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According to a recent survey from the American Pet Products Association (APPA), 67% of U.S. households have a pet. That’s nearly 85 million homes. Dogs are the most popular, followed by cats, freshwater fish, birds, and small animals — with saltwater fish tied with horses at the bottom of the list.
These pets are also big business. The APPA found Americans spent nearly $96 billion on their pets in 2019 alone.
And while the American Society for the Prevention of Cruelty to Animals (ASPCA) says 6.5 million pets typically enter animal shelters each year, that figure could see a drop in 2020. That’s because pet adoption rates have seen a huge increase among consumers looking for companionship at home while socially distancing due to COVID-19.
In New York, for example, some shelters reportedly saw adoption applications increase tenfold. But Kitty Block, president, and CEO of the Humane Society of the United States, told Wired it’s a phenomenon happening across the country — with fostering up 90% in some locations.
And that may explain why in the midst of a tough retail environment overall — with store closures projected to hit 20,000 to 25,000 locations by the end of the year — pet brands are holding their own. Bloomberg reported online pet retailer Chewy, for example, saw an influx in orders that pushed fulfillment out to as many as seven to 10 days at one point — as its stock price soared.
To be fair, the increase in online transactions is also likely tied to consumer behavior during the COVID-19 pandemic overall. But, for a brand like Chewy, the rise in pet adoptions certainly doesn’t hurt. It also proves we’ve come a long way from Pets.com, which infamously failed during the dot-com bubble in part because pet food was heavy and therefore expensive to ship.
But Chewy, which was acquired by retailer PetSmart for $3.4 billion in 2017, is a veritable giant in the pet care space. What about the little guys?
They’re doing okay, too.
In fact, three direct-to-consumer (D2C) pet care brands are not just staying afloat, they’re embracing specific niches within the overall pet care space and thriving in this challenging market. Here’s a closer look at how they’re doing it.
Pumpkin is a pet insurance and wellness company that launched April 30, 2020. While there were certainly other pet insurance options out there at the time, Elizabeth Dimond, head of marketing for Pumpkin, said Pumpkin saw a few critical gaps in the marketplace. For starters, it’s hard for pet insurance brands, in particular, to convince consumers to invest in a product they may not use right away.
“People feel like they would be paying money each month and not necessarily getting any value for that money,” Elizabeth said. That’s why Pumpkin focuses on pet wellness through preventative care in addition to insurance. “We're all about making sure that we can keep our pets healthy and enabling the best care for our pets, as we are pet parents ourselves,” she added.
What’s more, many consumers associate pet insurance with the health insurance they have for themselves. The latter is not always straightforward, which can lead to a bad customer experience when a covered individual seeks care and still winds up with a bill in the mail.
The same is true in pet insurance, which is why Elizabeth said Pumpkin provides one of the most extensive plans in the marketplace with options for dogs and cats. The plans vary, but generally cover annual exams, as well as some vaccines and medications. It also allows prospective customers to comparison shop on its website.
While the puppy plan is still in beta, Elizabeth said Pumpkin will even reimburse customers for vaccines a puppy received before its owner signed up for the plan. “We still want you to have the ability to really get the full value of the plan,” she said.
Pumpkin also seeks to make the lives of pet parents easier with medicine reminders.
In fact, Elizabeth said forgetting about monthly medications like flea or heartworm control was one pain point cited by both vets and pet owners.
But perhaps the biggest challenge for Pumpkin specifically was launching during the COVID-19 pandemic when consumers were understandably distracted. While Elizabeth said there was some internal debate — and even Pumpkin’s PR agency asked if they were sure about going live in April — ultimately, they decided it was the right thing to do for one simple reason: Pet adoptions were on the rise. And that means an entirely new market of pet owners.
“Now across the U.S. and in certain geographies, if you want to adopt a pet, you're going to have to go on a waiting list even to get one,” Elizabeth said. “So there's just been a tremendous need as people are really spending more time at home. Looking for other sources of companionship is super important. And so people are really gravitating toward pets, which really lends itself very nicely to [our] offering and why it's so important for people like us to be in the market.”
In addition, Elizabeth said the rising unemployment rate and increased financial instability overall further demonstrates a need for options like Pumpkin, which help customers cover their pets’ unforeseen expenses. “For us, it felt like now more than ever, this type of product is highly needed,” she added.
Pumpkin will even send medication directly to customers’ homes as an added convenience. With most pet prescriptions still filled in veterinarians’ offices, this gives Pumpkin a compelling distinction — especially during a global pandemic when consumers seek to minimize contact.
“That's one of the other [reasons] why we launched during COVID-19,” Elizabeth said. “We think we can be super helpful to consumers because we can ship parasite medication to people's homes and they don't even need to go to their veterinarian to go pick them up, which is a really nice part of the value proposition that we offer.”
Which is not to say there were no obstacles whatsoever.
Pumpkin opted to work with multiple PR agencies to help drive organic mentions. And while Elizabeth said the D2C brand did well, all things considered, it still saw far less coverage than a launch under different circumstances, as the media became focused almost exclusively on COVID-19.
Pumpkin, however, also embraced a community-building strategy on platforms like Instagram, Facebook, and Pinterest, and invested in paid advertising on Facebook and Google. Of course, the right combination of platforms varies based on the needs of an individual business. But by being nimble and following a test-and-learn approach, Pumpkin determined which channels yielded the best results. And that’s certainly a tactic other brands should adopt as well.
“I'm always a firm believer that you can't put all of your eggs in one marketing channel or marketing basket,” Elizabeth said. “So we're able to kind of get a lot of really good learnings in our beta phase to help us scale and think about how we can accelerate our growth, even in today's environment.”
And the good news, Elizabeth said, is lockdown has made us better pet owners overall.
“Most people, you know, if they don't work from home, they've had to rely on pet sitters and pet walkers to kind of take care of their pets while they're at work,” she added. “I think now we have a chance to have a greater connection with our pets by doing a lot of those things ourselves and, frankly, being around our pets, 24/7.”
Goodboy is a premium pet supplement brand that offers personalized plans for dogs based on their individual health needs. It launched in late 2019 following the cancer diagnosis of Kari Sapp’s four-year-old dog, Finley.
“I don't know if anyone ever expects their dog to get sick, but it just took me by surprise and kind of got me thinking, ‘Am I doing enough for her outside of giving her a really good exercise routine and quality dog food?’” said Kari, CEO, and co-founder of Goodboy.
So it’s easy to understand why Goodboy is now focused on long-term pet health. “I think a lot of times people do forget about their pets, they really focus on it for themselves, but that long-term care sometimes gets put by the wayside,” she added.
Goodboy was entering an existing marketplace with sizable competitors who could leverage economies of scale to offer much lower price points in some cases. The key differentiator, Kari said, lies in ingredients. Goodboy carefully sources its ingredients — and only includes those sourced outside the U.S. if they don’t grow here. Goodboy also skips fillers and additives that don’t benefit dogs. “All ingredients are really premium and top-shelf,” Kari said. “I think that separates us on the product side.”
Goodboy also walks prospective customers through the supplement-buying process with a quiz that provides recommendations based on the needs of their dogs and shows how they can benefit. “We're able to guide people through the process … and really link them up with the supplement that's going to be the best for their dog,” Kari said.
This focus on wellness is attractive to a new generation of pet owners who aren’t content to pick up a bag of dog food at the grocery store, but rather truly prioritize the health of their pets. It’s a natural extension of a behavior consumers are increasingly applying to themselves as they gravitate toward organic, local options.
“Millennials are waiting longer to have kids, or choosing not to have kids at all. And so they're kind of treating their pets like kids and really sparing no expense on their health and well-being,” Kari said. “I think an earlier generation might have viewed this as unnecessary or kind of an extravagance or whatnot. But this kind of new generation of pet owners is really viewing it as a necessity.”
That requires a different engagement approach, which is why Goodboy actively fosters customer relationships with constant dialogue. “I think in the pet space, historically … there hasn't been a lot of transparency with where things are sourced or what ingredients are included in products. It's just kind of been, ‘This is what this does and we're just really not going to tell you anything else, but you should trust us,’” Kari said. “We really didn't want to do that.”
Instead, Goodboy has what Kari describes as “a super open line of communication” through full transparency on ingredients and sourcing, as well as its quiz, which includes a section that allows customers to detail specific concerns. Kari said this helps Goodboy take the pulse of its business, such as when customers wrote in about dogs with meat sensitivities.
“We took that information and we were able to reformulate one of our best-selling products and we excluded all the meat products from that formula,” she added. “So just by listening to our customers, we were able to take that [feedback] and really pivot quickly.”
Large brands spend millions of dollars trying to eke out every last piece of consumer data hoping to find insights. The story of Goodboy makes it clear that there’s an easier way, especially for brands just starting out — just ask. Customers are happy to tell their stories, and the feedback can be more invaluable than all the data mining in the world.
How Goodboy keeps the line of communication open with customers:
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Goodboy did make one major shift early on. That’s because the D2C brand thought, as the name implies, it would sell directly to consumers on its website and retain exclusive rights to its products and customer data.
But, Kari said, that philosophy quickly changed.
“I think a lot of bigger brands are kind of moving towards this space where they're wanting to bring in smaller, more boutique options to give to their big-box stores. So kind of right out of the gate — and it was really surprising — Nordstrom reached out to us and wanted to carry our supplements in their stores.”
And while traditional retail was certainly an unexpected pivot, Sapp said it was the right move because it offered brand exposure that would have been impossible to achieve otherwise. “It was an interesting way to get our brand out in front of a lot of eyeballs that we wouldn't have otherwise been able to do so early on,” she said. “Quickly, we realized that reputable big brands like that are a great way to partner up.”
Now, Goodboy works with a number of small retail partners and has some bigger retail plays in the works. And it’s still striving to change the way modern pet owners care for their animals.
“From a Good Boy perspective, we're focused on supplements right now… we have five formulas and I think we were hoping to bring on anywhere from three to five more by the end of the year,” Kari said. “So we’re really expanding our offering there, but also kind of encompassing this pet wellness space as a whole, so it kind of frees us up to do other things.”
There is an old military saying that no plan of engagement survives first contact. Brands need to have a similar mindset — the best business plan in the world is only good while it accurately reflects the realities the business is facing. Brands looking to grow, and grow quickly, need to be able to react to market conditions and the opportunities they are presented with.
Honest Paws was founded in 2017 to provide premium CBD products for pets, including oils, treats and even infused peanut butter, to help animals manage previously hard-to-treat conditions like nervousness or mobility and to promote overall wellbeing.
It’s a market CEO Erik Rivera said opened up thanks to the 2018 Farm Bill.
“Our mission was really simple: To create high-quality products with transparency on sourcing in the CBD space,” Erik said. “And since then, we've just evolved to build wellness products in general … now Honest Paws is looking at other supplements and other all-natural ingredients that can help enhance the quality of your pet’s life.”
As a relatively new product concept, Erik pointed to a spectrum of consumer needs, which ranges from those who don’t know they have a problem to customers who aren’t sure how to tackle their problem and finally consumers who know a given product will solve their problem, but are not necessarily sure whether it is trustworthy.
So far, Honest Paws has zeroed in on the latter group, which are in the middle of the purchase funnel.
“What we do with content marketing is we focus on people who are looking for the product that we have … and it makes it very easy because when you're building a business … and you're trying to hone your messaging, it's a lot easier to say, ‘I make X and you're looking for X and here it is,’ and then to get customer feedback and do that customer development loop before you go to the unaware market and try to educate them or you go to the people that you know in order to try to make them more problem aware,” Erik said.
That means focusing heavily on search, which Erik described as “about as literal as you can get.” That’s because by bidding on keywords like “CBD oil for dogs” and creating relevant content that ranks well, you’re literally answering customer questions online.
“We like to call our content strategy ‘demand-driven content,’ meaning we're looking at data and we're looking at metrics to determine what to write about,” Erik said. “The one thing that's kind of unique about the 21st century is everybody expresses their problems to Google … and so we try to match our content to those queries, target them and rank well for them or bid on those keywords.”
From its initial target audience of mid-funnel consumers, Honest Paws plans to expand to the larger market. Erik said this is where paid advertising will come in to boost prospecting among consumers who don't know Honest Paws exists yet.
“The messaging is very different in the early stages versus the later stages where we're doing more like demographic targeting, or trying to educate general pet owners,” Erik said.
For more on Honest Paw's content marketing strategy:
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Honest Paws also relies heavily on mutually beneficial partnerships — like a performance partnership program with publishers — to connect with consumers. The brand gives commissions for referrals, but remains true to its brand ethos by ensuring the referring entity is transparent about their relationship.
This, Erik said, results in win-win situations. And now Honest Paws is also working with non-profits like local shelters to help both parties amplify their messages in given markets.
“I think the pet industry tends to be pretty local,” Erik said. “It's a national conversation, it's a national market. But, you know, I go to the local dog park, I adopt from the local shelters.”
And while the pandemic has certainly created a tough environment for local independent pet stores, Erik said it’s been interesting to see how Honest Paws’ retail partners have adapted to date by offering delivery and pickup services.
“I think some of those convenience trends … will stick because it's hard to put the genie back in the bottle, right?” Erik said. “Like, once you change consumer behavior, it's really hard to say, ‘Hey, we did all this stuff, you liked it, but we're not going to do that anymore.’”
And so Erik expects to see COVID-era services that make shopping more convenient to remain long after.
Honest Paws itself prioritizes the customer experience above all else, making sure it not only has good customer satisfaction scores, but also that the brand is not intrusive with its marketing. That’s one benefit of being a direct-to-consumer brand with direct relationships with consumers.
“I think the only way that you can start these days [is online] unless you want to raise a lot of capital because you can get a core audience of people that are looking for the product or service or have the problem that you're trying to solve,” Erik said. “You can build a direct relationship with no intermediaries, you can talk directly to your customers. And if you kind of follow the lean startup methodology, you kind of come from the school of thought that developing a product is a feedback cycle.”
But, as businesses grow, Erik said most end up looking the same at a certain point because they’re trying to serve customer needs.
“I think starting online is the best way to help a product gain traction and build a brand,” Erik added. “And then to go omnichannel is kind of the only way because you want to have as much contact with your customers as possible and also make it as convenient as possible for them to purchase your product or service.”
Another constant that bodes well for Honest Paws: The trend toward treating pets like family members as consumers wait longer to have kids.
“I think with dogs there's this humanization effect, right? Where we're more conscientious of what we give them,” Erik said. “Whether that's pet insurance, pet food, or pet products or pet treats and you know, the supply chain, I think we're just going to see a lot of the human trends in terms of what we demand from businesses reflected in the pet industry because the way that we view pets is shifting and how they integrate with the family is shifting.”
A global pandemic is certainly a challenging time for any brand, but that’s particularly true for startups that don’t have the resources of big competitors. But by identifying unmet needs within petcare, as well as changing consumer sentiment, Pumpkin and Goodboy have found their own loyal audiences.
For Pumpkin, it’s about making life easier for pet parents with vaccine coverage for puppies that pre-date membership, as well as medicine reminders and mail-order prescriptions. After all, consumers have enough to worry about as it is. But it’s also about experimenting with online platforms to determine which channels help the brand communicate with its target audience and yield the greatest ROI.
Meanwhile, Goodboy is stressing transparency and communication to build its relationships. The brand is also listening to customers by incorporating their feedback directly into product formulations. Goodboy didn’t go to market precisely the way it envisioned, but it was the D2C brand’s willingness to embrace an unforeseen opportunity that is in part responsible for its success today.
No one really knows what life will be like after the pandemic, but it’s likely recent trends toward wellness and transparency will continue. And that’s certainly good news for Pumpkin, Goodboy, and Honest Paws, which stand poised for continued success.
Last updated on September 16th, 2022.