News Article

The battle between the big UK dot com pet stores is heating up, PetsPyjamas have had their recent TV advertising campaign, and Pets At Home has been forced to join them, selling on-line in competition with the likes of Ireland's PetMad and Scotland's PetPlanet.. but everyone is keeping an eye on the U.S. and the news is not good.

Rumours that recent staff layoffs at the California based Petstore.com could be a signal that they are preparing to merge with one of their three main competitors, Petopia, PetsMart or Pets.com. If this is true then it must be taken as evidence that the on-line pet retail sector is becoming overcrowded.

Of all of the above, only one company has so far gone public - Pets.com launched shares which traded at an initial price of $11 US. To sell now, disappointed shareholders will get back little more than $2 US.

This reduces the options available to the other players wanting to raise investment and they are holding back on share offers for the time being.

Whilst a similar story exists across the on-line retail market as a whole, pet store margins are particularly susceptible to distribution costs and competition on price is fierce. Pet owners are looking for specialist products and are not impressed when they have to hunt around for the things they want.

This means that retailers are having to cater for niche as well as mass markets in order to keep customers coming back.

The pioneers of on-line retail are paying a high price for getting in first let's hope it all pays off. With only 20% of us on-line there is a long way to go and quite a bit of re-shaping still to be done.