BarkBox. The Farmer’s Dog. Ollie. Jinx. Ask anyone who’s spent time quarantining with a dog, and they’re likely to tell you they’ve seen stepped-up competition in D2C pet supplies.
Certainly, it’s no surprise that consumers are buying more pet products online. Because of COVID-19, they’re buying more of everything online. But an intriguing new study finds that pet care and fitness are the only two D2C categories living up to past performance levels.
I first came across the PipeCandy research in company co-founder Ashwin Ramasamy’s recent report on TechCrunch. I was surprised to see how poorly most D2C companies are faring, relative to the larger ecommerce universe.
PipeCandy, a research and insights company, collected data on 1,000 D2C brands for April, a period when much of the U.S. was sheltering at home. But rather than just comparing 2020 data to April, 2019, it also compared it to the month in 2019 when there was peak traffic for each specific category.
Just 24% of the D2C brands PipeCandy tracked managed to surpass their peak month of 2019 this April. And 36% of the brands declined more than 50% from their respective peaks.
“The idea was to see not just whether these brands grew in April 2020, but also to see if they hit their peaks they hit in 2019," writes Ramasamy.
“Fitness, pets and grocery registered healthy growth compared to 2019 averages, while the declines in furniture, apparel and kids have been minimal (compared to the carnage we see in retail). But, when we see the data cut for peak 2019 versus April 2020, we see fitness and pets as categories [that] have been resilient.”
The number of unique visitors to pet-related D2C brands in April of this year grew 40% from April of last year and 7% compared to each brand’s peak month in 2019. For fitness, visitors increased 97% in the April to April period, and 14% in the peak month comparison.
Every other category analyzed, including nutraceuticals, kids, grocery, food and furniture, saw decreases in the number of visitors in April, compared to their peak month of 2019.
The report tries to put the D2C sector in the context of the astronomical gains of ecommerce overall, which Ramasamy notes has “grown at the same rate in the last two months as it did in the last seven years.”
PipeCandy also crunched the numbers a different way, to better analyze the impact of COVID-19. It took the traffic numbers from 2019 and then projected the trends for 2020, “assuming it would be a normal world from the vantage point of December 2019.” It then compared them with the way business actually unfolded in the January–through-April period. By that measure, pets emerged as the most resilient category by far.
The conclusion, at least of this analysis, doesn’t look good for the D2C universe. The winners? Mid-market and large pure-play ecommerce companies, concludes Ramasamy. This “is one segment where the compounded quarterly growth rate of active companies is better than the 2019 average.”