Amazon Unit Quidsi Expands From Diapers and Soap to Dogs and Cats, With New Site Wag.Com
Today Jersey City, NJ-based e-commerce provider Quidsi—which was bought by Amazon in November for $500 million—is launching Wag.com, an online warehouse that will offer more than 10,000 products for dogs, cats, fish, birds, and just about every other critter that families welcome into their homes. The site will operate independently of Amazon, similar to Quidsi’s other properties, Diapers.com, Soap.com, and BeautyBar.com. Like those sites, Wag.com will offer free shipping on orders above a certain size.
The launch of Wag.com certainly piqued the interest of this reporter, for many reasons. First of all, I am a dog owner who does quite a bit of shopping both online and off for food, treats, and other accoutrements for my terrier mix, Molly (photo above—isn’t she adorable?). But I’m also well familiar with many of the challenges pet sites faced during the first dot-com boom in the early 2000s, when I was a young tech reporter for BusinessWeek. Back then, Amazon owned 30 percent of Pets.com—one of the many pet-related sites that didn’t survive the bust.
So a few days before Wag.com launched, I put two of Quidsi‘s executives on the firing line: David Zhang, Wag’s site leader, and Earl Gordon, its director of marketing. They patiently fielded my many questions about how they planned to compete in a category that’s famous for its low profit margins, as well as its growing crowd of competitors that, oddly enough, includes Amazon itself.
Zhang and Gordon pointed out to me that Quidsi’s Mom-friendly shopping sites have 800,000 loyal users—all of whom would be natural marketing targets for Wag.com. “There’s an interesting parallel between pets and children,” Zhang says. “Pets charm us with their unconditional love. They’re like babies that never grow up. We have one site built on babies, so it was just a matter of time before we added pets.”
Makes sense, but I wondered: How can anyone make a profit if they waive the shipping charge on 40-pound bags of dog food? This was a major issue for Pets.com and its rivals in the early dot-com days, when free shipping was a popular promotional tool. I pulled up one of the first stories I wrote for BusinessWeek (now Bloomberg Businessweek), which we published shortly after Pets.com went public in February 2000—and saw its stock plummet from $11 a share to $6.
BusinessWeek crunched the numbers and figured out that for every dollar Pets.com paid dog food manufacturers and UPS for shipping, it collected just $0.43 from customers. In other words, it was losing $0.57 on every dollar of sales. No wonder Pets.com closed its doors in November 2000, leaving nothing but the enduring image of that annoying sock puppet that starred in all its ads.
Zhang believes Pets.com was a good idea, but was ahead of its time. He says that the technology for building a robust distribution infrastructure has improved vastly over the last decade. And Quidsi plans to leverage the automated shipping system at its three existing warehouses for the new pet-products site. That system, which relies extensively on robots, allows Quidsi to ship every order within one or two days. (See video below.) And so far, Zhang and Gordon say, they have managed to keep profit margins acceptable, even on low-margin items like diapers.
The shipping will be free for any Wag.com order over $49, and that minimum will drop to $39 for any customer who orders simultaneously from the other Quidsi sites. Wag.com customers who live in the New York City area will be able to request same-day shipping. “That’s a major value proposition in New York,” Gordon says. “Wouldn’t you rather have same-day shipping than have to get on the subway with a 40-pound bag of dog food?”
Free shipping may turn out to be a draw, but Wag.com will still have to contend with a tough competitive landscape. Molly and I have done our fair share of shopping, and we often buy based on price alone. Last fall, for example, I bought 315 biodegradable poop-pickup bags from Amazon, so I could clean up after Molly during our walks. The price, which did include shipping, came out to $0.08 a bag. A few months later, the little poop-meister and I were shopping at Petsmart and we found 240 bags for $0.04 a bag—a bargain compared with Amazon, even when I factored in the cost of the gas I used driving to the store.
What’s more, we bought a new dog bed, which Molly could try out right there in the store. Plus she got to sniff all the meat snacks in the treat aisle, cavort with the other dogs visiting the store, and reminisce with me about the fun obedience class we once took at that Petsmart (which she passed with flying colors, by the way).
That brings us to Wag.com’s other challenge: It will have to compete against the “experience” factor—the sheer fun that bricks-and-mortar pet stores create for dogs and their parents. “It is true that you can’t bring your pet to our site. And online shopping can make you feel disconnected,” Zhang says. So Wag.com’s team has spent a lot of time working on personal touches that they hope will keep customers coming back. The site will offer 24/7 live customer support. All orders will be delivered in special Wag.com-branded boxes. And customers will be able to enter in information about their pets on the site, so they can receive offers geared specifically to the type of animal they own. (No cats in this house—Molly would torture them—so we can surely appreciate the personalized nature of Wag.com.)
And with room enough for 10,000 products, Wag.com may be able to offer a bigger selection than your average pet store. I told Zhang and Gordon that I’ve struggled to find a winter coat for Molly, who shivers on extremely cold days because of her short hair. They urged me to check the site in October, when they plan to offer a range of doggie coats in different styles and price points.
Okay, I confess, I will probably check out Wag.com’s selection of coats come autumn. Heads up, Molly: Your new winter coat may be arriving soon—in a special box, no less.
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