What's Amazon doing in the pet consumables market?
Amazon surprised many animal health insiders recently by announcing its intention to expand into the pet retail market, causing whispers and worries about how retail may be affected at veterinary clinics. How can the hometown veterinarian's limited retail shelves compete against a giant that offers free two-day shipping directly to the client’s home?
Since then, the company hasn't offered much insight into its pet business model—until now. Zak Watts, director of Amazon Pets, and Mike Bassani, consumables lead for Amazon Pets, were on hand at the inaugural NAVC E-Commerce Summit held Sept. 19 in Kansas City.
The Amazon team defines “consumables” as food, healthcare products such as parasite prevention, and litter. Consumables is where Amazon is focusing on growing its portfolio of products in the pet space. Items like toys, leashes, harnesses and behavior aids are a large part of Amazon's sales, but the company isn't focusing its energy in those areas, Watts says.
Amazon operates under four guiding principles, which have also been applied to its pet consumables vertical. Staying true to these values has allowed the company to build trust with consumers, Watts says. These principles are:
> Customer obsession
> Passion for invention
> Long-term thinking
> Operational excellence.
So what's the vision for Amazon Pets? Citing industry reports, Watts says retail sales of pet supplies is forecasted to be $8.2 billion in 2018. Amazon wants to leverage that spending and the strong emotional bond pet owners have with their pets to create deeper connections with its customers through the pet category. The company aims to drive loyalty and repeat purchases, Watts says. Amazon wants to be seen as having the best selection of products, the best value and the most convenient way to purchase those products. One way it’s trying to do this is by investing in customer acquisition—for example, by offering 40 percent off the customer's first "subscribe and save" order.
How else is Amazon creating innovation in the pet space? The company recently rolled out the ability for customers to set up a "pet profile" on their Amazon accounts. As these profiles are completed, Amazon will begin recommending products tailored to that pet's needs and preferences, Watts says. The company's goal is to take personalization to the next level, leveraging data to help pet owners make better decisions for their pets, he says.
While Watts outlined the vision, Bassani offered a few brass-tacks strategy insights about Amazon’s pet retail plans. Today the company offers mainly flea and tick products in its healthcare category, but in the future it wants to offer expanded brand selection, evaluate new features, and expand into product education for pet owners. Amazon wants to advocate for pet owners and help them learn by offering articles, Bassani says.
Do you now have to worry about competing with Dr. Amazon in addition to Dr. Google? Bassani says the company wants the education it provides to be respected by the veterinary community. It also wants to integrate with the manufacturer through features like "Ask the manufacturer," where a company can directly answer pet owner questions, aiming to build bridges in communication and education with shoppers.
Bassani says Amazon's goal is to build the pet category the “right way,” with the customer obsession principle as the roadmap. He says the company wants to work directly with the best brands in the segment and eventually serve all species and breeds in collaboration with the veterinary community. Amazon doesn't want to be seen as predatory; it wants to collaborate, Bassani says.
In the long run, Bassani says Amazon builds only when it feels equipped to deliver. How these goals will play out in the market is yet to be seen, but it's clear that the company aims to enter the market in a big way.