Has Chewy.com proven that online sales are going to the dogs?
Retailers sniffing around for online growth may find opportunities with pet owners (AKA pet parents, in some circles). Research conducted last year by Slice Intelligence found that online spending on pet supplies increased 67 percent between July 2015 and 2016.
Fifty-seven percent of online dollars for cats and dogs is spent on food and treats, according to Slice’s findings. The revenue generated by pet food and treat sales has grown 121 percent since the beginning of 2015.
Litter and housebreaking (9 percent); collars and leashes (7 percent); beds and furniture (5 percent) are among the pet segments contribution to overall online sales growth.
Research conducted by 1010data puts total online sales of pet care products at $1.5 billion for 2016. This is only a small fraction of total industry sales, which the American Pet Products Association estimated at $62.75 billion last year.
Pet care was second only to health supplements as the biggest consumer packed goods categories tracked by 1010data. As in the case of Slice Intelligence, 1010data’s research also pegged year-over-year growth at 67 percent.
The number one online seller of pet food and supplies today is Chewy.com, which has gone from $26 million in sales in the first year after it was founded (2012) to this year, in which it is expected to generate more than $2 billion in revenues. The company promises to ship orders placed by 4:00 p.m. the same day and one- to two-day delivery is free on orders of $49 or more. Chewy.com offers discounts on items in its Autoship & Save program.
Ryan Cohen, CEO of Chewy.com, told the Miami Herald that he and fellow co-founder Michael “Blake” Day, CTO of the company, initially intended to sell jewelry online before scrapping the idea to concentrate on pets.
“I always wanted to do something with pets, but I couldn’t figure out how to monetize it,” he told the Herald. “So, I was going to the pet store and realized the market online was really under-penetrated.”
Mr. Cohen said he and Mr. Day lacked passion when it came to jewelry, but not pets. “I understand the customer — because it’s myself,” he said. “So, we built the company.”
- National Dog Day Report: online spending on pet products is up 67 percent – Slice Intelligence
- 1010data Releases Industry Report: Consumer Packaged Goods Online Sales Surge 36% and Hit $10 Billion in 2016 Across Key Categories – 1010data
- Pet Industry Market Size & Ownership Statistics – American Pet Products Association
- Pet food retailer Chewy.com has seen fantastic growth. But can it keep up the pace? – Miami Herald
DISCUSSION QUESTIONS: Do you think there remains a great upside potential for pet products online? What does the move to online mean for retailers selling pet food and other products in stores?