How to launch successful pet businesses

If you're in the pet space, you know the challenge of navigating the myriad of available sales channels — from vets to wholesalers to pet shops to direct-to-consumers to e-commerce retail options. 

Last week, I had the honor of recording a podcast with Jon Willbanks, a leading voice in how to successfully grow pet brands on Amazon. 

Meeting Jon has been a stroke of luck for me. From excelling in the art of Amazon selling through his agency — Cartograph — to launching his own personalized pet supplements brand — Arterra — Jon’s path is truly energizing.

Here are Jon’s top tips for pet businesses looking to launch on Amazon:

To sell, or not to sell, on Amazon?

1. Price Matching and Channel Consistency: Be aware of how pricing on Amazon can affect your other sales channels. Online platforms often use automated price matching, which can quickly erode profit margins if not managed carefully. Try to maintain consistent pricing across channels where possible.

2. Third-Party Resellers and Distribution Control: Utilizing Amazon's Seller Central or FBA can expose your brand to third-party resellers who may undercut your pricing. This can negatively impact your Amazon sales and brand control. Implementing agreements with distributors and sellers to prevent online reselling can help mitigate this risk.

3. Wholesale Relationships: Selling through wholesale giants like Costco can inadvertently lead to product diversion to Amazon, where resellers can undercut your pricing and erode your Amazon market share. Launching your product on Amazon before hitting Costco shelves and strategic pricing can help manage this.

4. Maintaining Brand Control: Use tools like Amazon Brand Registry to maintain control over your listings and brand content on Amazon. Losing control to third-party sellers can be detrimental and challenging to regain.

Top “quick fix” tips

1. Drive traffic to Amazon from external sources. Manage Amazon ads efficiently by linking them from social media and your website. Attribution from external sources also decrease Amazon fees. 

2. Offer Amazon purchase options on your website to add credibility and convenience for customers, showcasing your brand's legitimacy and trustworthiness.

3. Focus on developing a strong marketing and customer retention strategy. 

How to actually make a profit on Amazon

Comparing the apparent gross margins between channels (Amazon vs. direct sales) requires factoring in various costs like Amazon's fees, fulfillment expenses, and customer acquisition costs.

It's crucial to account for Amazon's selling fees, between 15-30% depending on your fulfillment method, when assessing profitability.

Initial sales on Amazon might be unprofitable due to heavy investment in customer acquisition. But over time, organic sales (not driven by paid ads) can make the channel more profitable.

Emphasizing contribution dollars over raw revenue helps in making informed decisions about channel optimization and resource allocation.

High-end products strategy for Amazon

1. Understanding Cost Structure - As products become more expensive, the percentage of fulfillment costs relative to the selling price tends to decrease. This is because higher-priced items allow for better absorption of fixed costs like shipping, making the margin more sustainable.

2. Margins and Business Viability -  While lower percentages might seem less attractive on high-priced items, the actual dollar amount of profit per sale can still be substantial, ensuring the business remains profitable.

3. Product Type Considerations - For consumable products, the focus might shift towards customer acquisition and lifetime value rather than immediate margins, banking on repeat purchases to drive profitability.

4. Amazon's Luxury Push - Amazon is increasingly catering to the premium market segment. However, extremely high-priced items (e.g., 3x the average) can struggle due to competitive visibility issues.

5. Building Brand Equity - Successful ultra-luxury brands often establish themselves outside Amazon first, leveraging existing customer bases before entering the platform.

6. Storytelling and Differentiation - Effective product listings with compelling storytelling, high-quality images, and clear differentiation can convince customers of the value of premium products.

In wrapping up our discussion, the insights shared by John highlight the ongoing evolution and challenges within the e-commerce landscape, especially in the pet-centric market. 

Here are my top takeaways:

1. Navigating the complexities of e-commerce like Amazon requires a blend of innovation, adaptability, and community engagement.

2. Every decision made—from pricing and distribution to channel selection—shapes the brand's identity and impact within the digital marketplace.

3. By understanding the nature of online retail and implementing proactive strategies, brands can achieve sustainable growth while maintaining brand integrity.

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