boxes of pet care products, allows Shipt customers to purchase products through Petco and partnered with DTC brand Bark to sell some of its products in stores.
DTC allows companies to control their brand’s story and relay messaging directly to consumers, as discussed in this article from VisionCritical.
“If a consumer chooses your product over a competitor on a retailer’s website, you might have won a sale, but you’ve lost the opportunity to build a relationship,” says Alex Becker, global vice president of branded manufacturers at Digital River. “
A distinctive, compelling and focused public-facing brand experience, complete with direct-to-consumer online sales lets manufacturers control and cultivate relationships with customers that transcend retail channels.”
The VisionCritical article also suggest companies use their DTC channels to bring insight to their partners by testing new products, receiving consumer insight and more.
Utilize already successful platforms.
There’s no point in reinventing the wheel in what some may call a crowded space such as the pet food industry. That’s why companies looking to enter the DTC market should turn to companies that already have the consumers and infrastructure in place.
For instance, Amazon, Seattle, Wash., built out its pet food segment thanks to partnerships with reputable store brands as well as private label ones.
PetSmart’s online pet product retailer Chewy.com filed documents to prepare for an initial public offering to continue being the “most trusted and convenient online destination for pet parents everywhere,” according to its mission.
And, DTC brand Ollie now sells its pet food products through Jet.com, which is owned by Walmart. From order experience to convenient packaging to appropriate price points and user-friendly websites, these companies have already figured out what makes dogs’ tails wag and what makes them growl and show their teeth.
Innovate, incubate and package for food safety.
Innovation and incubation isn’t just for the food and beverage industry. In fact, funding for pet startups increased by 334% from $67.2 million in 2012 to $291.8 million in 2017, according to report presented by Crunchbase. And, these pet startups are thinking outside of the doggie bag.
For instance, Petco partnered with DTC brand JustFoodforDogs to open an exhibition kitchen in one of its New York City stores. This partnership, announced last year, means customers can walk into select Petco stores and watch JustFoodForDogs staffers prepare the brand’s signature meals and walk out with freshly made pet food. Innovation isn’t just for new product development.
While organic and all-natural SKUs claim top rank in the pet food aisles, packaging also continues to evolve, especially as brands revert back and forth from online to offline channels. And, food safety, whether it be on the store shelf or delivered to the front door, still stands as an overarching reason for packaging manufacturers to step up their game.
For example, pet food packages must be fully sealed, allowing food and treats to stay fresh longer.
A PetMD.com piece suggests pet owners should not throw away the original packaging, as “high-quality dog food bags have been designed to keep out the elements and maintain its freshness for as long as possible.”
Select the right DTC supply chain partner.
All of this is for nothing if pet food manufacturers affiliate with the wrong partner. Within the next five years, 81% of shoppers will likely make at least one purchase from a DTC brand, according to Diffusion.
Additionally, one-third plan to make at least 40% of their purchases with DTC companies within the same timeframe. That’s why it’s imperative to partner with a company skilled in navigating the waters of building, expanding and sustaining a DTC business.
The right supply chain partner will help pet food manufacturers build a platform for future business, makes introductions to major players, offers competitor knowledge, provides fast-to-market scalability and more.
Selling pet food online direct to the consumer does not have to be such a bite. With the right tools, resources and partners in place, companies can successfully grow their brands in in the DTC channel.
At Gray Growth Strategies, we specialize in working with pet food brands to establish DTC channels. For a FREE consultation, simply fill out our consultation form or you may reach us through our contact page.