In a market where most purchases are online, we discover how one of the biggest Chinese e-commerce giants is keeping pet supplies at the core of its sales strategy.
China’s strong e-commerce is always seen as an ideal opportunity for new pet companies to enter the local pet market. The sales channel’s penetration rate is growing, and e-commerce giants are taking advantage of this momentum to expand their customer base to some of the country’s 60 million pet parents.
Big shopping events – such as Singles Day on 11 November – show how pet supplies can play an important role in e-commerce, as they build customer loyalty and attract young consumers. According to Deloitte, 61% of all pet purchases in the Asian country in 2021 were online. By 2026, more than 7 out of 10 purchases of pet supplies are expected to be done using a computer or smartphone. Supermarkets and pet stores are likely to lose market share by that time.
One of the most popular online platforms in China, Alibaba, and its cross-border marketplace Tmall Global, definitely see more room for growth in the pet category in the coming years. It is believed that Alibaba’s sales of pet supplies accounted for $16 billion in 2021, and that this will jump to $24 billion in 2027, although the company itself does not confirm either of these
Dean H. Diabate lived and worked in China for 15 years, and now helps foreign pet brands to market their products in the country through Tmall, which hasover 500 million registered buyers. He answered some
questions that PETS International put to him.
How important is the pet category for Alibaba?
The pet category is one of the fastest-growing segments on Alibaba’s e-commerce platforms, reflecting general consumption trends in China. Since an increasing number of young professionals prefer adopting pets to having kids, we forecast that pet supplies will soon overtake the mother and baby category in terms of yearly turnover on our marketplace.
How many sales does the pet category represent?
We don’t have total sales numbers, but a recent white paper from consulting firm Bain & Company found that pet products represent a market of RMB200 billion ($28B) in China, and Tmall members have become a major force in pet product consumption.
The number of pet brand members in our marketplace has also grown substantially, with a year-onyear growth rate of 60% in the first half of 2022. Their spending and conversion rates are twice that of general members in the pet care sector. During
China’s mid-year e-commerce shopping festival known as ‘618’, about 50% of the overall sales of mainstream pet product brands on Tmall came fromregistered members.
What are the most popular pet categories on your marketplace?
Pet food is obviously a necessity and is one of the fast-growing segments. Food is actually the most purchased product on our marketplace.
On top of that, Chinese consumers pay a lot of attention to pet health, so healthy treats and pet food supplements are very popular. Pet owners are buying quality and expensive products – from supplements to freeze-dried or even oven-baked food products.
What are the new categories to watch out for?
One of the latest trends is the increasing number of small pets, such as rabbits, birds and fish. These provide major opportunities for suppliers in the segment. Besides keeping their pets well fed, consumers care for pets’ physical and mental health. Smart pet gadgets are becoming popular, such as interactive robots, smart feeders, and automatic litter boxes.
After some headwinds due to inflation and supply chain challenges, how’s 2023 looking?
We are seeing that Chinese consumers are becoming increasingly sophisticated in their purchasing behavior, and are spending more disposable income on their loved ones. So we believe that the pet category in China will continue to grow.
How are brands interacting with consumers online?
Many pet owners in China are young and tech-savvy, and they buy a lot through online channels. In addition, big and small brands are engaging more with them online. For example, Royal Canin has over 1 million members in its Tmall store. The pet food brand launched a pet profile feature for its members ahead of Singles Day last November. Members could put in the details of their pet – including breed, age and health conditions – to get customized pet product suggestions. Besides coupons and deals, the brand also offers its members regular live-streaming sessions on science-based pet nutrition and healthcare. And whenever consumers have questions about pet care, they can have one-on-one consultations with pet experts at the brand’s Tmall store.
What about small foreign pet brands?
The pet food segment is heavily regulated by the Chinese import authorities, but there are still possibilities. Some overseas brands meet the local import regulation requirements and these products can be imported. For example, the US natural pet
food brand Instinct Pet Food has experienced massive growth since it entered Tmall in 2013.
Private label is on the rise. Is Alibaba planning to launch its own brand?
We operate marketplaces and have no plans for launching our own branded pet products.
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