Intellicheck Identity Verification Report June 2024 Banner

D2C Food Subscriptions Drive Loyalty by Courting Pet Parents

D2C Food Subscriptions Drive Loyalty by Courting Pet Parents

As direct-to-consumer food providers compete to become more relevant in consumers’ day-to-day lives, ButcherBox is expanding its reach into pet food, creating more occasions for its customers.

The D2C meat and seafood brand launched its ButcherBox For Pets line Feb. 27. ButcherBox founder and CEO Mike Salguero discussed in an interview with PYMNTS the opportunity that the space presents for the brand, given its human food customers’ high degree of pet ownership.

“[B]efore we got in [the category], in our membership base, 60% of them have a dog and 75% report having a pet — a cat or a dog,” Salguero said. “…There’s a very large overlap, but [our pet food business] will be standalone, so it will bring in its own customers as well.”

He added that he “would think” many customers new to the business through this pet food vertical will adopt the brand’s core human food offerings as well, given the similar focus on sourcing and food quality.

The move comes as more brands make plays for consumers’ digital pet food spending, as shoppers purchase less of their pet care products in physical stores. Aggregators have been adding pet supply retailers to their platforms.

Last month, it was reported that British eGrocer Ocado is getting into pet food, launching “fine dining” meals for cats and dogs.

Last year, D2C meal kit giant HelloFresh announced its dog food subscription, The Pets Table, as part of the firm’s push to become the top “fully integrated food solutions group” in the world.

By the Numbers

Pet parents disproportionately tend to buy the items they need online. Findings from the PYMNTS Intelligence study “Changes in Grocery Shopping Habits and Perception” revealed that only 27% of those who purchase pet supplies primarily do so in physical stores. This share is lower than the cross-grocery-category average of 44%.

“Direct-to-consumer pet food has been a very big market recently,” Salguero said, citing the success of eCommerce pet product retailer Chewy as well as several well-funded D2C pet food startups.

Once consumers start buying pet food online, they tend to rely on these digital platforms for the bulk of their animal-related needs, scaling back on brick-and-mortar shopping.

The PYMNTS Intelligence report “The Replenish Economy: A Household Supply Deep Dive” drew from a survey of more than 2,000 U.S. consumers. It revealed that among the 15% of retail subscribers participating in Chewy’s Goody Box pet food and toy subscription program, 53% now shop in stores less often, with 11% of participants in the program no longer shopping in stores for these items at all.

The Acquisition Challenge

As consumers buy more of their pet care products online, ButcherBox is seeing the opportunity to secure consumers’ strong loyalty — but only if the brand can get over the steep acquisition hurdle.

Salguero discussed the challenges that pet food subscriptions face in the initial stages, building their audiences.

“The biggest challenge with a pet food company is [that] the switchover is a much more considered thing,” he explained. “If you talk to people who own a pet, it’s like, ‘My dog eats X food. They’re OK with it. I don’t want to change it over.’”

Given that changing pets’ diets can result in issues such as the animal not wanting to eat the new food or gastrointestinal challenges, it can be difficult to convince consumers to try new brands, he said. Yet he contended that because dogs are inclined to enjoy the product, loyalty will be strong once the company can get over that initial challenge.

“Once people have made the switch, then the retention is going to be really high, we think,” Salguero said, noting that the company has not “seen enough game tape” yet to know for certain.

Using the Whole Carcass

In addition to securing consumers’ long-term loyalty and driving engagement with the brand’s existing customers, the addition of dog food also benefits the economics of the entire business, allowing the company to drive more revenue from the animals it was already going to butcher anyway for its human food.

“For us, there’s this carcass utilization play,” Salguero explained. “… If we can create a pet food company, then the price of everybody’s meat will go down.”

He noted that pet food tends to use different parts of the animal than human food, and as such, the brand will be able to sell more parts of the carcass to consumers “at a premium price” rather than at a “commodity price.” This, in turn, may allow the brand to bring down some of the pricing on its human food cuts, driving customer acquisition and loyalty.

“Lots of meat companies have pet food brands, but to my knowledge, we’re the only meat company that actually put our name on it,” he said. “… What we’re saying is, ‘If you are buying this for your animal, your animal is getting the same top quality that you are.’ … That’s considered very risky.”

For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.