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How PetcoNow fits into Petco’s sales strategy

July 27, 2015 11:26 AM
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If you’ve ever have the misfortune of reaching a scooper into the pet food container and, coming up empty, had to turn and face your furry friend’s expectant and hungry look, you can probably understand why there might be demand for PetcoNow, a program Petco Animal Supplies Inc. launched in June in 14 metro markets in conjunction with delivery service Instacart. PetcoNow takes orders for kibble, treats, toys and more online and through the PetcoNow mobile app, with Instacart delivering the goods in two hours or less for a $3.99 delivery fee.

At first glance it may seem like an unlikely match, in that Petco already has more than 1,400 stores and a well-established e-commerce business at Petco.com, which generated an Internet Retailer-estimated $83.1 million in web sales in 2014 and has been selling online since 2001. Petco.com is No. 275 in the Internet Retailer 2015 Top 500 Guide.

But Petco chief marketing and digital officer Michael Zuna says the program satisfies the demand from customers who want a more “on-demand resolution to their pet purchases.” He says these are Petco’s younger pet parents who really treat their pets like children and are more tech-savvy and mobile-enabled.

The PetcoNow program emerged from a pilot the retailer began running with Instacart earlier this year, in which Petco saw a “significant” lift in sales and in average order value. “The value proposition was firing on all cylinders and it quickly became obvious to us that there was enormous opportunity for competitive differentiation here,” Zuna says, adding that Petco is the only specialty pet retailer doing this, which gives it a “terrific competitive advantage and positions us pretty strongly against the pure plays.” He adds that Petco is working on a buy online, pickup in store model and that Petco shoppers can expect the retailer to get “aggressive” in the delivery space. Zuna says consumers can expect to see lots of promotion of PetcoNow in the coming months, including promotions offering free Instacart delivery.

Zuna says as PetcoNow develops, Petco will use order data to market to consumers more effectively. “If we know you bought dog food 25 days ago, you can get an email prompting you to buy more today [as you are about to run out],” he says. “We will use data to be more personalized and relevant to you.” PetcoNow order data can be linked to Petco’s Pals loyalty program data to create a fuller picture of customers’ shopping habits. 

For more on Instacart and the growing market for e-grocery in the United States, check out “The e-grocery explosion,” Internet Retailer magazine’s August cover story, available Aug. 1. Sign up for a free print or digital subscription here.

 

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