Why Pet Related Services Are An Enormous Market Opportunity

December 6, 2018
with contributions from:
No items found.

Six months after adopting my dog Bruce, I was rubbing his belly when I noticed some raised black spots there. A quick Google search convinced me that there was a very good chance they were melanoma, but as it was a Friday afternoon, I couldn’t get Bruce to the vet until Monday. It was a truly awful couple of days, but I knew I wasn’t the only one worrying about a four-legged friend.

Humans have had a deep, emotional connection with their pets since ancient times, but recent socio-economic trends have kicked that connection into overdrive. As Millennials are delaying family formation due to a number of social and economic factors, the human-pet relationship is becoming especially central to the emotional life of unmarried people under 35. A recent TD Ameritrade survey found that the average millennial dog owner spends $1,215 per year on their pet; as a group, they spend $67 billion annually. I’m all too aware of how good my dog has it—he often eats healthier than me and visits the doctor more often.

Fortunately, I was wrong about Bruce’s diagnosis. Come Monday, the vet told me with a smile that my dog’s raised bumps were his nipples, and no, we definitely didn’t need to remove them. Laugh if you must (hey, I would), but the vet made me feel a little better by telling me that in her ten years of practice, she saw clients who thought their male dogs’ nipples were melanoma at least once a month.

This got me thinking. Since pets can’t communicate with us directly, there’s a structurally higher level of guesswork involved with being a pet parent. You can’t just ask a dog whether their stomach hurts or what they ate that day.

This uncertainty causes an enormous amount of what we at AE call silent suffering—frustration with existing products and services that most people write off as a part of everyday life. You know, like the frustration of trying to hail a taxi before the convenience of Uber. Silent suffering is a signal for latent demand and therefore the sign of a potential new market many times the size of the old. Ten years ago, most people may not have described hailing a taxi as a major pain point in their lives; yet as soon as there was an alternative in Uber, people adopted it in droves.

The worry I felt over the weekend when I waited to take Bruce to the vet felt more intense than the usual silent suffering, however. Unlike the difficulty of hailing taxis, our pets’ health problems aren’t just inconveniences. They touch on our deepest emotional needs, becoming a major source of vulnerability.

In fact, the angst I felt over my dog’s welfare made me realize that service providers have an enormous opportunity to build trust with pet parents by alleviating the suffering we usually are forced to hold so close. They can do this by providing goods and transparent services that offer us more information so that we can make the best decisions for our animals. Here are a few of the main areas of vulnerability I see and a few solutions that might address them.

Am I feeding my pet correctly?

It’s hard to know what to feed our dogs and cats. Commercial pet food isn’t held to FDA standards—does this mean that it’s safer to feed animals the foods we humans eat, or will they miss out on the nutrients those commercial meals are fortified with? I usually cook Bruce’s food myself—mostly chicken breasts, rice, and sweet potatoes—but is this really the best option?

And what about portion control? The average dog in America lives two years less than its full lifespan due to overeating. It’s likely that many of us are feeding our pets too much, but without clear guidelines, how will we ever know?

Perhaps a startup should get to the bottom of it by looking at our pets’ genes. In 2016, researchers at Cambridge University found that around a quarter of pet Labradors are missing a gene that makes it harder for them to know if their bodies have sufficient fat stores. This means that even after they become overweight, they continue eating in an attempt to fatten up. It seems likely that genetic factors could also impact other breeds.

To me there’s a clear opportunity for a company to offer genetic testing for pets, with the goal of telling you not only what your dog or cat should eat, but how much food they should eat. The service might be especially helpful for parents of mutts or mixed-breed pets, who might be less sure which breed-specific health and nutrition guidelines are relevant to them.

Vulnerability #2: What medical treatments do my pets need?

There’s so much conflicting information out there that making any decision about pet health tends to become overwhelming. For example, though I’ve done a great deal of research over the years, I’m still not sure whether I should get Bruce’s teeth professionally cleaned. His vet says that he doesn’t need dentistry, yet I’ve also read articles in which vets are quoted as saying gum disease is five times more common in dogs than in people. Although I trust my dog’s vet, this still gives me pause.

Visiting the pet store doesn’t help. I see rows of dog toys that are designed to squirt out toothpaste when a dog chews on them. Do they actually work? Should I get one for my dog? If I were to buy one, how on earth would I know if it was actually working?

It’s possible a wearable device could give us insight about our pets’ health. Similar to a Fitbit or other wellness tracker, it could record body temperature, sleep patterns and exercise levels. As technology for at-home medical testing improves, the possibilities will expand still further. Perhaps one day, I’ll be able to snap a picture of Bruce’s gums and a machine learning algorithm will be able to tell me whether he might have gingivitis. At the very least, I’m hoping an app or device might be able to tell me, “no, those are your dog’s nipples” when I ask it about possible melanomas on Bruce’s bellies. In short, entrepreneurs may want to look at ways to adapt existing wearable and telemedicine technologies for use on beloved animals.

Vulnerability #3: How can I be insured against unexpected health expenses for my pets?

Adopting a pet is expensive. According to a recent report by the ASPCA, the average cost of the first year of pet ownership is more than $1,000, which includes spaying or neutering, food, vaccinations and toys.

However, it’s the unplanned costs that scare many potential pet parents out of adopting a dog or cat. A 2016 study by a pet insurance company found that stomach ailments—one of the most common causes of insurance claims for dogs—can cost more than $6,000 to diagnose and treat. With less than 1 percent of pet owners owning pet insurance, this is probably more than many people could easily afford.

It’s odd that pet insurance (which averages to about $43 per month for dogs and $27 per month for cats) isn’t more popular given the preponderance of devoted pet owners. Yet it’s possible they just haven’t been run across a great insurance product. Many of the innovations we’re seeing with human insurance could also make pet insurance more affordable. For example, what if a pet insurance company synced an AI platform with a wearable device so that Fido could get a discount on his premiums for walking the right number of steps per day? There is an enormous opportunity here—it’s just a matter of who will take advantage of it first.

A common denominator of the solutions mentioned here is the need to collect better biological information about a pet and then deliver the data in an easy, efficient way to pet parents. Not only will these solutions strengthen existing relationships between pets and their humans, they also may enable more humans to have pets. Many wannabe pet parents put off adopting dogs and cats because they don’t feel confident they will know how to care for them or that they’ll be able to pay for their care. Better insurance products and more reliable sources of information could ease these worries, enabling more people to adopt pets and therefore expand the existing market for pet-related products and services. It’s an enormous opportunity not only to build successful new businesses but to make life better for pets and their humans.

Subscribe to the latest AE NEWS