Pandemic Leads D2C Pet Brands To Navigate Digital Shift

dog and cat

Three out of four Americans own a pet. It is a $75 billion industry dominated by millennials and ripe with opportunity for direct-to-consumer (D2C) brands. Several of them are navigating changes in the market brought on by the pandemic-led digital shift.

A Korean company called Pluto Electronics has crafted a unique strategy entering the U.S. and European Union markets with a D2C product for cats. Circle Zero is an automated litter box that uses robotics and a mobile app to enable remote litter box cleaning. Similar products are on the market for price points north of $800. After scoping the competition at CES (there were four automated litter boxes there), Pluto is entering its Circle Zero product via Indiegogo at $399. Beginning this week it is taking pre-orders with an estimated ship date of early August.

Circle Zero began its work after the pandemic started by posting photos and product descriptions on Facebook and Instagram with an email opt-in call to action. That effort netted 12,000 potential leads. According to CMO Hae Min Yang the company is focused on lead management and customer service as it manufactures the products.

“It’s all about customer service,” Yang told PYMNTS. “We are focusing on you know working with local repair service providers and customer service providers to prepare for the product launch and maintenance. The company is actually incorporated in the U.S. so we can actively engage in growing the business after the initial Indiegogo campaign has shipped. After that we want to move on to eCommerce platforms such as Amazon or Shopify.”

Note that Circle Zero is not planning at this time on distributing through brick-and-mortar locations for any of the pet franchises or through the most popular eCommerce site, Chewy. The physical locations have mixed status depending on the state, between essential and non-essential companies, but many have stayed alive with “order online pick up in store” services or curbside pickup. Blake Jackson, founder of holistic dog treat company Rogue Pet Science, says the eCommerce aspect of his business is booming, up 50 percent for April 2019. However, as a company that counts on physical locations as well as online sales, the pandemic forced Rogue to adapt its business model and try new ways of doing business to survive.

Rogue started an aggressive online marketing strategy to overcome the lack of in-store purchases. But it needed a partner to complement its product line and grow the business. Rogue found a company called KC Canine, makers of a full line of single protein dog treats. The company now has a partnership that allows its customers — many of whom came to Rogue via its dog show exhibitions — to see a transparent supply chain. Jackson says ingredients will be important for pet owners when and if the pandemic clears.

“I think this is actually going to be the model for B2C pet brands,” he says. “When you’re competing with huge companies like Purina it’s important to maintain profitability and maintain some kind of presence at online sites and through our own sales. You can’t compete without a strong brand. Partnerships are a good way to build that.”

Jackson expects eCommerce to become a bigger factor as a result of the pandemic. That sentiment is supported by data from Nielsen. From February to March 2020, online sales of pet food jumped by $281 million, or more than 51 percent. Year over year (YOY) compared to March 2019, pet food eCommerce this March rose 77 percent. Brick-and-mortar sales in the U.S. increased 26 percent YOY in March 2020, tracking almost exactly to the pandemic spread and retail lockdowns. They increased over 50 percent in the third week of March compared to 2019.

“Pet care is a rapidly growing industry, with pet food sales up more than 6 percent versus last year,” said Colin Stewart, executive vice president, business intelligence at Acosta. “With this growth, we’re seeing spending behaviors shift to reflect more hassle-free buying options and more interest in healthy options for their pets that include real, natural ingredients. As pet ownership continues to soar, retailers should capitalize on industry growth by homing in on their competitive advantages and competing from all directions — price, assortment and convenience.”



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.