When creating and executing social media marketing strategies, we know by now that watching metrics and doing some A/B Testing can help us see what is working and what is failing. However, in the case of Pets.com, the desire to scale too quickly might have led to its downfall. They are now an infamous example in the pet industry of a business that tried to revolutionize pet retail and didn’t quite hit the mark.
The Details
Launching in November 1998, the company focused on e-commerce, and although they tried to leverage their sock puppet in a marketing campaign that even appeared in a Super Bowl commercial, this was a minor success that generated a lot of buzz. Still, the business model being fundamentally flawed held back the company’s success and caused them to close their doors in November of 2000. In this case study from the University of Kentucky, we can see that in its lifetime, Pets.com spent more than $70 million on marketing, a large portion of which was promoting its mascot, part of this going to a Super Bowl ad and part of which went to having this mascot as one of the giant balloons in the Macy’s Day Parade. The article also shares that pets.com spent an average of $400 to acquire each new customer. This is where the numbers just didn’t match up because the average orders from their site were around $55, so when we consider that they spend $400 to obtain an order of $55, it is clear that it wouldn’t be long until there was a significant deficit for the company. Their marketing efforts helped them but also helped the entire online pet industry to increase their sales. They also acquired the assets of Petstore.com in hopes of benefiting from the merger and the new additional offerings that would come with the consolidation of the two businesses.
The Issues
On top of the fact that the money spent on acquiring customers was, on average, more than the customer would end up spending, the fact that they did not position their brand correctly in the market caused them to get overlooked when customers were looking across the market at the options available online for their pets’ products. Yes, they had a very valuable domain name, but that means nothing if the brand is not positioned properly in the eyes of its target audience. They operated for two years with negative profit margins and had to sell products below costs just to compete in the market. They did well with their mascot campaign, drawing a lot of buzz, but they could not attract enough online customers to meet business objectives and goals. Even when merging with petstore.com after the acquisition, they still did not successfully attract enough customers to help them stay afloat and succeed.
The Opportunities
The mascot was a hit, and they sold 35,000 puppets in the first month, which means that this was an opportunity to take the mascot and insert it into social media posts and other campaigns across the online platform. They were opened in 1998 and closed in 2000, which makes me wonder if they may have had a different outcome if they had been competing in the market at a different time. If they allocated the marketing budget differently, with more of a focus on their social media marketing strategies and creating short-form videos that caught the eyes of their target audience, they may have been able to attract more pet parents to their brand and position themselves as a modernized brand in the industry that has a strong online presence across channels. They could be like Nike and create a community for their customers, including all breeds and species of pets. They are pets.com, after all; why not capitalize on the domain name and showcase their customer’s pets in contests for cutest pet of the month or have educational posts sharing “did you know…” about different species and breeds so it keeps customers coming back and sharing their personal experiences with products, and what worked for their pet with the rest of the community. User-generated content helps build customer loyalty and does not cost the company more marketing dollars. They could have incorporated their mascot across all channels, telling stories from the puppet’s perspective.
In today’s digital world, I feel that pets.com could have done more with its budget and even gained influencer partnerships that allowed it to help in sharing content that showcased its products. Technology has come a long way in allowing a deeper dive into analytics and market research. It enables them to better see what works and adjust the budget. They could fine-tune their target audience based on demographics and other aspects of their customers with a CRM platform that tracked analytics across their channels. It would be easier to see when and where to scale strategies so a realistic timeline could be set up for their business objectives and goals. Today, if you type pets.com into your browser, it will redirect to petsmart.com. This company purchased the domain when pets.com closed, and PetSmart has continued to be a company that has successfully maintained a strong brand positioning in the online pet industry. A quick internet search will show you many videos and articles that one author titled “The Story of Pets.Com: The Biggest Stock Market Failure Ever…” or the short informative video “Pets.com – The Rapid Rise and Fall” discussing the history of the pets.com company. It is sad to see that the company will be remembered in this way when we know now that there are many opportunities available today that could have allowed them to run their business efficiently, spend their marketing budget more successfully, and have the potential to be a very successful company.
