AU INDUSTRY (SPECIALIZED) REPORT OD4086
Online Pet Food and Pet Supply Sales in Australia
The cat's pyjamas: Industry revenue is rising as Australians increasingly pamper their
pets
Arna Richardson | June 2021
IBISWorld.com +61-3-9655-3800 info@IBISWorld.com
Contents
About This Industry...........................................5
Industry Definition..........................................................5
Major Players................................................................. 5
Main Activities................................................................5
Supply Chain...................................................................6
Similar Industries........................................................... 6
Related International Industries....................................6
Industry at a Glance.......................................... 7
Executive Summary..................................................... 10
Industry Performance..................................... 11
Key External Drivers.....................................................11
Current Performance...................................................12
Industry Outlook............................................. 16
Outlook......................................................................... 16
Performance Outlook Data......................................... 17
Industry Life Cycle....................................................... 17
Products and Markets..................................... 20
Supply Chain................................................................ 20
Products and Services.................................................20
Demand Determinants................................................ 22
Major Markets..............................................................22
International Trade.......................................................24
Business Locations..................................................... 24
Competitive Landscape...................................27
Market Share Concentration....................................... 27
Key Success Factors................................................... 27
Cost Structure Benchmarks........................................ 27
Basis of Competition................................................... 30
Barriers to Entry........................................................... 31
Industry Globalization..................................................31
Major Companies............................................33
Major Players............................................................... 33
Other Players................................................................35
Operating Conditions...................................... 39
Capital Intensity........................................................... 39
Technology And Systems........................................... 40
Revenue Volatility........................................................ 41
Regulation & Policy......................................................42
Industry Assistance..................................................... 43
Key Statistics..................................................45
Industry Data................................................................45
Annual Change.............................................................45
Key Ratios.................................................................... 45
Additional Resources...................................... 46
Additional Resources.................................................. 46
Industry Jargon............................................................46
Glossary Terms............................................................46
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About IBISWorld
IBISWorld specializes in industry research with coverage on thousands of global industries. Our comprehensive
data and in-depth analysis help businesses of all types gain quick and actionable insights on industries around
the world. Busy professionals can spend less time researching and preparing for meetings, and more time
focused on making strategic business decisions that benefit you,your company and your clients. We offer
research on industries in the US, Canada, Australia, New Zealand, Germany, the UK, Ireland, China and Mexico,
as well as industries that are truly global in nature.
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Covid-19
Coronavirus
Impact Update
IBISWorld's analysts constantly monitor the industry impacts of current events in
real-time – here is an update of how this industry is likely to be impacted as a result
of the global COVID-19 pandemic:
• The outbreak of COVID-19 led Australian consumers to stockpile pantry supplies,
including pet food supplies and treats, causing a short-term rise in demand for
industry products in March and April 2020. However, delivery delays partially offset
the full benefits of this increased demand.
• Vulnerable or self-isolating customers less able to visit supermarkets due to the
outbreak of COVID-19 turned to online retail channels for their pet's needs, to the
potential benefit of industry operators. This is expected to have expanded the
industry's customer base. Increased demand also came from pet-parents working
from home who were able to spend more time with their animals, purchasing new
accessories and treats.
• The industry is likely to retain a portion of its new customer base as changing
consumer shopping habits remain, even after lockdowns and social distancing are
relaxed.
Note: The content in this report is currently being updated to reflect the trends
outlined above.
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About This Industry
Industry Definition The industry includes online pet supply stores that retail pet food and suppliesthrough the internet. Industry operators sell a range of products including pet food,
pet products and accessories, and pet healthcare products. The industry includes
pure-play pet food and care retailers, and bricks-and-mortar pet stores with online
operations.
Major Players Millell Pty Ltd
Greencross Pty Limited
Main Activities The primary activities of this industry:
Online sale of pet food
Online sale of pet accessories
Online sale of pet toys
Online sale of animal healthcare products
The major products and services in this industry:
Durable pet products and accessories
Pet healthcare products
Pet food and treats
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Supply Chain


SIMILAR INDUSTRIES
Prepared Animal and Bird
Feed Manufacturing in
Australia
Supermarkets and Grocery
Stores in Australia
Online Shopping in Australia Pharmaceuticals
Wholesaling in Australia
RELATED INTERNATIONAL INDUSTRIES
Pet Stores in the US Online Pet Food & Pet
Supply Sales
Garden Centres & Pet Shops
in the UK
Pet Stores in Canada
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Industry at a Glance
Key Statistics
$579.5m
Revenue
Annual Growth Annual Growth Annual Growth
2016-2021 2021-2026 2016-2026
17.0% 7.9%
$23.2m
Profit
Annual Growth Annual Growth
2016-2021 2016-2026
15.3%
4.0%
Profit Margin
Annual Growth Annual Growth
2016-2021 2016-2026
-0.3pp
339
Businesses
Annual Growth Annual Growth Annual Growth
2016-2021 2021-2026 2016-2026
9.9% 6.1%
636
Employment
Annual Growth Annual Growth Annual Growth
2016-2021 2021-2026 2016-2026
11.1% 6.5%
$41.4m
Wages
Annual Growth Annual Growth Annual Growth
2016-2021 2021-2026 2016-2026
14.0% 7.2%
Key External Drivers % = 2016-2021 Annual Growth
0.3%
Real household discretionary income
5.4%
Internet subscribers
1.1%
Number of veterinarians
1.2%
Consumer sentiment index
2.4%
Demand from supermarkets and grocery
stores
Industry Structure
POSITIVE IMPACT
Life Cycle
Growth
Globalization
Low
MIXED IMPACT
Revenue Volatility
Medium
Concentration
Medium
Regulation
Medium
Barriers to Entry
Medium
Competition
Medium
NEGATIVE IMPACT
Capital Intensity
High
Industry Assistance
Low
Technology Change
High
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Key Trends
Rising discretionary incomes have increased the spending
power of pet owners
Many industry firms have been using third-party platforms
like eBay to sell their products
New businesses have entered the industry to meet growing
demand, particularly in niche areas
Home deliveries will boost online pet food sales due to pet
food's bulky nature
Premiumisation trends will boost online sales as more
owners seek fortified or organic pet foods
An ongoing reliance on price discounting will constrain
industry profit margins
The growing tendency to treat pets as family members has
underpinned industry revenue growth
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Products & Services Segmentation
Durable pet products and
accessories
19.8%
Pet healthcare products
33.2%
Pet food and treats
47.0%
Online Pet Food and Pet Supply Sales
Source: IBISWorld
Major Players % = share of industry revenue SWOT
STRENGTHS
Low Customer Class Concentration
WEAKNESSES
Low Profit vs. Sector Average
High Product/Service Concentration
High Capital Requirements
OPPORTUNITIES
High Revenue Growth (2016-2021)
High Revenue Growth (2021-2026)
High Performance Drivers
THREATS
Very Low Revenue Growth (2005-2021)
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Executive
Summary
The Online Pet Food and Pet Supply Sales industry is gradually
changing as it gains traction in the wider Australian pet-care sector.
While the industry includes many small niche players selling specialist pet products,
larger pure-play online pet-care companies are emerging. At the same time, national
pet-care chains are launching complementary ecommerce platforms and
transitioning into clicks-and-mortar operations. Pet food sales are an important part
of the industry. More Australian consumers are purchasing everyday goods online,
and the industry is catering to this demand. Increasingly sophisticated technology
and infrastructure, and convenience have drawn customers towards online
purchases over the past five years, with some industry operators offering same-day
dispatch.
Industry revenue is expected to increase at an annualised 17.0% over the five years
through 2020-21, to total $579.5 million. Premiumisation trends and the growing
tendency to treat pets as family members have underpinned industry revenue
growth over the period. People are increasingly choosing smaller pets and providing
them with premium, healthy food, luxury designer accessories, and even products
typically reserved for humans, such as health insurance and birthday parties. The
migration to online shopping following the outbreak of the COVID-19 pandemic in
2019-20 benefitted industry operators as did the record number of pet adoptions
that occurred as housebound consumers sought out companion animals during
lockdown restrictions. Revenue is anticipated to rise by 19.2% in the current year,
driven by higher volumes as more consumers purchase their pet supply needs
online in line with the structural changes in shopping patterns that have occurred as
a result of COVID-19.
Many of the industry's underlying favourable trends are anticipated to continue over
the next five years, spurring further industry growth. New business models and
services, including pet meal subscription options and telehealth vet services will
also drive industry growth. Industry revenue is forecast to increase at an annualised
7.8% over the five years through 2025-26, to total $845.5 million. While the industry
will likely remain fragmented, some industry consolidation is anticipated as the
major players compete for market share over the period. In addition, intensifying
competitive pressures from external rivals, including online player Amazon, will also
likely influence the industry's operating landscape.
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Industry Performance


Key External
Drivers
Real household discretionary income
Discretionary income influences how much money pet owners have available to
spend on their pets. Pet owners are increasingly spending more on their pets,
purchasing premium pet food and expensive pet accessories. This trend presents
industry operators with an opportunity to expand. Real household discretionary
income is expected to fall in 2020-21.
Demand from supermarkets and grocery stores
Supermarkets are the largest retail channel for most dog, cat and bird food.
Consumers also purchase a significant proportion of their pet products, pet
accessories, and pet healthcare products from supermarkets. Supermarkets
therefore represent a significant source of external competition for industry
operators and can threaten industry growth. Demand from supermarkets is
expected to rise in 2020-21.
Internet subscribers
The industry operates solely through the internet. The number of people that have
internet connections and the speed of their connections therefore significantly
influence the industry. Steady growth in internet connectivity has increased the
market for online shopping over the past five years. The number of internet
connections is expected to decline slightly in 2020-21.
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Number of veterinarians
The number of veterinarians reflects demand for pets in Australia. Veterinarian
numbers have grown over the past five years, boosted by pet ownership trends,
strong demand from Australia's livestock sector, and three new veterinary and
animal science schools opening and increasing the number of graduate
veterinarians. The number of veterinarians is expected to fall in 2020-21, in the face
of reduced household demand for veterinary services due to the COVID-19
pandemic.
Consumer sentiment index
Consumer spending is influenced by how consumers feel about their financial
situation and the economy. Declines in consumer sentiment can limit consumers'
willingness to spend extra money on their pets, reducing industry demand.
Following a sharp fall in the previous year due to the COVID-19 pandemic, consumer
sentiment is expected to mostly recover in 2020-21.


Current
Performance
The Online Pet Food and Pet Supply Sales industry is small but is
rapidly growing.
Most pet owners are satisfied with the product selection provided by bricks-and-
mortar operations, but the industry has benefited from growth in online retail
operations across Australia. An increasing number of consumers are buying
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products over the internet, either due to convenience or to source products that
cannot be found elsewhere. Time-poor consumers are starting to use new
purchasing and delivery methods for bulky and premium pet foods, including auto-
delivery options. Pet owners are increasingly viewing their pets as family members,
further boosting industry demand as many of these consumers use the internet to
find specialised or luxury products.
The industry has captured an increasing share of spending on pets over the past
five years, as online shopping has become more popular. Industry revenue is
expected to grow at an annualised 17.0% over the five years through 2020-21,
including expected growth of 19.2% in the current year. However, revenue has
grown from a low base as the industry is still relatively new. The industry is
expected to generate revenue of $579.5 million in 2020-21, over double that
generated five years earlier.
An increase in pet ownership numbers and an expanded customer base underlie
the projected growth in industry revenue in 2019-20 and 2020-21. Following the
initial outbreak of the COVID-19 pandemic, several industry operators faced a short-
term spike in demand as Australian consumers used online channels to stockpile
essential pantry-supplies, including pet food. Consumers who were self-isolating or
working from home have focused more on their pets for emotional support,
increasing the amount of time spent with them. In some instances, pet parents
have set up Instagram accounts for their furry family members with their pets often
photographed with an array of accessories and matching outfits. In addition, many
Australians used the additional time at home to adopt a pet with animal shelters
across the country cleared following a record number of adoptions in 2020. These
developments contributed to increased demand for pet treats, toys or accessories
acquired from online channels.
Industry structure
Industry enterprise numbers have risen at a strong rate over the
past five years as new businesses continue to enter the industry to
meet growing demand, particularly in niche areas.
Industry employment has also grown over the past five years, as new enterprises
have employed staff. Pet Circle (formerly Paws for Life) is the only major pure-play
online pet food and supplies retailer in the industry. Pet Circle relies on a
subscription business model and its success indicates how the industry is
changing as it matures. The industry also includes a growing number of
multichannel pet retailers, as several traditional pet stores transition to clicks-and-
mortar operations, including PETStock and Best Friend Pets. Integrated pet-care
provider Greencross is currently using the strength of its Petbarn and Greencross
Vet brands to grow its omni-channel operations to offer a seamless experience
across its in-store and online operations.
Beyond these players, the industry remains highly fragmented. While many smaller
industry retailers have their own websites, many industry participants use eBay and
Etsy to sell their products. Established online marketplaces such as eBay have a
reputation for being reliable and providing easy payment systems for small sellers.
These online marketplaces are also considered a good platform for niche products,
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due to their high traffic. Many of these operators have entered and exited the
industry over the past five years.
Over the past five years, many industry operators moved towards selling higher
value items, such as designer wear for dogs, water fountains, functional or
handmade treats, and animal healthcare products, boosting profit margins.
However, profit margins remain comparatively low, due to the low-value nature of
several major product lines that industry operators sell, such as bulk pet food.
Competition across the industry is largely based on price and many firms provide
free shipping, which has further limited industry profit. Supply-chain disruptions
following the outbreak of COVID-19, particularly for products sourced from
international markets have dragged down profit margins over the past two years as
have higher freight costs and the implementation of new IT platforms to cater to
the dramatic change in Australian purchasing patterns that have occurred in the
wake of the COVID-19 pandemic. In April 2020, Petbarn announced a partnership
with the ride-sharing platform Uber to offer same-delivery in metro areas. This move
was implemented in response to delays in Australia's post delivery network
following the dramatic spike in Australian online purchase as consumers flocked to
online platforms following the implementation of COVID-19 lockdown measures.
Delivery processes operated by the industry's larger players have also recently
changed with most now offering contact-free delivery.
Online shopping
Industry operators have benefited from the increasing popularity of
online shopping over the past five years.
The growing number of consumers who own pets and are comfortable with online
shopping has driven this development. Additionally, industry operators have
expanded their product ranges and computer literacy has been increasing among
older consumers, further driving industry growth.
Pet accessories and preventative healthcare products, including over-the-counter
parasite treatments and dietary supplements, have been some of the main sources
of industry revenue over the past five years. The popularity of these products
reflects consumers' increasing concern for their pets. While many pet owners have
been reluctant to buy perishable and bulky pet food online, consumer attitudes have
been gradually changing.
According to a 2019 study by Animal Health Alliance (Pet Ownership in Australia),
about 14% of consumers purchase most of their pet healthcare products over the
internet, while only 5% of dog owners purchase most of their pet food online.
However, this proportion has increased over the past five years, as industry
operators have developed ways to bulk pet food at discounted prices while still
maintaining profit margins. For example, more industry operators have been relying
on subscription models, where customers have bulky pet food automatically
delivered on a schedule. Industry operators have also been increasingly stocking
specialist and gourmet pet food to compete with the growing range found in pet
superstores. Changed shopping patterns following the outbreak of the global
COVID-19 pandemic and the subsequent implementation of lockdown and social
distancing measures has fast-tracked the migration to online platforms for pet food
purchases as consumers reduced their number of visits to bricks-and-mortar stores
and instead turned to online alternatives for their pet care needs.
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Historical Performance Data
Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic
Demand
($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m)
2012–13 152 25.3 188 169 279 N/A N/A 14.7 N/A
2013–14 184 31.7 205 183 307 N/A N/A 16.4 N/A
2014–15 218 38.1 223 197 340 N/A N/A 18.8 N/A
2015–16 265 44.7 236 211 375 N/A N/A 21.5 N/A
2016–17 284 47.8 254 225 400 N/A N/A 23.7 N/A
2017–18 327 55.3 269 243 440 N/A N/A 27.5 N/A
2018–19 377 63.7 300 273 497 N/A N/A 30.7 N/A
2019–20 486 77.8 338 310 580 N/A N/A 36.5 N/A
2020–21 580 91.6 368 339 636 N/A N/A 41.4 N/A
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Industry Outlook
Outlook Despite the Online Pet Food and Pet Supply Sales industry's rapid
growth over the past decade, the industry still accounts for a small
proportion of the Australian pet-care sector, suggesting that further
growth opportunities are available.
The industry is therefore anticipated
to continue strongly growing over the
next five years, largely due to the
rising convenience and popularity of
online shopping, a development
which has been fast-tracked by the
COVID-19 pandemic. More efficient
delivery systems will likely further
support revenue growth, as
consumers opt for the convenience
of having heavy items delivered,
such as cans and large bags of pet
food. Both the volume and value of
pet food sold through this
distribution channel is projected to
increase over the period.
Premiumisation trends are
anticipated to boost online sales as
more consumers rely on the internet to acquire higher value fortified, natural or
organic pet foods. Household discretionary incomes are forecast to rise over the
next five years, increasing Australian consumers' spending power. Pet owners are
anticipated to continue spending more to ensure the health and wellbeing of their
pets, assisting industry growth over the period.
Industry revenue is forecast to increase at an annualised 7.8% over the five years
through 2025-26, to reach $845.5 million. Industry revenue is projected to grow at a
slower rate over the next five years compared with the previous five years, as fewer
growth opportunities will become available. However, the industry is forecast to
significantly outperform the overall pet-care sector over the next five years,
accounting for just under 25% of the overall pet-care sector by 2025-26. Industry
operators may potentially benefit from Australian consumers continuing to rely
more on online shopping following the COVID-19 pandemic, resulting in a larger
customer base and higher volumes for the industry in the new post COVID world.
Industry dynamics
The industry is anticipated to remain in the growth phase of its life
cycle over the next five years.
Industry enterprise and establishment numbers are likely to continue to increase
over the period, as new participants are attracted by the industry's potential, and
existing players expand their operations to benefit from strong demand. The steady
nature of demand for pet consumable products and regularly required animal
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healthcare items, such as flea and heartworm products, is also projected to attract
new industry entrants. Larger players are anticipated to open new distribution
outlets to service regional markets, minimising distribution costs. Industry
employment is forecast to rise alongside growth in enterprise and establishment
numbers, and as existing operators take on more staff to satisfy demand.
Smaller online players that struggle to compete against larger players such as Pet
Circle are anticipated to increasingly specialise in exclusive, niche products. Smaller
players may have difficulty establishing warehouses and delivery networks,
representing a potential barrier to growth over the next five years. Intensifying
competitive pressures will also likely represent an entry barrier, with an ongoing
reliance on price discounting limiting industry profit margins. In response to
pressure on profit, more industry operators are anticipated to introduce subscription
models that offer a range of services. These services can include premium, human-
grade diet plans for dogs, customised cat treat boxes containing high-quality toys
and natural treats, and personalised boxes containing medication and wellbeing
products for pets. Within the US market, some businesses are rolling out new
subscription based online pet meal offerings with pet owners receiving meal
delivery kits of fresh ingredients, not dissimilar to the growing number on offer for
human consumption.
Changing channels
While supermarkets are anticipated to remain a key channel for
general pet-care sales, both pure-play online pet-care and clicks-
and-mortar pet-care companies will likely challenge the market
dominance of supermarket chains over the next five years.
Industry operators will also need to compete against external rival Amazon. In the
US online pet-care market, Amazon is a dominant player accounting for over one-
third of the market with annual sales in excess of US$4.0 billion.
Growing consumer acceptance of online shopping and investment in
communications infrastructure will likely increase the industry's competitiveness
against bricks-and-mortar pet stores over the next five years, particularly as industry
operators focus on faster fulfilment times and advances in home delivery services.
While the industry cannot fully replace the specialised services offered by vets, pet
groomers and related service providers, recent advances in telehealth arising from
the COVID-19 pandemic may see a growing number of industry operators offer
online vet consults.
Performance Outlook Data
Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic
Demand
($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m)
2021–22 624 98.6 393 363 678 N/A N/A 44.3 N/A
2022–23 693 109 431 399 753 N/A N/A 49.6 N/A
2023–24 744 117 453 420 791 N/A N/A 52.7 N/A
2024–25 798 125 473 439 830 N/A N/A 55.7 N/A
2025–26 846 133 488 455 871 N/A N/A 58.7 N/A
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Industry Life Cycle The life cycle stage of this industry is Growth
LIFE CYCLE REASONS
The industry's growth has been significantly higher than GDP growth
The industry has adapted new platforms for sales of well-accepted products
Consumers have become increasingly aware of and interested in the industry's activities


The industry is in a growth stage of its life cycle, with strong annual revenue growth
expected over the 10 years through 2025-26. Moreover, the industry's contribution
to the economy (as measured by industry value added) is expected to grow at an
annualised 11.5% over the 10 years through 2025-26, which is significantly higher
than forecast GDP growth of 2.1% over the same period. This suggests that the
industry is significantly outperforming the general economy.
The industry sells a well-accepted set of products in a new way. By adapting online
platforms to the pet product market, the industry has been able to grow strongly
due to technical innovation, rather than the cultivation of significant new pet-related
products. The industry is benefiting from growing investment in, and acceptance of,
online transactions. Technology has changed rapidly, generally enhancing
consumer experience, and allowing website operators to process transactions
quickly and safely. The outbreak of the COVID-19 pandemic stimulated further
technological innovations as industry operators sought to respond to the initial
surge in demand for online pet care purchases following the implementation of
stay-at-home restrictions and associated moves by consumers to reduce their visits
to bricks-and-mortar stores.
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Over the next five years, the industry stands to benefit from ongoing pet
humanisation trends, which are likely to allow industry operators to sell a growing
variety of premium and higher value products geared towards the comfort, health
and wellbeing of increasingly pampered pets. The recent rise in pet numbers as
Australians took advantage of additional time at home to adopt a companion
animal during COVID-19 lockdown restrictions is also expected to indirectly benefit
industry operators. New subscription-based business models are likely to drive
future industry revenue streams.
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Products and Markets
Supply Chain KEY BUYING INDUSTRIES
1st Tier
Consumers in Australia
KEY SELLING INDUSTRIES
1st Tier
Prepared Animal and Bird Feed
Manufacturing in Australia
2nd Tier
Grain Growing in Australia
Meat Processing in Australia
Products and
Services


The industry's products can be divided into three core segments:
durable pet products and accessories, pet food and treats, and pet
healthcare products.
Online sales of these products have grown over the past five years, as product lines
and delivery methods have developed. During the height of COVID-19 lockdown
restrictions many housebound consumers turned to online platforms to ensure their
pet's needs were still met, with a large number expected to continue shopping
online in the post-COVID environment.
Pet food and treats
As pet food is the primary ongoing expense for pet owners, the rate
of pet ownership in Australia drives demand for pet food.
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Although the RSPCA reports that pet abandonment increases in times of economic
hardship, demand for pet food is highly resilient. More pet owners are buying
premium pet food and pet treats, including fortified products, veterinarian-endorsed
products and natural foods.
These trends have benefited online stores that sell specialised pet food, which is
tailored for healthy and balanced diets, or for specific types of pets. Pet food
brands include Evo, Innova, Iams and Black Hawk. This segment has significantly
grown as a share of industry revenue over the past five years. The success of
online-only sites that deliver pet foods, such as Pet Circle, suggests that demand
for heavy, low-value items from industry operators may increase over the next five
years. Changed food shopping patterns by Australian consumers, including pet
food purchases, as a result of COVID-19 are also likely to drive further growth in this
product segment, supported by auto-shipment delivery models.
Pet healthcare products
Online stores have made inroads in the over-the-counter pet
medication and treatment market by offering cheaper versions of
common pet medications.
The industry has focused on treatments that are simple to administer and
pharmaceutically well-understood. The most common pet healthcare products sold
online include flea, worming and tick treatment products. Sales of dietary
supplements for pets have also grown over the past five years, as pet owners have
increasingly adopted a holistic approach to their pets' health and wellbeing. The
associated increase in the average lifespan of pets has also driven growth in this
segment. Industry operators can use their economies of scale to benefit from a
significant advantage over vets in this product segment. This segment includes
products used to maintain aquarium quality and fish health. While this segment has
increased in absolute size over the past five years due to higher consumer
expenditure on pet healthcare products, its contribution to revenue has fallen due to
stronger growth in online pet food and pet product sales.
Durable pet products and accessories
Pet products and accessories, such as grooming items, toys, collars
and harnesses, clothing, cat litter trays, carry cases, tanks and
kennels, account for the smallest share of industry revenue.
These products are highly suited to online selling as their durability makes them
easier to store and deliver. In particular, accessories are a discretionary and highly
individual purchase. Online stores can compete with traditional pet stores by
offering a larger range of these products, including designer clothes, matching
outfits and jewellery for collars. In terms of pet products, such as aquariums and
related products, online stores are well positioned to pass on savings to
consumers.
Small businesses and non-employers dominate this product segment. Many of
these operators use existing online platforms, such as eBay and Etsy, in conjunction
with or instead of their own websites. Hosting platforms make payments easier. In
addition, the feedback that comes from activity on these websites helps smaller
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operators establish consumer trust. Sales of durable pet products and accessories
are anticipated to grow in line with pet humanisation trends. This product segment
has increased as a share of industry revenue over the past five years, as a growing
number of pet owners have turned to online channels for pet accessories.
Demand
Determinants
The industry has benefited from exponential growth in demand for
pet-care related products, especially from pet owners, over the past
five years.
The availability of lower prices, greater convenience, and wider product ranges have
driven growth in online sales. Many of the industry's operators, especially those
selling pet food, trade on the convenience factor. Several operators use online pet
food subscription-based models which allow consumers to order pet supplies, and
then designate delivery times.
The prevalence of lower prices, and the availability of products that are not easily
available from physical retailers are other significant reasons why consumers
choose to purchase these goods online. Various online operators offer discounted
prices on both pet foods and healthcare products. Newcomer Max Pet Supplies
relies on aggressive price discounting and auto delivery options to attract and retain
consumers. Others stock premium and science-based pet foods not usually
stocked in grocery channels, along with luxury designer pet accessories. Pet Circle
has recently introduced curious boxes to cater for pet owners that like to spoil their
pets with presents.
Pet ownership is a significant driver of demand for industry goods. Australians are
estimated to own over 28 million pets, with this number exceeding total population
numbers. The availability of free time, and lifestyle choices, including the size of
people's living spaces, have significantly influenced pet ownership trends over the
past five years. This has contributed to a growing preference for smaller-sized,
indoor-based pets. Pet humanisation trends are also influencing both ownership
trends and demand patterns, as pets are increasingly being treated like family
members. An increasingly holistic approach to the health and wellbeing of the
family pet is also increasing the lifespans of pets, which again influences demand
patterns, with products now being targeted at different life stages.
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Major Markets
The major markets for the industry are segmented based on the age of consumers.
Spending on pets, particularly online spending, significantly varies between age
segments. A growing proportion of generation X and Y consumers are becoming
pet owners, which has influenced the industry. Consumers in these age groups are
more willing to shop online, which is supporting industry revenue growth. All market
segments have remained stable as shares of industry revenue over the past five
years, due to the standardised spending patterns of each age bracket.
Pet owners aged 18 to 24
A high proportion of consumers in this age cohort are likely to own a pet, including
indoor cats and small dog breeds, alongside reptiles, fish and birds. However, many
people in this category may live in rented accommodation with lease conditions
that exclude pets. Consumers in this age cohort are generally highly computer
literate and are confident shopping online, and tend to be more willing to spend
their discretionary income on spoiling their pet.
Pet owners aged 25 to 34
Consumers in this age group are typically tech savvy, and comfortable using
smartphones and shopping online. As a result, pet owners in this age group are
likely to fulfil some of their pet product needs online due to convenience and price.
Like their younger cohorts, they are more likely to treat their pet as a member of the
household.
Pet owners aged 35 to 44
Pet owners aged 35 to 44 are the most lucrative age group for the industry. At this
stage of life, consumers are typically settling into careers, relationships and longer-
term accommodation. All these factors increase the ability of consumers in this age
group to care for a pet. This age group has the highest rate of online shopping
adoption, which means that pet owners in this age group are highly likely to shop
online for pet accessories and pet food. A growing number of consumers in this
age cohort are also likely to regard their pets as family members and are prepared
to spend considerable sums of money on the health and wellbeing of their pets.
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Pet owners aged 45 to 54
Pet owners aged 45 to 54 are the industry's second largest market. Adults in these
households are in their prime earning years, which means that they generally have
high disposable incomes and are prepared to pay for the convenience of shopping
online. They are also likely to regard their pets as family members. However, pet
ownership rates tend to be slightly lower relative to people aged 35 to 44.
Pet owners aged 55 and over
Pet owners in this age group are more likely to have the time and stability of
lifestyle to care for pets, which are often kept for companionship purposes.
However, pet ownership rates also tend to tail off among people aged 70 and over.
In addition, Australia's older population does not tend to shop online compared with
younger consumers. This age group represents a growth opportunity for the
industry, particularly for online operators operating subscription models for regular
purchases such as dry pet food and worming tablets.
International
Trade
Exports in this industry are Low and Steady
Imports in this industry are Low and Steady
The industry involves negligible international trade. The industry is in a growth
phase, so the relative lack of penetration of online shopping and the small size of
the Australian market mean that international players have shown little interest in
capturing market share. In addition, many of the industry's products, such as fish
tank ornaments, collars and toys, are low-value items. Australia's geographic
isolation provides a barrier to international operators, as postage costs often
outweigh the lower prices offered overseas.
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Business
Locations

Business Concentration in Australia
ACT
NSW
NT
QLD
SA
TAS
VIC
WA
0 10 20 30
Percentage of Pet ownership (%)
Online Pet Food and Pet Supply Sales in Australia
Source: IBISWorld

Australia has one of the highest pet ownership rates in the world with over 60% of
Australian households owning a pet. Pet ownership rates however, tend to vary
across Australia's states and territories reflecting differences in underlying socio-
economic and demographic factors. Nonetheless, given the nature of online
retailing, industry operators can service all state and territory geographic markets.
Pet ownership numbers and the popularity of internet shopping therefore influence
the industry's geographic spread. The three eastern seaboard states are expected
to account for over three-quarters of all pet numbers and the majority of online
expenditure.
Online operators have a smaller geographic footprint than their bricks-and-mortar
equivalents. Online operators tend to be clustered close to population centres that
have good access to ports, such as Sydney or Melbourne. In cities, online operators
are frequently located in low-rent and commercial areas. Industry operators have a
more limited physical presence than retail stores, often using one head office to
maintain and update online information for the entire country. However, several
emerging industry players are now investing significantly in their distribution and
logistics operations, given the considerable costs involved in freighting large, low-
value items such as bulk dry food. For example, Pet Circle has invested in its
logistics, while My Pet Warehouse has opened distribution-equipped stores in key
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capital cities to reduce freight costs, including a store in Perth, which is used to
dispatch online orders in Western Australia and the Northern Territory.
Nevertheless, all but the largest industry enterprises rely on third-party logistics
services, which further reduces their need for an extended network.


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Competitive Landscape
Market Share
Concentration
Concentration in this industry is Medium
The structure of the industry is changing
as pure-play online pet retailers, multi-
channel retailers and integrated pet-care
providers seek to grow their market share.
The top two players are expected to
account for two-thirds of industry revenue
in 2020-21. This moderate level of
concentration is despite numerous niche
and small players providing specialised pet
products.
Market share concentration is forecast to
increase over the five years through
2025-26, particularly as smaller players
start to exit the industry. In addition, the
major retailers are projected to continue
growing, using their existing supply chains and brand strength. Some firms will use
new technologies, such as data analytics, digital assets and personalisation
capabilities, to grow market share across multiple channels.
Key Success
Factors
IBISWorld identifies 250 Key Success Factors for a business. The most important for this
industry are:
Ability to quickly adopt new technology: Pet-care retailers that can efficiently adopt and
implement new technology can minimise disruptions to consumers and maximise sales
revenue.
Provision of superior after-sales service: Industry retailers should address after-sales
issues in a prompt and efficient manner to build a loyal customer base.
Ability to control stock on hand: Pet-care retailers that use inventory management
systems can ensure they have enough stock on hand for peak trading times and order
fulfilment.
Having a loyal customer base: Industry firms that build a reputation for offering high-
quality products, efficient delivery and exceptional customer service are more likely to
ensure repeat sales.
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Cost Structure
Benchmarks
Profit
Industry operators typically have low profit
margins, which are estimated at 4.0% of industry
revenue in 2020-21. Low profit margins reflect
price competition and the bulk low-value
products sold by industry operators. An
individual operator's ability to successfully
manage the costs involved in warehouse
operations, distribution and logistics can
significantly affect profit. This factor is
particularly true for operators that offer free
shipping for bulky pet food items, such as large
bags of dog biscuits. Industry profit has slightly
decreased over the past five years, dragged
down by the higher costs incurred during the
COVID-19 pandemic due to supply chain
disruptions and increased freight costs.
Wages
Industry wage costs are low as the industry
does not need to employ many people
compared with bricks-and-mortar retailers. This
principle also applies to smaller operations, as a
website is easier to maintain than a shopfront.
Wage growth has lagged behind revenue growth
over the past five years. As a result, wages have
fallen as a share of industry revenue over the
period.
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Purchases
Purchases account for the largest proportion of
industry revenue. The amount of inventory an
enterprise holds and their expected ability to sell
each product largely determines their purchase
costs. Consequently, purchasing costs vary
during different times of the year. For example,
pet owners may buy additional treats and
accessories as Christmas gifts for their pets
during the peak period of December. However,
as online grocery shopping increases in
popularity, these seasonal costs are expected to
be spread out as consistent pet food purchasing
makes up a larger portion of industry revenue.
Stock is often sourced internationally, which
means that exchange rate fluctuations affect
costs. The Australian dollar depreciated over
most of the five years through to 2019-20,
increasing purchase costs, before appreciating
in 2020-21. Industry retailers have increasingly
moved towards stocking higher-value items in
line with premiumisation trends, and the average
unit price of pet food has risen, further
increasing purchase costs over the period.
Purchase costs have therefore risen as a share
of industry revenue over the past five years.
Other Costs
Other costs include expenses associated with
transportation, labour subcontracting and
marketing. These costs have increased in
absolute terms over the past five years, as
operators have gained market share through
free shipping deals and other promotions. For
example, intensifying competitive pressures,
exacerbated by the recent arrival of internet
giant Amazon, have resulted in some industry
players undertaking marketing campaigns to
retain market share. These costs have slightly
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increased as a proportion of revenue over the
period.
Basis of
Competition
Competition in this industry is Medium and Increasing
The industry faces internal and external competitive forces, both of
which are growing as the industry gradually matures.
As traditional pet stores gradually transition to clicks-and-mortar operations, and as
more players compete in the online market to win the loyalty of consumers, internal
competitive pressures are expected to increase. Similarly, as supermarkets and
veterinary practices expand their pet-care offerings, external competitive pressures
are also likely to intensify.
Internal competition
Industry participants mainly compete with one another on price.
Online shoppers can compare prices easily and can quickly respond to price
signals. However, given the arms-length nature of online transactions, the brand and
reputation of online sellers can be a major competitive advantage. The same can be
said of an existing retail network and the back-of-house systems that support it.
The ability to offer convenience is another key basis of competition, reflecting one
of the main reasons that many consumers rely on internet shopping. My Pet
Warehouse competes on the basis of offering same-day dispatch for orders made
before 2 pm. A growing number of industry operators are introducing subscription
models with auto-replenishment systems for pre-set regular deliveries of food,
treats, kitty litter and worm tablets. Several multi-channel operators have rolled out
new click and collect options over the past five years.
External competition
The industry does not account for a significant proportion of the
overall pet-care sector.
Traditional bricks-and-mortar specialty pet stores that do not operate
complementary ecommerce platforms represent a source of competition. Other
channels in the pet-care sector, including veterinary practices that stock a range of
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pet food, accessories and pet healthcare products, are another form of external
competition.
Supermarkets also represent a key external competitive threat. While consumers
have been increasingly purchasing pet food, and pet products and accessories from
specialty pet stores rather than supermarkets, supermarkets still attract a
significant share of pet-related expenditure in Australia. Other retail channels that
also stock pet-care products, such as discount department stores Big W and Kmart,
are another form of external competition. The recent entry of Amazon has
intensified external competitive pressures. As at April 2021, Amazon Australia had
over 70,000 pet supplies on offer including pet food, health supplies and pet
accessories.
Barriers to Entry Barriers to entry in this industry are Medium and Steady
Barriers to entry for the Online Pet Food
and Pet Supply Sales industry mainly
relate to the complexities of establishing
a successful online business. Industry
operators sell products that are as
accessible as other retail products to
buy from wholesalers.
Niche retailers in the industry can
commence trading with minimal outlay.
The industry's smaller operators often
start trading using ecommerce
platforms such as eBay. This enables smaller operators to sell online without
having a website or transaction system of their own, instead paying commission to
eBay to act as a host. This helps explain the substantial number of small players
operating within the pet products and accessories product segment. By contrast,
My Pet Warehouse and Greencross have developed proprietary websites, payment
mechanisms and distribution channels to complement their retail operations.
Through their coverage of consumer goods markets, these players aim to achieve
economies of scale in their online operations.
New entrants that aim to capture market share and compete with major online
retailers will need to be better prepared, with extensive stock levels, logistics plans,
marketing budgets and a user-friendly website. Building brand recognition can be
the largest barrier to entry. In the case of pet food, the need to process, pack, store
and cost-effectively transport large or bulky low-cost items can also act as an entry
barrier.
Barriers to entry checklist
Competition Medium
Concentration Medium
Life Cycle Stage Growth
Technology Change High
Regulation & Policy Medium
Industry Assistance Low
Industry
Globalization
Globalization in this industry Low and Increasing
The industry has a low level of globalisation, with minimal international trade and
low levels of foreign ownership. According to the Animal Health Alliance's 2013 Pet
Ownership in Australia publication, Australian pet owners buying healthcare
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products online are far more likely to use Australian, as opposed to overseas,
websites. This trend also highlights the low level of globalisation currently
characterising the industry.
The most significant example of foreign involvement in the industry is eBay, which
provides a platform for many industry participants. However, the rate of technology
transfer between Australia and foreign markets is rapid. The industry is exposed to
international best practice and adopts innovative technology quickly. The level of
industry globalisation has recently increased following the purchase of Greencross
Limited in February 2019 by Vermont Aus Pty Ltd (TPG Bid Co), a company
ultimately owned by US-based private equity firm TPG Capital.
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Major Companies


Major Players MILLELL PTY LTD
Market Share: 53.5%
Millell Pty Ltd operates in the industry under
its trading name, Pet Circle. Previously known
as Paws For Life, Pet Circle is an Australian
company headquartered in Sydney. Pet Circle
commenced operations as a dedicated online
pet food delivery service in 2011. Pet Circle
began with a range of 16 different products
and four brands. Today it has over 400
employees and 500,000 customers with over
one million monthly visitors to its website
which sells pet food, treats, health and
wellness products, medications and accessories. Pet Circle operates a
subscription-based business model that allows customers to set up pet supply
orders, which are automatically delivered at specified time intervals. Customers are
offered additional discounts on select brands. Pet Circle also offers free one- to
two-day metro shipping for all orders over $49, a price-match policy and free advice
from an online veterinary team.
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Financial performance
Pet Circle has significantly grown since commencing operations as Paws For Life in
August 2011, with the company successfully establishing itself as one of Australia's
top three pet-care retailers. The company has relied on venture capital funding to
expand its operations, tripling the size of its Sydney warehouse operations. In
January 2017, BLUE Sky Alternative Investments divested its stake in Millell to
AirTree Ventures, having acquired a stake in the company in December 2013.
AirTree and global private equity firm Francisco Partners made growth equity
investments in the company in November 2017. COVID-19 ecommerce tailwinds
have meant that the company is of current interest to investment banks although it
is not known if the company will list within the short-term future.
As a private company, little information is available regarding Pet Circle's revenue or
profitability. Company revenue is expected to rise at an annualised 51.6% over the
five years through December 2021, to reach $320.0 million. Pet Circle's strong
revenue growth represents an outperformance of the wider industry. At the peak of
the pandemic, Pet Circle implemented buying restrictions on high demand products,
including bags of litter. At the same time, it benefited from a dramatic increase in
demand for premium pet foods and pet toys.
Millell Pty Ltd - financial performance*
Year** Revenue Growth
($m) (% change)
2011 1.0 N/C
2012 6.0 500.0
2013 9.0 50.0
2014 14.0 55.6
2015 20.0 42.9
2016 40.0 100.0
2017 73.0 82.5
2018 115.0 57.5
2019 153.0 33.0
2020 260.0 69.9
2021 320.0 23.1
Source: IBISWorld
Note: *Estimate **Year end December
GREENCROSS PTY LIMITED
Market Share: 12.3%
Integrated pet-care company Greencross
Limited operates in the industry through its
Petbarn brand. Petbarn is one of Australia's
leading specialty pet store brands, with over
200 retail stores. The company has retail
operations across Australia and an online
store, and sells products such as pet food,
animal pharmaceuticals, toys, kennels, pet
carriers, educational books, pet health
products and supplements. The company's
online store sells 8,000 products for dogs,
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cats, fish, birds, reptiles and other small animals, including rabbits and guinea pigs.
In 2015-16, the company began selling prescription food online and launched a
mobile optimised version of its website. Petbarn also provides a range of services
through partnerships with relevant industry organisations. These services include
pet adoption (a partnership with the RSPCA and Lort Smith), dog wash and
grooming (in-store DIY), pet hotels (in conjunction with Hanrob Pet Hotels), and dog
day care through Petcloud.
Prior to 27 February 2019, Greencross was Australia's only listed pet services
provider. However, it was delisted following its purchase by Vermont Aus Pty Ltd
(TPG Bid Co) in February 2019. Vermont Aus Pty is ultimately owned by US private
equity firm TPG Capital, which purchased Greencross in February 2019 for $675.0
million after Greencross rejected a $736.0 million takeover offer from TPG Capital
in 2016. TPG had previously owned a stake in Petbarn (then owned by Mammoth
Pet Holdings) prior to its merger with Greencross in 2013.
In February 2017, the company completed the national rollout of its click-and-
collect services. It has since adopted a new digital transformation strategy.
Following the outbreak of the COVID-19 pandemic, it commenced zero contact
click-and-collect services in 60 minutes. It also converted its store network to
fulfilment centres to offer same-day delivery to customers, as well as partnered
with ride-sharing platform Uber to offer same-day delivery services in metro areas.
At the height of lockdown restrictions, free same day delivery services on online
orders was also offered although it has since reverted to free metro delivery on
orders over $49.00. Customers using its repeat delivery service qualify for free
delivery and discounts of up to 20%.
Financial performance
Petbarn's operations, including its online platform, have grown significantly over the
past five years. The company's click-and-collect option helped drive online sales
growth of over 70% in 2017-18, with online sales expected to account for 6.0% of
total sales in 2018-19. The company's industry-related revenue is expected to grow
at an annualised 56.3% over the five years through 2020-21, to $70.0 million. This
represents an outperformance of the wider industry, reflecting a low base and
Greencross's dominant position in the wider pet-care sector. According to the
company, its online business is profitable.
Greencross Pty Limited - industry segment performance*
Year** Sales Growth
($m) (% change)
2013-14 2.3 N/C
2014-15 4.2 82.6
2015-16 7.5 78.6
2016-17 11.6 54.7
2017-18 20.0 72.4
2018-19 37.5 87.5
2019-20 55.0 46.7
2020-21 70.0 27.3
Source: IBISWorld
Note: *Estimate **Year end June
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Other Players The industry is fragmented and includes many small enterprises, reflecting thegrowth stage of the industry's life cycle. However, some industry operators have
attempted to specialise. While some stores have positioned themselves as general
online pet stores that can offer wider product selection and lower prices due to
lower overheads, several specialty vet supply stores operate in the industry, such as
Vet Products Direct, Vet Net Supplies, vet-n-pet DIRECT, Entirely Pets and Vet Shop
Australia. Other stores specialise in premium dog food, such as Scratch Pet Food
(super-premium dry dog food sold on subscription), the Australian Pet Treat
Company (holistic pet food) and the Natural Pet Store (natural, organic and holistic
pet food and treats). Other stores, such as Furberry and Topdog Boutique have
marketed themselves as suppliers of high-value luxury pet lifestyle goods. Some
online operators offer dog party plans, and host dog birthday parties in addition to
their online shops.
Specialty retailers
The industry includes a growing number of smaller specialty retailers. While not
technically significant players (in that they do not hold a market share of over 5%),
these smaller specialty retailers tend to differentiate themselves based on the
range of products offered or value-added services such as delivery. Specialty online
retailers have opportunities to grow market share by ensuring costs are minimised
through efficient warehousing, and maximising repeat business through loyalty
programs. Additionally, as the economies of scale of the industry's larger,
diversified players mean that price will likely increasingly difficulty to compete on,
smaller firms can use product quality as a basis for differentiation.
BEST FRIENDS PETS HOLDINGS PTY LIMITED
Market Share: 5.0%
Established in 2007, Best Friends operates 31 Best Friends Pet Care centres along
the Australian east coast. As with its main rivals, Best Friends supply a range of pet
supplies along with dog grooming services, vet pet clinics and puppy pre-schools.
As part of the growing popularity of pet adoption rather than pet purchases, it does
not sell cats or dogs. The company has instead teamed up with local shelters.
In January 2019, Best Friends acquired the My Pet Warehouse business from The
Trustee for Heon Holdings Unit for $19.2 million. Established in June 2009, My Pet
Warehouse is an Australia-based multichannel pet store with 11 physical stores
located in Melbourne, Sydney, Perth and Brisbane, and an online store offering a
range of pet supplies, pet food, accessories, and veterinary and prescription animal
health products. Several of these stores operate as distribution-equipped stores to
support the company's online operations, but the company also owns dedicated
distribution centres in Sydney, Melbourne, Brisbane and Perth. My Pet Warehouse
stocks over 5,500 product lines and offers free shipping on orders over $49.99. The
company also offers click-and-collect options. The company competes on the basis
of price, offering a lowest-price promise.
In 2018-19, Best Friends Pets Holdings generated sales revenue of $121.5 million
(latest available data), up from $95.2 million in the previous year. Revenue was
boosted by the inclusion of the My Pet Warehouse business. However, it is not
known what proportion relates to My Pet Warehouse's online platform.
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MAX PET SUPPLIES PTY LTD
Market Share: 5.0%
Max Pet Supplies commenced operations in 2015 through its online store
vetsupply.com.au. Based in Alexandria, Sydney, the company competes on the
basis of free delivery and heavily discounted product. Initially focusing on pet
healthcare products, the online store has since widened its product portfolio to
include pet food. As with its main rivals, the company offers an auto delivery option,
with a 5.0% discount offered for each auto-delivery. The store also offers discounts
if customers shop using their mobile app.
PETSTOCK PTY LTD
Market Share: 5.0%
First established as the Ballarat Produce and Merchandise store, PETstock is an
Australian family owned and operated pet store company with a one-stop shop
business offering. As at April 2021, the PETstock network consisted of 186
corporate and franchised stores, and employed over 1,000 staff across Australia.
The company also operates 55 co-located vet practices as part of its PETstock VET
business offering, which it commenced in 2007. In July 2019, PETstock acquired
the Diggiddy Doggy Franchising Pty Ltd, a provider of dog day care services.
PETstock entered the New Zealand market in June 2015, and currently has 12 retail
stores in New Zealand.
In addition to pet foods and products, PETstock outlets provide a range of value-
added services, including pet wash and grooming treatments, dog training courses
and in-house veterinary surgeons. It has also moved online, offering a price match
promise, auto-shipping services, 15 minute click-and-collect options, and free home
delivery for orders over $20 within major metropolitan regions. PETStock has grown
at a strong rate over the past five years, with revenue totalling $394.3 million in
2019-20, over double that generated in 2015-16. In the same year, it derived 91.7%
of its revenue from sales of pet-related goods, although it is unclear what
proportion was derived from its online platform.
BUDGET PET PRODUCTS
Market Share: 4.0%
Budget Pet Products is an Australian family-owned business operated by the
Trustee for Budget Pet Products Unit Trust. Based in Queensland, it operates an
online webstore that allows customers to shop by pet type or brand, with brands
including Hill's, Royal Canin, Blackhawk and Advance. The company offers free
shipping within one to two business days for orders over $49. Consumers also have
the option of using its auto delivery service or buying app only deals.
PET SHOP DIRECT
Market Share: 4.0%
Pet Shop Direct operates in the industry through its online platform by the same
name. In addition, it operates a retail warehouse store, Petfood Plus, and a
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warehouse located in Sydney, which services its online business. Pet Shop Direct
positions itself as a one-stop shop offering discount prices and nation-wide
delivery.
WORLD FOR PETS
Market Share: 2.0%
World for Pets is a specialty pet brand developed and run by the Royal Society for
the Prevention of Cruelty to Animals (RSPCA), which was first formed in Victoria in
1871. The RSPCA is a charity organisation created and driven by the community,
with a mission to prevent cruelty to animals by actively promoting their care and
protection.
World for Pets has about 17,000 items on stock, including pet clothing, dog doors,
educational DVDs and health products. The company has a World for Pets
superstore and one other store, both located in Queensland, in addition to its online
retail store. The company's profit goes to the RSPCA for animal welfare services.
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Operating Conditions


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Capital Intensity The level of capital intensity is High
The industry has a high level of capital
intensity. For every dollar invested in capital,
industry firms spend an estimated $1.51 on
wage costs. While the industry does not have
a high level of capital-related expenses, wages
costs tend to be low, as online retailers do not
require a high number of employees per
enterprise. Although labour in the industry
requires a specialised skill set, industry
owners tend to either already hold the
necessary skills, or are prepared to learn them
as their business progresses. In addition to
fulfilling orders, industry employees may also
be involved in website development and
maintenance, blogging, search engine
optimisation and customer service. Industry
firms must make capital investments in
computer equipment, point of sale systems,
and warehouses and distribution centres for
larger players.
Technology And
Systems
Potential Disruptive Innovation: Factors Driving Threat of Change
Level Factor Disruption Description
High Rate of Entry Likely
Annualized growth in the number of
enterprises in the industry, ranked against
all other industries. A greater intensity of
companies entering an industry increases
the pool of potential disruptors.
Moderate Ease of Entry Potential
A qualitative measure of barriers to entry.
Fewer barriers to entry increases the
likelihood that new entrants can disrupt
incumbents by putting new technologies
to use.
Moderate MarketConcentration Potential
A ranked measure of the largest core
market for the industry. Concentrated core
markets present a low-end market or new
market entry point for disruptive
technologies to capture market share.
Very Low Rate ofInnovation Very Unlikely
A ranked measure for the number of
patents assigned to an industry. A faster
rate of new patent additions to the
industry increases the likelihood of a
disruptive innovation occurring.
Very Low InnovationConcentration Very Unlikely
A measure for the mix of patent classes
assigned to the industry. A greater
concentration of patents in one area
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Level Factor Disruption Description
increases the likelihood of technological
disruption of incumbent operators.
The industry is experiencing a low level of both the rate of new patents and the
concentration of patents in the industry. This creates an environment where the
threat of new technologies driving disruption is low.
The industry structure creates a moderate level of entry barriers, which is coinciding
with a high rate of new competitors entering the industry. This high rate of entry
creates a significant pool of potentially disruptive entities and the industry structure
does not significantly affect their growth potential.
Industry operators are using digital technologies to disrupt the
traditional pet care retail sector.
Many have successfully drawn consumers away from bricks-and-mortar pet stores
with subscription-based services for pet food and animal health products. These
services and same-day delivery options appeal to the growing number of
consumers seeking convenience. Online retailers have used targeted digital
marketing, data analytics and digital tools creating personalised customer
experiences to grow online sales. Pet humanisation trends are also disrupting the
industry, as pet owners demand an increasing variety of premium pet food and pet
care items, including human-style pet food, seasonal outfits and costumes, and
memory foam mattresses. In response, industry operators are providing a wider
choice of premium style products to cater to these pampered pets.
The level of technology change is High
Technology represents a substantial proportion of the industry's
capital investment.
The internet's development, penetration and use are central to the industry's
performance. Online retailers require a selling platform, hardware, and software.
Technology allows industry operators to display their products to customers, and
accept and process orders. Operators require up-to-date security practices to
handle sensitive payment information, either by credit card or electronic funds
transfer. Smartphones and tablets with internet connections are a growing platform
for the industry. Industry retailers are also using social media platforms to target
younger consumers and offer them increasing options to pamper their pets. In
addition to an online platform for sales, industry participants require inventory
management and distribution technology to fulfil orders. Some firms are using data
analytics to drive online sales. Additionally, customised, subscription-based
services for pet food and healthcare products have proven successful.
Many small operators rely on eBay as a selling platform. A growing number are also
using Etsy to target pet owners looking for customised or unique products.
Collectively, these sellers represent a sizeable proportion of industry revenue.
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Revenue Volatility The level of volatility is Medium
Note: Revenue growth and decline reflective of 5-year annualized trend. Y-axis is in
logarithmic scale. Y-axis crosses at long-run GDP. X-axis crosses at high volatility
threshold.
The industry's current moderate level of revenue volatility is due to
its dramatic pace of growth, driven by increased expenditure from
pet owners.
Revenue is anticipated to stabilise as the industry matures, and because demand
for major product segments, such as pet food, is resilient to changes in the
economy. Pet owners typically develop strong emotional bonds with their animals
and are often reluctant to cut back on pet expenditure, even during times of
economic uncertainty. During the COVID-19 pandemic, housebound consumers
increased their pet expenditure, spending more on new toys or accessories for their
pets as a result of spending more time with them. Social media trends also
influenced expenditure patterns during the pandemic with some pet parents setting
up Instagram accounts for their pets. This saw an associated rise in expenditure on
pet outfits, including matching outfits for pet and parent.
Regulation &
Policy
The level of regulation is Medium and is Steady
The Online Pet Food and Pet Supply Sales industry operates under
the same laws that apply to traditional retail stores.
In addition, specific regulations relating to electronic communications cover the
industry. The trend in industry legislation has been stable, with no significant new
legislation introduced over the past five years.
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The most significant piece of legislation is the Competition and Consumer Act
2010. This legislation covers the way items are advertised for sale, the terms of
warranties and pricing. The legislation also specifies the terms for repair,
replacement or exchange of items bought online. However, unlike conventional
retailers, operators in the industry are not subject to regulations concerning trading
hours or tenancy issues. The ACCC enforces the act.
Online content in Australia is regulated by ACMA. The Spam Act of 2003, and the
Broadcasting Services Act of 1992 are enforced by this regulator and apply to the
industry. The industry is also subject to regulation relating to the Electronic
Transactions Act 1999 in soliciting and processing payments. This legislation
established national standards to judge the validity of online transactions.
Regulations exist regarding sales of pet meat and pet food. These regulations cover
the correct packaging and labelling of the industry's products. The Hygienic
Production of Pet Meat 2006 was amended in 2009 and was set up to establish and
maintain minimum hygiene standards for meat production. All raw pet meat that is
sold must contain labelling stating that the product is not fit for human
consumption, although the inclusion of specific ingredients is not required.
Modern Slavery Act
In November 2018, the Federal Government passed the Modern
Slavery Act 2018.
The act, which came into force on 1 January 2019, is a new reporting requirement
for larger Australian businesses. Companies that generate an annual consolidated
revenue of at least $100.0 million will have to report on how they act to mitigate the
risks of modern slavery in their operations and supply chains. The first reports will
relate to 2018-19, with most reports being released in 2020. The NSW Government
is also considering its own state-based version of the report, which would make
businesses with consolidated annual revenue of at least $50.0 million have to
report. The NSW Modern Slavery Act 2018 was due to come into force on 1 July
2019, but was delayed for further consultation.
Industry firms must ensure that pet food and pet care items sold are not produced
using slave labour. However, modern slavery is not likely to be found in the
industry's supply chains. Moreover, few industry operators generate revenue of
more than $100 million. The act is therefore not expected to significantly affect the
industry.
Industry
Assistance
The level of industry assistance is Low and is Steady
While tariffs are applicable to some products traded by the industry,
tariff protection is not significant.
In addition, the industry does not receive any major government subsidies or grants.
The industry is expected to benefit indirectly from government spending on
telecommunications infrastructure. The NBN is currently being rolled out
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nationwide and is designed to provide most Australians with access to high-speed
internet. This infrastructure has increased consumers' access to industry products.
More generally, the NBN is expected to strengthen the competitive position of
online retailers against other retailing methods. Much faster connection speeds for
most Australians will allow for richer website content, faster browsing, and, in the
case of fibre-optic infrastructure, improved reliability.
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Key Statistics
Industry Data
Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic
Demand
($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m)
2012–13 152 25.3 188 169 279 N/A N/A 14.7 N/A
2013–14 184 31.7 205 183 307 N/A N/A 16.4 N/A
2014–15 218 38.1 223 197 340 N/A N/A 18.8 N/A
2015–16 265 44.7 236 211 375 N/A N/A 21.5 N/A
2016–17 284 47.8 254 225 400 N/A N/A 23.7 N/A
2017–18 327 55.3 269 243 440 N/A N/A 27.5 N/A
2018–19 377 63.7 300 273 497 N/A N/A 30.7 N/A
2019–20 486 77.8 338 310 580 N/A N/A 36.5 N/A
2020–21 580 91.6 368 339 636 N/A N/A 41.4 N/A
2021–22 624 98.6 393 363 678 N/A N/A 44.3 N/A
2022–23 693 109 431 399 753 N/A N/A 49.6 N/A
2023–24 744 117 453 420 791 N/A N/A 52.7 N/A
2024–25 798 125 473 439 830 N/A N/A 55.7 N/A
2025–26 846 133 488 455 871 N/A N/A 58.7 N/A
Annual Change
Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic
Demand
(%) (%) (%) (%) (%) (%) (%) (%) (%)
2012–13 8.81 11.5 11 11 11 N/A N/A 11.4 N/A
2013–14 21.1 25.3 9 8 10 N/A N/A 11.6 N/A
2014–15 18.3 20.2 9 8 11 N/A N/A 14.6 N/A
2015–16 21.6 17.3 6 7 10 N/A N/A 14.4 N/A
2016–17 7.36 6.93 8 7 7 N/A N/A 10.2 N/A
2017–18 15.1 15.7 6 8 10 N/A N/A 16.0 N/A
2018–19 15.1 15.2 12 12 13 N/A N/A 11.6 N/A
2019–20 29.1 22.1 13 14 17 N/A N/A 18.9 N/A
2020–21 19.2 17.7 9 9 10 N/A N/A 13.4 N/A
2021–22 7.62 7.64 7 7 7 N/A N/A 7.00 N/A
2022–23 11.1 11.0 10 10 11 N/A N/A 12.0 N/A
2023–24 7.40 7.31 5 5 5 N/A N/A 6.25 N/A
2024–25 7.18 6.55 4 5 5 N/A N/A 5.69 N/A
2025–26 5.97 5.91 3 4 5 N/A N/A 5.38 N/A
Key Ratios
Year IVA/Revenue Imports/Demand Exports/Revenue Revenue per
Employee
Wages/Revenue Employees per
estab.
Average Wage
(%) (%) (%) ($'000) (%)
2012–13 16.7 N/A N/A 544 9.68 1.48 52,688
2013–14 17.2 N/A N/A 599 8.92 1.50 53,420
2014–15 17.5 N/A N/A 640 8.64 1.52 55,294
2015–16 16.9 N/A N/A 706 8.13 1.59 57,333
2016–17 16.8 N/A N/A 710 8.34 1.57 59,250
2017–18 16.9 N/A N/A 743 8.41 1.64 62,500
2018–19 16.9 N/A N/A 758 8.15 1.66 61,771
2019–20 16.0 N/A N/A 838 7.51 1.72 62,931
2020–21 15.8 N/A N/A 911 7.14 1.73 65,094
2021–22 15.8 N/A N/A 920 7.10 1.73 65,339
2022–23 15.8 N/A N/A 920 7.16 1.75 65,870
2023–24 15.8 N/A N/A 941 7.08 1.75 66,625
2024–25 15.7 N/A N/A 961 6.98 1.75 67,108
2025–26 15.7 N/A N/A 971 6.94 1.78 67,394
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Additional Resources
Additional
Resources
Australian Bureau of Statistics
http://www.abs.gov.au
Pet Industry Association
http://www.piaa.net.au
Pet Food Industry Association Australia
http://www.pfiaa.com.au
Animals Australia
http://www.animalsaustralia.org
Industry Jargon APPS
Applications for smartphones, tablet computers and similar devices.
ETAILERS
Online shopping retailers.
HUMANISATION
Imbuing pets with human characteristics and treating them in a similar manner to humans.
Glossary Terms BARRIERS TO ENTRY
High barriers to entry mean that new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an industry.
CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with
that spent on labour. IBISWorld uses the ratio of depreciation to wages as a proxy for capital
intensity. High capital intensity is more than $0.333 of capital to $1 of labour; medium is
$0.125 to $0.333 of capital to $1 of labour; low is less than $0.125 of capital for every $1 of
labour.
CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation
using the current year (i.e. year published) as the base year. This removes the impact of
changes in the purchasing power of the dollar, leaving only the 'real' growth or decline in
industry metrics. The inflation adjustments in IBISWorld’s reports are made using the
Australian Bureau of Statistics' implicit GDP price deflator.
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DOMESTIC DEMAND
Spending on industry goods and services within Australia, regardless of their country of
origin. It is derived by adding imports to industry revenue, and then subtracting exports.
EMPLOYMENT
The number of permanent, part-time, temporary and casual employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISE
A division that is separately managed and keeps management accounts. Each enterprise
consists of one or more establishments that are under common ownership or control.
ESTABLISHMENT
The smallest type of accounting unit within an enterprise, an establishment is a single
physical location where business is conducted or where services or industrial operations are
performed. Multiple establishments under common control make up an enterprise.
EXPORTS
Total value of industry goods and services sold by Australian companies to customers
abroad.
IMPORTS
Total value of industry goods and services brought in from foreign countries to be sold in
Australia.
INDUSTRY CONCENTRATION
An indicator of the dominance of the top four players in an industry. Concentration is
considered high if the top players account for more than 70% of industry revenue. Medium
is 40% to 70% of industry revenue. Low is less than 40%.
INDUSTRY REVENUE
The total sales of industry goods and services (exclusive of excise and sales tax); subsidies
on production; all other operating income from outside the firm (such as commission
income, repair and service income, and rent, leasing and hiring income); and capital work
done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed
tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA)
The market value of goods and services produced by the industry minus the cost of goods
and services used in production. IVA is also described as the industry's contribution to GDP,
or profit plus wages and depreciation.
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INTERNATIONAL TRADE
The level of international trade is determined by ratios of exports to revenue and imports to
domestic demand. For exports/revenue: low is less than 5%; medium is 5% to 20%; and high
is more than 20%. Imports/domestic demand: low is less than 5%; medium is 5% to 35%;
and high is more than 35%.
LIFE CYCLE
All industries go through periods of growth, maturity and decline. IBISWorld determines an
industry's life cycle by considering its growth rate (measured by IVA) compared with GDP;
the growth rate of the number of establishments; the amount of change the industry's
products are undergoing; the rate of technological change; and the level of customer
acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT
Businesses with no paid employment or payroll, also known as nonemployers. These are
mostly set up by self-employed individuals.
PROFIT
IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s
profitability. It is calculated as revenue minus expenses, excluding interest and tax.
VOLATILITY
The level of volatility is determined by averaging the absolute change in revenue in each of
the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to
±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%.
WAGES
The gross total wages and salaries of all employees in the industry.
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