Pet brand owners have a good reason to be optimistic. In late March, the American Pet Products Association (APPA) announced the industry had reached a historic milestone. In its 2021 State of the Industry Report, the APPA confirmed that pet industry sales set a record of $103.6 billion in 2020, a 6.7% increase from the previous year.
“We have reached a critical milestone, generating $103.6 billion in sales,” said Steve King, President and CEO of APPA. “We are bullish for the coming year, projecting growth of 5.8% – well above the historical average of 3 to 4%. This past year presented a host of challenges that resulted in consumers across the country turning to their pets for comfort and companionship. Interestingly, the product trends we are seeing in the pet care community mirror those of consumers – a desire for a healthier lifestyle, increased focus on fitness, turning to supplements for improved well-being, and technology playing a larger role in everyday life.”
The APPA reports that the global shift to e-commerce, accelerated by the pandemic, directly impacted the pet industry as people spent more time at home with their pets. As noted by King, the APPA forecasts this growth in pet industry sales to continue to climb, with above-average projections of 5.8% to reach $109.6 billion this year. Additional data from the APPA includes the following insights:
- 47% of pet owners report they increased the number of times they purchased pet products online in 2020
- 30% of pet owners spent more on their pet/pet supplies in the past year; only 10% say they spent less
- Vets experienced a 50% increase in new pets per week from March through August 2020
Channel Key Client Data Coincides with APPA Report Insights
As a full-service channel management marketplace agency with a proven track record of helping brands in the pet category succeed on Amazon, Channel Key can confirm that some of our clients are experiencing changes that align with the APPA report – including the need to both prepare for and adapt to challenges related to the growth of e-commerce.
For example, one of our clients provides all-natural treats for dogs. During Spring of 2020, the number of units sold along with total overall sales increased by more than 30% MoM on Amazon. The sudden spike created inventory issues for our clients as they struggled to keep up with demand. To avoid the risk of running out of stock on these items, Channel Key helped our client pivot their marketing strategy to focus on products that were not bestsellers until inventory for their most popular products could be replenished. Despite challenges in the market, our client saw a 44% total YoY growth in Amazon sales from 2019 to 2020.
The Shift to E-Commerce Provides an Opportunity for Pet Brands to Attract New Customers
According to the APPA’s 2021 forecast, nearly half of all pet owners increased the number of times they purchased pet products online within the past year. This translates to a significant increase in online searches for pet products, which presents a powerful opportunity for brands to win and retain new customers. Brands in the pet industry that embrace this global shift to e-commerce with marketplace strategies and tactics that are proven to drive traffic, increase brand awareness, and convert sales will have a strong advantage over their competitors.
That said, this opportunity may not last long. Online marketplaces are becoming more crowded by the day. There are currently more than six million 3rd party sellers on Amazon, an increase from 2.5 million just two years ago. In other words, each day counts. The longer pet brands wait to establish their presence on platforms like Amazon, the more competitive these marketplaces will grow. At this point, each day is an opportunity to increase your brand awareness online, which will translate into more conversion power behind your ads in the future when they are shown against those of competitors with less awareness.
Fortunately, the shift to online shopping for pet owners is still in its early stages. Channel Key has developed a robust, multipronged strategy designed specifically to help brands in the pet category win new customers. While this information is reserved for Channel Key clients, we are happy to share that certain marketing levers such as Sponsored Brands have improved new customer acquisition by an average of 40%.
How to Measure Success for Winning New-to-Brand Customers in the Pet Industry on Amazon
Implementing a calculated combination of marketing and advertising campaigns is only part of the solution that will help pet brands successfully win new customers. Another is analyzing the results and making appropriate changes to maximize the performance of your campaigns.
One of the most valuable analytics tools that Amazon provides to brand owners is new-to-brand metrics. These analytics determine whether an ad-attributed purchase was made by an existing customer or one buying a brand’s product on Amazon for the first time over the prior year. With new-to-brand, advertisers receive campaign performance metrics such as total new-to-brand purchases and sales, new-to-brand order rate, and cost per new-to-brand customer. This information helps estimate the cost of acquiring new customers on Amazon and identifying the most efficient channels and tactics to achieve their campaign goals. Currently, Amazon provides the following new-to-brand metrics:
- New-to-brand orders: The number of first-time orders for products within the brand over a one-year look-back window
- New-to-brand sales: The total sales of new-to-brand orders
- % of orders new-to-brand: The percentage of total orders that are new-to-brand orders
- % of sales new-to-brand: The total sales of new-to-brand purchases
- New-to-brand units: The number of units from first-time orders for products within the brand over a one-year look-back window
- % of units new-to-brand: The percentage of total units that are units from new-to-brand orders
- New-to-brand order rate: The number of new-to-brand orders relative to the number of clicks
These analytics tools – along with an effective use of marketing and advertising – will provide a powerful advantage to pet brands that seek to grow their e-commerce channels into a significant source of revenue.
CHANNEL KEY TAKEAWAY
Like most markets, the pet industry is changing. Pet owners are not only forecast to purchase more pet products than ever before, but the APPA also reports these customers will buy more pet food, pet supplies, pet accessories and other related items on e-commerce marketplaces in 2021 and 2021. As the largest online retailer in the world, it should be no surprise that Amazon will fuel the greatest percentage of these purchases. After all, Amazon is now the #1 platform where customers discover new brands, which includes a rapidly growing base of pet owners. Unfortunately, not all brands in the pet category will reap the same rewards. Those that move quickly to embrace the shift toward e-commerce will be better positioned, but that alone will not guarantee success. Selling on Amazon is no easy feat nowadays – especially when you are new to the marketplace or do not have the in-house expertise to compete against larger brands that have more awareness and resources. The good news is, with the right help and guidance, the current e-commerce landscape provides a viable opportunity for any pet brand to compete effectively, gain market share, and grow their customer base.
ABOUT CHANNEL KEY
Channel Key is a full-service channel management marketplace consulting agency that has helped generate nearly $500M in Amazon sales for retail brands around the world. Complete 360-degree services include marketplace strategies, content development, marketing and advertising, catalog management, marketplace and fulfillment setup, ongoing consulting, and much more. To learn more about how Channel Key can help increase sales for your business, contact us today for a free consultation.
