Welcome to DrugDirectory.info - Information on Discount pet drugs

Non-food items scratch out sales in on-line arena

SEATTLE -- Undaunted by the much-publicized failures of pet supply e-tailers, Drugstore.com dipped its feet into this space with the introduction of a small, eclectic pet selection in its "Specialty Shops" section late last month. But don't look for Hartz flea collars or any other goods typically found in mass channels. As part of the company's continuing effort to carve a specialty niche targeted at its particular audience, product lines include such nontraditional items as aromatherapy sprays for dogs from Good Dogma, organic catnip from Castor & Pollux and gourmet biscuits from Three Dog Bakery.

The company added the category because it discovered its pharmacy was filling many prescriptions of human drugs for people's pets, according to Sharon Wikstrom, general manager of Specialty Shops. "We had the indication from our customers with pets that this was a very good extension for us to try in our business model," she said. "We're hoping to do in our pet store what we've done with the drugstore. We're sticking with natural products and treats that you would find in small specialty shops."

In keeping with its human specialty lines such as Kiss My Face and Tom's of Maine, the pet category includes such fare as Pet-Trition vitamin and mineral supplements. Categories will be added as the pet store evolves, but they won't include food, which is too costly to sell on line, Wikstrom said. Drugstore.com also has no plans to offer veterinary drugs. One category to debut soon is "Gear" that will include "flexi" leashes from Planet Dog.

While the U.S. market for pet products is expected to reach $28.5 billion this year, according to the American Pet Products Manufacturers Association (APPMA), the jury is still out on whether the Internet will ever be a profitable selling channel. In the past year, e-tailers Pets.com and Petopia.com both folded, with PetsMart acquiring the Pets.com domain name for its own Web site, and Petco Animal Supplies Inc. purchasing both the domain name and assets of Petopia.

The big-box rivals have both posted losses from their on-line stores, but some Internet consultants say the traffic such Web sites can generate in bricks-and-mortar stores should not be overlooked. In fact, more retailers of all types are beginning to gauge the success of their sites as much by their value and a marketing and search tool as by the on-line sales they generate.

A recent national survey of pet owners by APPMA found that while veterinarians were cited as owners' leading information source, the Internet is gaining influence as an information provider, especially among owners of exotic animals.

Owners ranked discount stores as their preferred outlet for buying various pet care items. Pet superstores, such as PetsMart and Petco, ranked fourth behind small independent retailers and grocery stores. Respondents cited knowledgeable sales staff as the chief reason they preferred these small shops to chain stores.

PetsMart, whose e-commerce site operates as part of its PetsMart Direct division, posted a $2.9 million loss from the business in the second quarter and expects the dot.com to lose $0.09 cents a share for the year overall, management said on a recent earnings call.

But the operation is burning cash at a slower rate than expected and should be so integrated into the company within one year that it will be "difficult to assess as a separate business," said ceo Phil Francis. "As far as customer acquisition costs, order size and repeat rate, we can still look at that separately, and that continues to move in the right direction."

However, the on-line store will not even be "close to material" to PetsMart's overall results in 2002, he added. Largely on the strength of its growing services business, the company expects sales of $2.5 billion for 2001, with comp sales growth of 5%.

Any comparison of Drugstore.com's pet store with PetsMart's or Petco's e-commerce sites is apples and oranges, Wikstrom insisted.

The e-tailer is also not fazed by the difficulty others have had retailing pet products in cyberspace. "If you look at the demographics of who buys for pets, it is women, which is predominantly who our customer is," she said. "We're a value-add for the customer; while she's buying shampoo and deodorant she can pick up a couple of things for her pet at the same time."

Pet products are included in Drugstore.com's first print catalog, which was just released, and will also be in the holiday catalog launching at the end of October, she added.

Retailers with prior expertise in "pick-and-pack" are having more success at making this category work on line.

Dayton, Ohio-based Pet Warehouse, which began in 1986 as a cataloguer of bird supplies and expanded to a full line in the early 1990s, launched its site in 1996. With one 50,000-sq.-ft. distribution center and 125 employees, the company will process 100,000 on-line orders this year, according to president Don Laden. And its e-store now accounts for about 20% of sales volume.

"We look at the Internet as a marketing vehicle and another way to take orders," he said. The medium allows the company more flexibility with its product offerings than does its catalogs, he added.

Pet Warehouse is currently the largest direct supplier of aquatic goods in the United States, he said. Its most popular products are related to fish, reptiles and birds--it even ships live fish. The company carries more than 8,000 skus of every major pet brand and category, with a specialty in high-tech lighting and filtration products. "We try to carry unique items; that's our strategy in assortment," he said. "It's not easy for us to ship 72-in, light bulbs, but we do it. Large doghouses are also difficult."

Pet Warehouse fills a need for customers who prefer to buy direct or, for geographic reasons, don't have access to bricks-and-mortar stores, he said. But while the company sells food for fish, birds and small animals, it doesn't offer dog or cat food on its site.

"Food is one of the things that sank a lot of dot.com start-ups that used it as a way to acquire customers," Laden said. "It's not economically feasible to ship food."

Pet Warehouse enjoys the advantage of the obvious synergies between catalog and on line, Laden said. "We don't treat an Internet order differently from any other order. It's what we do: pick it, pack it and ship it. Bricksand-mortars don't do that. It's a totally different business, which is why it's such a challenge for them."