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Barry Cohen
Barry Cohen
Articles (31) 

Amazon Relentless in Pursuit of Large Pet Food Market

The e-commerce giant is already the leader in sales of pet food online, but still wants a share of this growing market

Amazon.com Inc. (NASDAQ:AMZN) is taking a huge bite out of the lucrative pet food market. And it appears no competitor owns a leash long enough and strong enough to reign in the rabid e-commerce company.

Among those owners purchasing pet products online within the past 12 months, 54% ordered from Amazon.com – by far the most popular option. The next, most-frequently used online sites for pet product purchasing were PetSmart and Walmart (NYSE:WMT).

The percentage of U.S. pet owners buying pet food online jumped nine points in just two years, according to the American Pet Products Association’s 2017-18 National Pet Owners Survey. That’s no surprise. Consumers like the convenience, competitive pricing and good value due to free shipping, whether it’s pet food, computers or vitamins.

Amazon’s appetite is still not sated.

During the recent Pet Industry Leadership Conference, Amazon executives presented the company’s plans to expand further into the online pet food retail market, reported Pet Business. Third-party analysts forecast its online pet product sales to reach $8.2 billion in 2018.

The company launched its own private label pet food on its website on May 2. Amazon’s Wag brand currently includes only dry dog food in several varieties. Wag dog food is available only to Amazon Prime subscribers

It’s of little surprise that Amazon has fallen in love with the pet food market in a big way. Its size was more than $24 billion in 2016 and is expected to hit $30 billion in 2022.

The reasons for demand are obvious to anyone who takes a stroll in the park: people love their pets.

Well over half of the households in the United States own a pet – almost 80 million homes. Man’s best friend might be the most popular, but all pets need to eat, be they cats, horses, birds or fish. Pets also need to be cared for – and with over 300 million pets in the U.S., that makes for a booming business.

Don’t underestimate Amazon, but there are some smaller segments of the pet industry that may be more difficult for the company to break into. Two are animal drugs and pet insurance.

In animal health, the leading company is Zoetis (NYSE:ZTS), which topped $5 billion in sales in 2017. Behind it are Merck (NYSE:MRK), Merial, a unit of Sanofi (NASDAQ:SNY) and Eli Lilly’s (NYSE:LLY) Elanco division.

And let’s not overlook pet insurance.

The market might not be huge compared to the other segments, but anyone who’s taken a pet to the veterinarian knows you can walk out with a bill that would feed a family of four for a week.

The leading public insurer is Trupanion (NASDAQ:TRUP), the Seattle-based company that has been around for 17 years. Its single plan offers great standard coverage, which includes hip dysplasia. It offers a “lifetime” deductible structure, which could benefit pet owners with puppies, kittens and purebreds in particular. Policyholders pay a one-time deductible per condition, regardless of how many vet-related visits or follow-up care the pet has throughout its lifetime.

About the author:

Barry Cohen
Barry Cohen has nearly 40 years experience in communications and marketing, the majority in senior positions at large international health care companies, including Abbott Laboratories and Bayer Inc.

He has contributed to a number of financial websites, writing primarily about the stocks of health care companies.

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