It’s a Dog Eat Dog (Food) World with Amazon Private Label
Amazon is dogging the competition! It’s taking a bite out of the $30 billion pet food market with its brand of private label dog food. Wag Dry Dog Food by Amazon is the newest thing to hit the virtual shelves of the marketplace. The Wag name has been associated with Amazon since 2011. Amazon acquired wag.com and related companies with its purchase of the parent company, Quidsi. When Amazon was unable to get the Quidsi suite of e-commerce sites profitable, wag.com was retired. It now redirects to Amazon’s pet supply landing page, Wag.
Wag Dry Dog Food launched at the beginning of May, 2018 and offers dog food in a variety of proteins. It aims to compete with the major players in the pet food industry. A grain-free kibble, Wag also claims to have been formulated with the help of veterinarians.
Customers have the option to purchase bags formulated for puppies or adult dogs in a range of sizes. The prices appear competitive within the industry, with the 30-pound bag as the most expensive at $44.99.
Wag’s price also competes well with Purina Pro Plan by Purina, one of the best-known dog food brands. Perhaps larger pet food brands like Purina and Blue Buffalo (maker of Blue Wilderness) ought to be concerned about Wag. Amazon private label clearly has no bones about making a play for our four-legged friends.
As with other categories, Amazon appears to be collecting data on what works well on their platform. Then, they’re channeling resources into creating those products themselves. It’s just one more reason that brands need to diversify their sales channels and set themselves apart as more than just a commodity offering.
Should boutique dog food brands be worried?
As Americans become more health-conscious about their own food choices (opting for non-GMO or organic offerings when possible), this concern extends to their beloved pets. Although Wag is marketing itself as healthy, it may not be healthy enough to threaten smaller “real food” brands like The Farmers Dog, The Honest Kitchen, and other boutique brands that use human-grade ingredients.
These smaller brands have their own market, which attracts the more discerning dog owner, who weighs the quality of dog food over the price – and even over the convenience of free two-day home delivery. These pet parents are willing to pay higher prices for food with quality ingredients and are loyal to the brands that they truly trust. An Amazon private label brand may seem to them too generic, so an Amazon private label food might not appeal to that crowd.
On the other hand, traditional pet food brands should be worried about Amazon and the many other companies delving into the rapidly growing pet food industry. Not only are pet-centric physical retailers like PetSmart, with its purchase of chewy.com, entering the profitable pet food market, but even regular packaged foods and home-related companies like General Mills, which acquired Blue Buffalo in early 2018. These companies are sniffing around for new ways to diversify their products and increase sales.
The e-commerce presence in the pet food market
Just like similar trends, sales of pet food in physical retail stores have all but gone to the dogs.
These statistics imply that sales are shifting toward e-commerce, along with the rest of retail.
In cyberspace, Amazon dominates as the main purveyor of low prices and convenience. Prime members who are also pet owners now have affordable dog food available online instead of having to lug heavy boxes from grocery or pet stores or pay a premium for shipping. Instead, Wag Dry Dog Food is dropped off at the home for free and in two days. As more consumers become accustomed to this way of shopping for pet food, the Wag brand may continue to grow.
E-commerce giant Amazon already has the upper hand – or paw – in the online space. And it will surely use its tools to give Wag an advantage. Amazon, through its millions of customers, can scale Wag in a number of ways. Primarily, Amazon can see the shopping practices of their customers and advertise Wag to them while they are shopping for other pet-related products. Amazon’s influence in this area could cut into the margins for the large pet retail stores like PetSmart and Petco, as well as other brands selling on the Amazon platform.
Reportedly, in addition to dog food, Wag will soon offer selections like cat food and other pet supplies. And, Amazon’s experience in the pet industry (through the success of pet products like AmazonBasics pet carriers) will help the Wag expansion succeed.
Wag and AmazonBasics are part of a recent, broader private label strategy, whereby Amazon monitors products in popular and profitable categories and homes in on those gaining traction, like kitchen supplies, bedding, clothing, and electronic equipment. Amazon then sells its own version of the items, usually beginning with non-Amazon-branded private label items. Then, eventually, the more profitable of those become Amazon-branded private label products, i.e. AmazonBasics.
Why Private Label?
There are many benefits for Amazon in using a private label strategy. The most obvious advantage is that Amazon can use its own cyber shelf space to advertise their items for free to their millions of customers.
Consumers may recognize some of Amazon’s 70+ non-branded private label brands like:
And dozens more! Then, there are the Amazon-branded private label items like AmazonBasics.
Of note, its new Wag dog food straddles the line by adding Amazon to its official brand name, “Wag Dry Dog Food by Amazon.” Branded as Wag on the packaging, it’s more or less an Amazon private label brand, but it also leans on Amazon’s name recognition.
As Amazon continues on its path of disruption, it can count Wag Dog Food as a win. Specifically, Wag, available only to Prime members, offers yet another incentive for non-Prime customers to join 100 million+ Prime subscribers. And, as Amazon adds more private label brands to Prime, thereby attracting more and more new subscribers, Prime will continue to grow into a staple subscription in households. With its private label business strategy added to its cyberspace edge, Amazon will surely remain the e-commerce top dog for years to come.
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