Next-Level Cyber Warfare
Ready or not, pet specialty retailers are probably about to see competition from the internet reach a new level of dangerous.
At least, that is what I took away from a couple of recent headlines about major online retail players Amazon.com and Jet.com—one of which was directly related to the pet industry.
First up was a report in the Wall Street Journal (WSJ) that detailed Amazon’s new move to compete with the likes of UPS and FedEx. Apparently, the web-based retail behemoth is so tired of watching shipping costs erode its profit margins (according to WSJ, these costs as a percentage of sales have risen every year since 2009) that it has decided to build its own delivery operation.
Of course, this venture is still in its infancy, and the challenges and expense of building the infrastructure necessary for a successful delivery business cannot be underestimated. However, WSJ reports that the company is already delivering its own packages from about 70 facilities in 21 states. And given estimates that 44 percent of U.S. consumers now live within 20 miles of an Amazon facility, it is not hard to see a path for growth for the company’s latest enterprise.
If Amazon is successful in building a self-sufficient internet sales model that no longer depends on third-party shipping, the impact will undoubtedly be felt by retailers of every ilk, including pet stores. Imagine a world where shipping time and costs are no longer a barrier for online purchases—that is what Amazon could be creating here.
Elsewhere in the world of internet retail, after it was announced in August that Jet.com would be acquired by Walmart, Fast Company magazine published an eye-opening article about the fast-rising web retailer’s approach to sourcing pet products—pet food, in particular. According to the story, which featured quotes from multiple food manufacturers, Jet has simply refused to take no for an answer when rebuffed by pet food companies that do not want their products sold through the online discounter.
It has even gone as far as sourcing product from brick-and-mortar retailers, in effect using them as distributors. As a result, “a number of high-end pet food manufacturers like Champion Pet Foods, Diamond Pet Foods, Rawz, FROMM Family Foods, Weruva, Naturvet, and Wellness Pet Food all say they don’t distribute through Jet.com, and yet their food appears on its site,” according to the article.
That is a disturbing practice that is not likely to end under Walmart’s ownership, especially given that the company has installed the executive who wrote this playbook, Jet.com CEO Marc Lore, as the head of its entire ecommerce division. The only difference now is that Lore will have the considerable resources of the quintessential mass retailer behind him when carrying out his duplicitous approach to sourcing.
Still, while the news coming out of Amazon and Jet could be cause for some sleepless nights, pet specialty retailers have proven to be a resilient and resourceful bunch with more than a few competitive advantages up their sleeves. Chief among them, as you will read in this month’s cover story detailing the opportunities and challenges faced by aquatics-focused pet stores—a segment particularly hard hit by internet competition—is the ability to provide a personal experience and expert guidance to shoppers. This ability, combined with a unique yet intuitive product selection, will continue to be key in brick-and-mortar stores’ war against cyber competition.
Clearly, it’s a war that is far from over.