Pet marketplaces: the place to be?
The number of new marketplaces offering exclusive pet services and products is on the rise. We look at the factors that are driving this trend, who the key players are, and what sort of opportunities are opening up.
Online marketplaces act as the ultimate pet store aisles. They simplify complex buying decisions, erase purchase hesitations and instill confidence by leveling the playing field.
“The convergence of fragmentation, consumer skepticism and our relentless ‘on-demand’ culture forms a potent mix, creating the perfect breeding ground for the pet industry’s transformative marketplace era,” says Chloe Smith, CEO at UK-based marketplace Tuft.
Attractive investment proposition
The new pet marketplaces are leading to the ‘Uberization’ of pet care. “They are streamlined, trustworthy, and tailored to the modern pet parent’s needs,” explains Smith.
The pet industry is widely regarded as being resilient enough to survive inflationary periods, having demonstrated a strong ability to retain customers and generate consistent product demand. According to Tom Gladstone, Partner at OC&C Strategy Consultants, the pet industry’s ability to squeeze out more customer income more successfully than other categories has encouraged the market and investors to support this space.
“Many pet-related areas are categories where the consumer has a repeat need for that product – which means there is a long-term repeat behavior you can play into as a marketplace or a supplier,” says Gladstone.
In February this year, for example, Seattle-based pet care marketplace Rover was acquired by private equity (PE) firm Blackstone in a $2.3 billion (€2.1B) deal. The company anticipates to close 2023 with a revenue of around $231 million (€211M), representing a year-on- year (YoY) increase of approximately 33%.
Similarly, pet-sitting marketplace TrustedHousesitters received a capital injection of $100 million (€91.4M) from PE firm Mayfair Equity Partners last December. A British company, TrustedHousesitters operates in 140 countries and recorded 158% YoY growth in 2022.
Fragmented suppliers
Humanization and premiumization trends have also resulted in new category areas that marketplaces can move into. Gladstone adds that new consumer demand for categories like accessories, equipment or services has encouraged fragmented suppliers to come under one retail belt.
Some major players
Supplies
German retailer Fressnapf ventured into the marketplace sector in 2022 as a strategic move to offer a ‘one-stop-shop experience’ for its consumers. Since the launch of its marketplace and the integration of third-party retailers, the firm claims to have doubled its number of online stock keeping units (SKUs).
“We guarantee our customers a broad, innovative and available product range for every pet and every pet owner. We firmly believe that this is key to remaining the number 1 platform for pet owners in Europe,” says Karolin Brombach, Head of Marketplace at Fressnapf/ Maxi Zoo.
At the beginning of this year, marketplace operator The Wires launched PawWire, a premium business- to-business-to-consumer (B2B2C) marketplace for all pet supplies: from food and grooming products to accessories, furniture, toys and pharmacy products. The Seattle-based company moved from beauty retail tech platforms to pet supplies after recognizing the pet segment’s “huge growth opportunity for the same compelling, interactive marketplace platform”.
Kimberly Carney, CEO of PawWire, explains that its strategy is to diversify the number of brands and products that consumers can discover, interact with and shop for on the platform. “So far, we’ve seen the most interest in pet accessories like collars and leashes, beds, toys and treats,” she says.
Presently, PawWire’s top innovation lies in its two-fold offerings both for third-party brands and customers. The former gain access to direct feedback from their customers, while the latter can discover more brands by swiping on products in the interactive user interface (UI). To innovate in the future, PawWire plans to focus on rolling out technologies to build and enhance brand/consumer relationships.
Services
UK-based Tuft app, launched in 2021 as a marketplace for grooming services, offers pet parents the convenience of booking from an array of care services for an ‘aisle-like experience’. According to the company, bookings have grown by between 9 and 10% every month, and the number of transactions increased from 10,000 in 2022 to 40,000 in 2023.
“2024 is going to be focusing on solidifying our market share in the grooming space and working strategically with partners to increase the frequency of use of the app by adding additional services and e-commerce,” states Smith.
The company aspires to enter pet boarding, walking and veterinary and non-medical care services on its ‘pet super app’. The marketplace also expects to integrate e-commerce retailers supplying grooming products from the third quarter of this year onwards.
Insurance
Insurance firm Marble recently partnered with Fletch, a technology provider, to establish an in-app marketplace for pet insurance. The model claims to offer 6 times as many trusted insurance providers via the marketplace. By allowing customers to compare plans and customize their coverage, it enables them to save as much as 57%.
“We were excited to launch into pet insurance because Marble members have added thousands of pet insurance policies to their digital wallets,” says Marble’s CEO and founder Stuart Winchester. He adds that they pursue a marketplace approach in everything they do.
According to Winchester, the company’s success lies in the ability to cater to a market that doesn’t have one-size-fits-all offerings – such as insurance: “Due to factors like price and coverage, alongside things like breed, pre-existing conditions and location, you really have to offer pet owners a wide variety of products. That’s what we aimed to do.” Within 2 months of launch, between 2 and 5% of Marble’s daily users are checking out a pet insurance offering on their app.
More categories, more loyalty
Growing consumer preferences for the personalization of pet products and services create extra scope for marketplaces to capture innovative and fast-to-market suppliers. Specialized pet marketplaces also present a good opportunity to work on customer loyalty. According to Smith, once customers are acquired it is easy to retain them, as pet parents dislike the hassle of finding new trustworthy pet care service providers.
Gladstone foresees that marketplaces will tap into the continued innovation and development of accessories and equipment, whether in terms of new categories being developed or the premiumization of existing ones. And although there is currently a significantly greater market for pet supplies than live pets, both on marketplaces and more generally, he predicts a rise in pet adoption marketplaces that match breeders with prospective pet parents.
Winchester forecasts the inclusion of proactive health and wellness products, alongside other pet services in pet insurance marketplaces. “It’s natural for all these products to live together,” he comments.
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