Observe a supermarket. It’s normal to see shoppers carry out heavy bags of dog food and pet care essentials but the habit of buying pet food online remains a rarity. Probably because there is only a scarce number of brands in Thailand that offer an attractive selection of pet products online. This is interesting seeing as a growing economy such as Thailand’s experienced pet food sales of $736.7 million in 2015 and alone claims 44% of Southeast Asia’s pet care market.
And global spending is only expected to grow, especially in developing regions such as Southeast Asia, thanks to urbanization, popularity of the internet and increase in pet-product information availability. The pet food sector grew by 4% to $70 billion globally in 2015, and more of that spending is happening online as an estimated 38% of total pet food sales occurred online in China during 2015.
As the region follows closely in the footsteps of the superpower, it shows a huge opportunity for the growth of online pet related sales in Southeast Asia.
At the Petfood Forum Asia conference last year, Mariko Takemura, lead analyst for Euromonitor International, shared that Thailand reached $737 million in overall pet care sales and continued its five-year CAGR of 13.7%. There is clearly a demand for pet related goods in the country, so who is creating it?
Thailand’s pet owner demographic
60% of pets, both cats and dogs, in Southeast Asia still eat homemade pet food or leftover scraps because of the low penetration of commercial pet brands. According to Harprem Doowa, founder of PetLoft, one of the first companies in Thailand to offer pet products online, the behavior of giving pets homemade food is a sign of a developing economy but as the spending power of the population and the ‘humanization’ of pets increase, pet owners will look to providing their pets with more vet-recommended products.
“In Singapore, we typically see pet owners who demand quality and unique products and services for their pets. These owners consider their pets to be members of their family and they are really into organic or human-grade food for them,” says Jennifer Lee, the events manager for Pets Asia expo in Singapore.
In Thailand, this trend is also becoming a norm. The increase in pet-ownership and humanization of pets has led owners to turn to premium products to focus on the holistic well being of their pets, rather than feed them leftovers. And they’re able to afford it – Thailand’s middle class is expected to surge as GDP is predicted to grow by 3.2% this year and single-person households are on the rise.
“In developing regions like Southeast Asia, the pet product market is still an emerging market and the pet food business is growing rapidly,” says Neil Wang, global partner and president for Greater China at Frost & Sullivan. “In line with the region’s economic growth, an increasing number of people consider animals as family members and are willing to make purchases for them.”
But Thais won’t spend carelessly. Research from “Winning the zero moment of truth in Southeast Asia” showcases how nowadays, consumers, especially the prices conscious ones in the region, will research and compare prices before purchasing everyday use products. This extends to pet food as well as almost one third of respondents have compared and contrasted different pet food brands on the internet.
On demand delivery startup Lalamove also revealed that one of the most popular products purchased off its platform in Thailand is pet food.
Capturing the opportunity online
Research from L2 states that pet care in the United States, worth $760 million, has the highest ecommerce penetration among the home care sector. Amazon.com and Chewy.com, both originally pure play ecommerce companies, were revealed to hold the most market share of pet food online. Why? Because they saw the potential and started selling online early. Retailers and brands in Southeast Asia can use this insight as a benchmark to capture the region’s million dollar pet potential online.
The bulkiness of pet food packages, large range of products and regularity in consumption make the product an extremely viable candidate for ecommerce. Packaged Facts, a US market research company, conducted a survey that revealed about one-third of dog owners and cat owners like the idea of home delivery for pet food because it’s an “essential product consumed at a steady rate.”
Through an online platform, brands can offer delivery, a wide product selection and even package deals, product bundles, subscriptions or a variation of discount strategies to further incentivize shoppers.
Thai pet owners unfortunately do not really have these options available to them. Aside from pet specific online marketplaces such as Petpro.co.th and dogilike.com, there is still a lack of reputable products online even though the demand exists. Only recently, Lazada Thailand reported 600% growth rate in its pet product category, mostly made up of third-party merchants.
Even well known global premium pet food brands such as Alpo, Royal Canin and Purina can be found through select online marketplaces such as Orami.co.th and Lazada.co.th. The absence of brands, especially in the mid-priced range, with their own site to promote pet information and offer a new selection of products leaves the online space wide open for new entry by someone new.
No pet related brand has launched a brand.com
Brand should look at adopting the direct-to-consumer model for the following reasons:
- Full control of a branded platform to use in capturing the attention of information-seeking pet owners with educational, SEO-optimized copy with smart content-marketing.
- Less competition with similar pet brands in a marketplace or the pet aisle of a supermarket.
- Direct access to consumer data used to increase customer lifetime value in the long run and re-target them later in the marketing funnel.
- Save costs by jumping over the middle man -a brand would have to pay 5% commission on a marketplace it sells on.
The American website of Purina by Nestle dedicates an entire landing page to outlining the nutritional value of all its products and its benefits for animals – all to attract attention and persuade the browser to buy.
“A pet food brand with enough SKUs would have a good chance at infiltrating the middle class pet owner market,” – Harprem Doowa, co-founder of PetLoft.
Case study: Leveraging Pedigree’s offline popularity
Although competition is set to intensify between brands looking to capture the mid-range pet product market, Mars Thailand remains a market leader in the country. One of the best-performing brands under its portfolio is Pedigree.
The household name for pet food has maintained its popularity through a series of both online and offline strategies. The brand held a successful “Valentine’s Day” campaign through its community initiative, Pedigree Foundation, where it took to social media to spread awareness about donating to help stray dogs using the hashtag #ValentinesDay and solidified itself as a dog brand that cares.
The PedigreeUS Twitter account alone has over 18,000 followers and its various other country specific accounts have over 1,000. An online following such as Pedigrees could easily be utilized to send traffic to a shoppable landing page.
By only having online visibility on marketplaces, Pedigree does not have access to customer data, no control over grey market distribution and lacks control over content and personalization.
It becomes more difficult to sell online when the brand is up against competitors for the same customers on the marketplace.
Timing is everything.
Thailand’s pet industry is wide open for brands, both old and new, to enter and grab market share. And more and more global companies and VCs are figuring this out.
Recently, Thai VC firm 500 TukTuks announced its investment in Singapore’s PerroPack, an online petcare ecosystem that includes Perrobox, an ecommerce subscription service for pets and PerroMart, an ecommerce platform for all things pets. It won’t be long before the same business models are implemented in Thailand.
As the Thai market begins to condense with the flood of global players and diversified consumer demand, more sectors become less attractive but the pet industry remains an empty bliss. Going online to find a necessity like pet food and pet care products will eventually become the norm as Southeast Asians grows increasingly familiar with the habit of ecommerce.
“The pet product market in Asia is becoming increasingly mature and diversified, and is likely to grow faster than the world average in the coming years, “ – Neil Wang, global partner and president for Greater China at Frost & Sullivan.
Any pet brands ready to graduate from the doggy paddle?