Last year, the e-tailer paid a princely sum to acquire Quidsi, the owner of such notable Web domains as Diapers.com and Soap.com. There was a lot of talk at the time that a toy-focused site was coming, along with one targeting babies. Apparently, though, it'll first go after the booming pet care industry with Wag.com.
Wag the dog
Pets are big business. The American Pet Products Association says 62% of all households -- some 73 million homes -- have pets, with dog owners outnumbering cat owners 46 million to 39 million. But no matter what they own, pet lovers are expected to spend nearly $51 billion in 2011 on their "pet babies," up 5% from last year.
According to the American Express Spending and Saving Tracker report, nearly half of all dog owners intend to pamper their pets in 2011, including buying gifts for their pets (44%) and taking them on trips (12%). Interestingly, dog owners spend an average of $101 on their dogs each month, with toys averaging $18. And if you're from the South, you'll likely spend more on special-occasion gifts for your dog than dog owners overall will ($77 vs. $63).
But those statistics above show why PetSmart
PetSmart is often seen as a proxy for the pet care industry, because it is the only publicly traded pure play. There are others that cater to pets, from privately held Petco to the more diversifed business of Spectrum Brands, while PetMed Express
Cough up a furball
Of course, there's an immediate comparison with Pets.com, the pet care company that had an incredibly famous sock puppet mascot, but an equally infamous (and lousy) business model that eventually collapsed under its own weight.
As good as the demographics seem for launching a pet-centric site, there's plenty of competition in the space, too. Big retailers like Target
In the doghouse
To start, at least, Wag.com will offer free shipping on all orders greater than $49. That might not cut in too much to the margins of PetSmart, which already offers free shipping for customers who sign up for its premium membership plan, a program similar to Amazon's Prime membership. Operated through ShopRunner, PetSmart's plan costs $79 to join, and membership can also be used at Toys R Us, Drugstore.com, and elsewhere.
How long Wag might offer free shipping before converting to some other model remains to be seen, but if Quidsi does launch toy- and baby-focused sites, then Toys R Us and Bed Bath & Beyond
Having e-commerce giant Amazon's muscle behind it gives Wag.com a better than even chance of gaining some market share. But I'm not expecting PetSmart in particular to be kept on a short leash as a result.