Online retail pet supplies sales in the United States will more than triple from $1.1 billion in 2007 to a forecast $3.4 billion in 2012, according to The State of Retailing Online 2008, the 11th annual Shop.org study conducted by Forrester Research Inc.
That growth will outpace overall online retail sales growth, which are expected to nearly double by 2012, from $174.5 billion in 2007 to $334.7 billion in 2012, the report said.
Despite a struggling economy, overall online retail sales, excluding travel, will grow 17 percent to $204 billion for 2008, accounting for 7 percent of overall U.S. retail sales, the report predicted. In 2007, online retail sales grew 21 percent to $175 billion and accounted for six percent of U.S. retail sales.
Online retail sales of pet supplies are expected to grow about 27 percent from $1.1 billion and 4 percent of overall U.S. pet supplies retail sales in 2007 to $1.4 billion and 5 percent of overall pet supplies sales for 2008.
The three largest retail segments included in the report were apparel ($26.6 billion), computers ($23.9 million) and automobiles and auto parts ($19.3 billion), which together accounted for about one-third of forecast retail sales.
“What’s spearheading online retail sales growth is a tale of two shoppers that visit the Web for very different reasons,” said Sucharita Mulpuru, Forrester’s principal analyst and lead author of the report. “The casual shopper goes online to look for the best price, leveraging the transparency of the Internet to save money. However, more affluent customers appreciate the convenience of shopping online and are not necessarily looking for the best deal. Retailers would be wise to recognize there are significant opportunities within both audiences and should market to them accordingly.”
The first part of the study, covering marketing, was released this morning at Shop.org’s Online Marketing Workshop in Scottsdale, Ariz., and included data on marketing plans for such retailers.
Among other findings in the report, online retailers currently allocate 53 percent of their marketing budgets to online customer acquisition and 21 percent to online customer retention. This is despite the “reality of online shopping behavior is that few customers are new to the online channel or to a given retailer’s Web store; To this end, customer retention efforts likely make more sense as a focus of marketing spend,” the report stated.
In addition, the report warned against “reckless or experimental spending” in social computing efforts, which may be effective in brand-building but showed little direct correlation to sales.
“Ads on social networks for instance are known for having notoriously low click-through rates, far below traditional banner ads and much lower than paid search ads.”
Despite that, the report expects retailers will be “eager to experiment with social computing initiatives in 2008.”
In addition, the report said online retailers “hope to focus less on now popular shipping promotions” such as free shipping. Instead, an increasing number would focus on retention programs, such as loyalty programs.

Well, after a year of development, thousands of hours of coding, gallons of coffee and a Red Bull here and there, we have finally launched our Private Beta version of Pet Cart to a select few lucky people.  It seems like just yesterday we started this project and it feels great to see it finally live with so many people interested in our eCommerce solution. So raise your glasses … “Here is to the future of Pet Cart!”