vying to be TOP DOG

Feb 01, 2000 10:30 PM  By

The online division of cataloger/retailer PetSmart is trying to lead the pack of online pet stores

What makes a category killer in a crowded e-commerce segment? How about a combination of a well-known brand, great product selection, multichannel selling capabilities, superior hands-on customer service, and order-fulfillment reliability? And don’t forget technical stability – fast page loading and secure ordering in an environment free of error messages. Then there are also the less tangible attributes, such as the ability to create a sense of community and provide authoritative, informative editorial that subtly sells.

Pasadena, CA-based PetSmart.com is aiming for all this and more. The e-commerce subsidiary of cataloger/retailer PetSmart has created a speedy, informative site and is leveraging its parent’s brand strength, customer service infrastructure, and distribution channels to stand out from the pack.

And the pack is formidable; it includes online-only competitors Pets.com, Petstore.com, and Petopia.com, and the print cataloger Doctors Foster & Smith. They all offer roughly the same features – secure ordering of pet food and supplies, articles and columns on caring for pets, information on adopting pets. Each also cultivates a sense of clubbiness among pet owners by hosting communities where people can post photos of their pets and join chats. As fire hydrants are to dogs and squeaky toys are to cats, so these sites are to pet lovers.

But for all the similarities among the cyber pet shops, there are distinctions too, says Tom McGovern, president/CEO of PetSmart.com. And those distinctions – such as brand recognition and back-end operational expertise – can make a big difference in terms of site traffic, sales, and return business.

The joint e-commerce venture between cataloger/ retailer PetSmart, which had sales of $2.1 billion in 1998, and venture capitalists The Idea Lab went live in July, making it a relatively late entrant in the online pet store category. But McGovern claims that the site easily made up for lost time. Statistics support McGovern’s assertion. For the week ending Nov. 6, for example, PetSmart.com had twice the traffic of its nearest competitor, with 611,000 unique visitors, according to estimates by PC Data Online Reports, an Alexandria, VA, research firm (see chart, opposite page).

As McGovern points out, some of the credit for PetSmart.com’s apparent success goes to the strength of the PetSmart brand. The rest is due to the existing back-end of the $104 million-plus PetSmart Direct division, which the PetSmart.com Website shares with PetSmart’s print catalogs, among them general pet supplies marketer R.C. Steele and Wiese Equine Supply.

Foot traffic, Web traffic

At least part of the high level of cybertraffic is tied to PetSmart’s foot traffic through its stores, notes Cameron Meierhoefer, a senior Internet analyst with PC Data Online. “If you love PetSmart and its pet-centric stores, then you’ll go there online. It engenders a little more trust,” he says. “It’s a key leverage point missing in a lot of the start-ups.”

PetSmart’s bricks-and-mortar presence also attracts online shoppers who have never set foot in a PetSmart retail outlet – primarily because the store is not conveniently located. As McGovern explains, “We have high brand awareness but limited store trading areas.” In fact, he estimates that less than 10% of PetSmart’s online customers are also PetSmart store customers.

McGovern reckons that each store’s local trading area is a 5-mile radius, “so even in a city like Los Angeles, where we have eight stores, 95% of the geographic area does not fall into a trading area.” Nonetheless, in markets where the company has stores, its television ads cover the entire region. So customers who want to shop from PetSmart but live out of range can just log onto the Website. As for cannibalizing the print customers of its R.C. Steele catalog (which has its own Website), “we’re not concerned about crossover at all.”

The power of the back-end

But while the brand helps draw cybershoppers to PetSmart.com, it’s the efficient back-end that turns them into paying customers. And McGovern insists that his site has a solid order-fulfillment and customer service infrastructure that the other online pet stores can’t match. He won’t reveal PetSmart.com’s conversion rate of browsers into buyers, but “through IdeaLab we see a lot of e-commerce companies, and we have the highest conversion rate that the IdeaLab group has ever seen online,” he claims.

PetSmart.com fills and ships 95% of its orders the day they’re received. The catalog operation’s order-fulfillment systems are interfaced to the Website, so they perform automatic, real-time inventory look-ups as shoppers are pointing and clicking on merchandise, notes Eric Kidd, vice president of engineering/chief technology officer. Once an order is placed, the system routes the order to the warehouse closest to the customer for fulfillment and shipping. Kidd’s staff develops inhouse all of the applications used for the site. The site itself is hosted by third-party provider Exodus in Santa Clara, CA.

Moreover, live customer service reps are available 24/7 to help with ordering problems. PetSmart’s CSRs are “empowered to solve the problem, not just collect information,” McGovern says. “We have an abandoned-call rate of less than 2%.”

PetSmart.com also considers site performance critical to building customers. Sluggish performance can translate into abandoned shopping carts faster than you can say “buy rate.” To satiate Web users’ need for speed, all 12,000 SKUs are stored on static pages (the HTML equivalent of a prerecorded tape) because they execute faster than dynamic pages (pages generated on demand from content stored in a database).

While that creates more work for Kidd’s 20-plus-person staff – they have to manually enter changes to product information and watch for potential errors in consistency – PetSmart simplifies matters somewhat by using an internally developed publishing tool that culls product information from the database and stores it in a template to render each static HTML page. “If we get a new price or photo for a product, we just rerun the program and generate the new page, and the old page is automatically removed,” Kidd explains.

Part of Kidd’s job is forecasting traffic and managing the site’s scalability to handle anticipated spikes during a sales promotion. He ensures that the site always has two to five times the capacity he thinks it will need. “In some cases we’ve seen much more load than we had estimated, and in those times, having the extra capacity came in handy,” Kidd says. “But it’s certainly not a science – there’s some art involved. And the more you know your business and systems, the more accurate you get.”

Variations in traffic often result from which online pet store is offering the best special or sale in a given week. For example, “buy one, get one free” has been an effective traffic driver for PetSmart.com, Kidd says. But neither Kidd nor McGovern is deterred by the traffic highs and lows. What keeps them up nights is finding the right staffers to develop the technical and content features that will maintain their Website’s market momentum.

“We look for people with dual passions for pets and technology,” McGovern says. “If we have a passion for pets and the technical skills, we’ll have the superior product at the end of the day.”

It’s a jungle out there in the online pet supplies market, and so far no single company can claim to be the king. “We’ve seen a rush of competitors into this space and significant growth in traffic in 1999, with a push to establish brands and grow market share,” says Cameron Meierhoefer, a senior analyst with PC Data Online. The pet category heated up significantly throughout fall and the holiday season, as the major dot-com firms – Pets.com, Petopia.com, and Petstore.com – ran an assortment of humorous television a dvertising campaigns.

For the week ended Nov. 27, when the holiday shopping season began in earnest, pet supplies ranked 10th among the 17 most active e-commerce product categories, wedged between flowers/cards (9th) and travel (11th), according to a PC Data Online survey of 3,084 home-based Internet users. The survey revealed that U.S. consumers spent more than $500 million online that week.

For their part, online pet stores as a whole garnered 313,000 paying customers for a buy rate of 15.8% and total sales of $7.7 million. In terms of unique visitors, PetSmart.com ranked third that week, behind Petstore.com and Pets.com, according to estimates by PC Data Online. And for the 10-week period ending Dec. 4, PetSmart.com led Pets.com, Petstore.com, and Petopia.com three of the 10 weeks and ranked second four times.