A lot is said about how some brands just out-execute their competition. A lot is written about brand-building. But there are forces above your execution that determine your success. Let's talk about picking the right niche.
Let's do this with an example.
A few months ago, for a customer of ours, we put together a report analyzing the 'Pet foods and toys' category and how eCommerce is playing out in that category. I recall my love for pets from a roadside banter I had in 2019 outside the Whole Foods marketplace in Tribeca, NYC. A man walked up to me setting the stage (in his mind, not mine!) for a nostalgic, humane conversation about pets in our lives and how donating to the cause of pets would open the keys for heaven for me.
'So, obviously, there can be no one who doesn't like pets. I am sure you do, right?'
'No! I don't like pets.'
I didn't play along on a topic where even sociopaths would have played along. I probably read one of Naval's tweets that morning about being true to our feelings.
I like pets on TV, on Twitter and I adore them. But I don't go near them. I don't like animals serving human needs and wants of connectedness. I like them in the wild, even the domesticated ones. But data about brands that own a category? I adore them. I can spend hours looking at them.
If you have data like the above, how can you not fall in love with it?
During the 'shelter in place' days, we seem to have spent more on Fitness and Pets than we did in 2019. The growth rate above is the median growth rate of traffic for Pet food D2C brands over their peak performances in 2019. Impressive right? Humans didn't spend this much even on our own kids!
Pets are a pandemic proof category. We are staying home and are serving our cat masters better than ever.
It's been a few months since I looked at the Petfood eCommerce space. But last I checked, I went 'Holy cow!' a few times.
Chewy, the bellwether of Petfood eCommerce that did an IPO in 2019 grew 179,550% at the same time Petfood retail grew 72%. There is a massive re-allocation of spend from offline to online when it comes to the pets category and a lot of it goes to Chewy.
I have said this before. The playbook for a billion-dollar D2C brand is right in front of our eyes. Take categories where the adoption is driven by passion and emotion. Look for the ones where the product needs skill, mastery, and guilt of getting it wrong. Simplify the attainment of skill and reduce the risk of failure.
No one wants to kill their plants. Yet they do. Whether people want to be bad parents or not is up for debate, but I am yet to see a bad pet parent. But bringing up a pet is a complex process. It needs devotion of time and developing certain skills. There is a lot of sophistication involved.
Several pet retailers and pet food brands understand this. They have online courses and pet clinics. They help the owner of the product prevent failure.
'Cat Person' recently launched right in the middle of the 'shelter-in-home' phase. The brand comes from the house of Harry's, the razor company that I don't know if it has sold to Edgewell Personal Care or note. Jinx, a dog food brand was launched a few months ago by ex-Casper executives. Farmer's Dog had one of the best growth rates between 2019 and 2020.
Categories, where the products are complex and serve very emotional needs, resist the downturns better than those that don't. It's not always about your brand or your execution, as we keep hearing about what it takes to succeed as a D2C brand. Choosing the right product niche makes a lot of difference too!
PS: If you have not downloaded the summary of our analysis of Covid impact on D2C, you can download it here.
PPS: Do you want to share your stories/perspectives with our audience? Write to me!
PipeCandy is a market intelligence platform that tracks the global eCommerce & 'direct to consumer' landscape.
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