When we talk about the pros and cons of selling “pet food” online we’re really talking about dog food and cat food, which together makes up the majority of “pet” food sales in this country. 

This makes perfect sense considering that dogs and  cats live in 37% and 32% of American households, respectively, well ahead of the next largest pet category of birds at just under 4%, according to the American Veterinarian Medical Association.

Years ago when I owned and operated LucyTheWonderDog.com I was approached at a trade show by someone offering to drop ship dog food for me.

At the time I never really considered selling dog food online figuring that it was too heavy and expensive to ship.  But if this pet food wholesaler was willing to drop ship the food for me and I wouldn’t have to invest in a single kibble of inventory to do it, I thought “why not?”

As it turned out, selling dog food online, or pet food in general, was a large success for our business for a couple of reasons that included:

• We only sold premium brands unavailable in box stores
• We purposely targeted harder-to-find brands
• People will pay for shipping if it’s a food they really want and can’t purchase locally
• Generated repeat business and cross-sell opportunities

The last point is one of the driving factors as to why any pet supplier, online or offline, sells food.  Pet food is a low margin item but, hey, the pet has to eat, so assuming you’re reasonably competitive on price and service, your customers will keep coming back for the life of their pet.

TO SELL OR NOT TO SELL, THAT, IS THE QUESTION

Getting back to online retailers who may be considering selling pet food online there is good news and bad news.

The good news first.

According to an article in Pet Age Magazine that quoted a recent study:  “ …a new report released by IBISWorld, a market research group (showed that) revenue from online sales of pet food totaled $484.7 million in the five years to 2011 and is projected to increase to $595.8 million during the five years to 2016”

The reason?  “Rising pet ownership in the United States and growth across the e-commerce sector has caused the industry to experience overall growth, despite the recession,” said IBISWorld analyst Kevin Culbert.

The bad news?

Recent pressure from US legislators to close a tax loophole that will require all online retailers, both inside and outside the pet industry, to start collecting sales tax on all orders.  Online retailers have long enjoyed a tax advantage by only having to charge sales tax within the states where they have a physical presence.  That may change if tax-starved states have their way, putting increased pressure on already thin profit margins combined with shipping costs, making online purchases less attractive to sellers and buyers alike.

BOTTOM LINE:   Experiment with a couple of exclusive lines.  Go to trade shows like Global Pet Expo, Super Zoo or HH Backer and seek out drop-ship relationships with up and coming premium pet food companies who are eager to get their brands out there.  Start small, experiment with free shipping options or lower cost shipping options to offset the day when sales taxes may eat into your online pricing advantage.