Inside Amazon & Chewy's Battle for Online Shoppers
Despite the fact that it only recently set its sights firmly on the pet care category, Amazon is quickly gaining important ground on Chewy.com when it comes to the visibility of its pet product offerings, according to a new report from Gartner L2, a New York-based business intelligence firm that benchmarks the digital performance of brands. Gartner L2's study, which focused on Amazon and Chewy's placement among Google search results in April 2018, reveals that while Chewy still "dominates" in paid search advertising, Amazon has already made significant strides when it comes to organic search results on the Internet's leading search engine.
In fact, Gartner L2 says that Amazon appeared in 38 percent of organic first-page search results from 253 relevant unbranded keywords—only slightly less than the bar set by Chewy at 39 percent. When it came to branded search terms, the study shows that Amazon actually outpaced Chewy, garnering a presence in 63 percent of first-page search results from 435 branded keywords, versus Chewy's presence in 48 percent of first-page results from the same searches. Interestingly, Petco came in behind both online outlets, appearing in just 38 percent of first-page search results from those branded keywords.
"In general, Amazon right now has a pretty robust organic presence on Google. So, if you were to search either a branded term like 'Blue Buffalo' or a generic, unbranded term like 'dog food,' Amazon will have a strong presence among those search results," says Jake Matthews, director of CPG research for Gartner L2. "Chewy, on the other hand, is more heavily invested in paid search. So, they're actually bidding on specific keywords so that one of their ads shows up on those searches, and they're going after both branded and generic terms."
As a result of its focus on keyword bidding, Chewy outpaces Amazon 69 percent to 13 percent in paid text ads and 76 percent to 9 percent in paid shopping ads, a trend that Matthews says is understandable when looked at in context. "It wasn't a total surprise to us when we were doing the research," he explains. "Amazon is obviously somewhat new to the pet care category, so we would have been shocked to see them going all-in from a paid search perspective on Google. But it was interesting to see that, even though they are relatively new to the category, they already have a strong organic presence. And it will be interesting to see if and how they might ramp up some of those paid search investments on Google to drive customer traffic to the site."
Another interesting element to the study focuses on the strategies that Amazon and Chewy are using to drive consumers to their respective private-label offerings in the pet category. According to Gartner L2's report, while Amazon's new Wag pet food hasn't made significant inroads on organic Google searches, the online retailer consistently features it across "prominent merchandising and curated product selections such as its dog food guide, helping Wag gain relevance against more established brands."
Similarly, Chewy is pushing its American Journey private label by merchandising it heavily on the homepage carousel and curated lists, as well as using product badges highlighting deals and discounts. In addition, according to the report, "American Journey also conquests rival product pages, appearing beside products with similar ingredients under the title 'You May Also Like.' A handful of other popular brands, including Merrick and Natural Balance, appear with American Journey on some product pages, but the private label brand stands ahead of the pack when it comes to overall merchandising on the site."
For brands doing business with Amazon and/or Chewy, insights from Gartner L2 study can be helpful in shaping an approach to marketing products through those online outlets. "The opportunity for manufacturers—specifically when it comes to Google searches—is in coordinating their investments [with the sites]," says Matthews, noting that coopting or coordinating search investments will ensure that brands are not competing against these online retailers. "Then it's a matter of how brands can shift some of their investments downstream to those retail platforms themselves."
So, what can traditional pet specialty retailers take away from Amazon and Chewy's approach to driving online customer traffic? Unfortunately, keeping up with the two online pet product outlets in paid and organic search results would require a level of investment that is beyond most brick-and-mortar pet stores—and even sizable chains. However, it would be a mistake to ignore the fact that customers are increasingly turning to the internet to look for places to shop for their pets' necessities. With this in mind, a strategic, coordinated approach to leveraging online resources such as Google's local search ads, review sites like Yelp and even social media platforms like Facebook should all be essential components of a retailer's marketing strategy. You may not be able to afford to dominate search results like Amazon and Chewy, but that is certainly no reason to concede to them an entire platform for driving customer traffic.