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P2Pet Case: Current Low Price as a Sales Growth Driver

The innovative P2Pet project is an ecosystem of services and products for pets, covering all areas of pet care in one project. We will tell you in this case about the project itself and why it needs daily monitoring of prices for more than 4 thousand products.

Many companies are preparing their post-covid recovery plans, and their heads hope that innovation can become the driver of the expected growth. Experts believe that now is a good time to launch innovative projects that organically integrate the urgent needs of customers into the digital environment.

Also, one of the leading trends of recent years is the formation of ecosystems in the digital space.

A digital ecosystem is an environment that provides conditions for the innovative development and distribution of digital services, digital products, applications and devices in a particular sector of the digital economy.

About the Project

P2Pet is a startup in the classical sense. Launched in 2020, it is an ecosystem for pets that completely covers all the needs of a pet owner: veterinary care, life and health insurance for dogs and cats, grooming, a hotel for overexposure, necessary pet supplies and much more.
Online consultations in the service are conducted in the following areas: veterinarian-therapist, dermatologist, zoo psychologist, nutritionist.

The website also lets you get a recommendation from trusted companies that provide their services offline (groomer, veterinarian, etc.)

Another feature of the project is a deeply integrated personal account. Each pet has a digital PET passport, which compiles all the data about the animal: its medical record (vaccination, tests, etc.), recommendations of specialists regarding treatment and personal care.

The neural network keeps the history of the pet (the results of analyses and recommendations of specialists) and, based on data analysis, issues recommendations for care that are available to the pet owner at any time and anywhere in the world.

The company is growing and developing rapidly, which is why it’s adding support for other languages. P2pet has no direct competitors with a similar range of services.

This large and complex project was launched in several stages:
  • the project took off in 2020,
  • the launch of the services section took place January 2021,
  • the online store started working in July 2021.

Powerful Expertise as a Base of the Project

The P2Pet project was originally created based on the powerful expertise of the zoo market.

Project director Dmitry Aksenov has been in the pet business for a very long time. For a long time he was the marketing director at Petshop. Commercial Director Dmitry Ardashev held the position of a top manager at Hills. And the investors are the largest and oldest distributors in the market.

What is the main feature of the project: the services that get accepted on the P2Pet platform undergo a strict selection. Non-professionals and amateurs are weeded out.

Dmitry Aksenov, CEO of the company:
“Although we are a startup, the approach to the implementation of the project was initially laid down with a focus on maximum expertise. It was vital for us to make sure customers that use the service are fully confident in everything that we recommend, whether it is a veterinarian, a hotel for overexposure or pet food.

To do this, we have created clear business processes for the integration of partners. Their reputation is checked by several criteria. The company providing the service for pets goes through many stages of verification before becoming our partner.

At the moment we have 7 regional managers. Plus, for small regions, there is a manager who works remotely over the phone. They are “on the ground” and keep direct contact with clinics and other service companies.”

Innovations of Our Own Development

P2Pet is a truly unique project that has quite few analogues. The team really wants to create a product that will cover absolutely all the needs in this niche: from buying an animal to comprehensively caring for it.

In the near future, the company plans to implement a pet food automation project. The project team has developed an automatic feeder under its own brand. It will be connected to the personal account of the service and controlled by the settings the person inputs there.

All you’ll need to do is plug the feeder into the outlet, and of course, have Wi-Fi in the house. Pressing a button in the personal account will activate it, and the mechanism will automatically issue a portion of animal feed based on the data that the neural network collects for each pet, that is, a personal dosage with an optimal frequency. The owner can be out of the house and be sure that his pet is full and satisfied.

Pet Supplies Marketplace

The P2Pet online store is essentially a pet supplies marketplace. In other words, it is a platform where retailers display their goods, and it works the same way as Amazon or Walmart.

How the Assortment Matrix is Formed

There are clearly expressed preferences in animal feed, as well as in food for humans. As a rule, the owners know what sort of pet chow they need and subsequently stay very loyal to a particular brand or type of feed, rarely changing it. Food and filler are the main commodity areas, because a dog leash or a cat harness is bought every six/twelve months or even every couple years, but food is a regular necessity. It makes up 90% of the commodity turnover of the entire pet market. And that is why these categories are primarily monitored by the service.

The project has anchor partners. The key partner, which covers most of the product matrix, and small manufacturers, which cover the remaining segments. Now the project has reached sufficient sales volumes to enter into direct partnership agreements with feed producers.

Vendors go through an internal selection process to work with the site. Since the service builds its reputation strategy on expertise, only verified manufacturers are allowed into the marketplace. And the only products sold are ones whose quality the service team is confident of.

Price is a Key Development Driver of the Trading Platform

It is already a proven fact that the key factor for most buyers of marketplaces is the price level.

And therefore, the availability of a large assortment of goods with low prices has become one of the key drivers of the development of the project's online store for the project team.

In order to confidently declare on the website a guaranteed pool of goods at the lowest prices compared to the competitive environment, a tool was required that would monitor prices on a daily basis for a significant number of commodity items.

Price Monitoring as a Key Tool for Working with Prices

The website features a “Lowest price” filter, that shows the client a list of products at proven low prices.

In order for this option to function, the company monitors the prices of the main categories of mass demand goods – this means the feed group (all cat and dog food, both wet and dry) plus fillers.

There are 4,390 SKUs monitored daily, which are positioned as products with the lowest price. Reconciliation is carried out at key marketplaces and huge retail networks.

How Did you Choose a Price Monitoring Service

The company started monitoring prices as soon as the online store was launched. But there was no need to look for a contractor to conduct monitoring. The explanation is simple — P2Pet is not the first company whose director entrusted price monitoring to the Priceva service.

Dmitry Aksenov, CEO of the company:
“This is not my first experience with Priceva. Since there was no need to pick a suitable candidate, I immediately contacted the Priceva service manager, with whom we have been cooperating productively effectively for a long time. Before that, we had the chance to work on several projects back when I was a marketing director.”

How the Price Matching was Done

The matching (comparison of prices) was carried out by articles. In P2Pet, all products have a unique barcode, the same for similar pet products, since all pet products are registered in the Mercury system.

*The automated information system "Mercury" is designed for electronic certification and traceability of goods subject to state veterinary supervision in order to create a unified information environment for veterinary medicine.

But the same barcode did not support automated matching, since identical products are named and designated differently on all sites, and the barcode is not always present.

The same item can be named differently on different sites, and the barcode or article is not necessarily indicated on all of them.

That’s why the matching was done manually. Specialists found each position, viewed it, compared it according to the criteria and identified it. A total of 10,302 articles were matched for monitoring, and it took about 3 weeks.

Dmitry Aksenov, CEO of the company:
“The Priceva service is currently at a very high level of preparation for integrations, so everything was done very quickly. The matching took a relatively long time given the sheer number of items (including those of our competitors) to compare and monitor.

It took one day to form all the necessary feeds, and another day to integrate the service. The whole setup and startup process took less than a month and did not cause any difficulties.”

How Does the Price Monitoring Procedure Work

The monitoring procedure is performed as follows: the list of products intended for reconciliation is uploaded as a separate feed list to Google Merchant Center.

The product feed is a list of products on the site with all the necessary information (attributes) about them.

This list includes articles that P2Pet’s catalog is guaranteed to sell at the lowest price.

Based on the price monitoring report, the low price attribute is added to the products with the lowest prices. You can use this parameter as a filter, too.

Making sure products from the list comply with the low price tag is done once a day. If monitoring confirms that the price is low, the tag is saved, if not, it is removed.

Sometimes there is a need to perform an unplanned update. This can happen if checking the price index shows a sharp change. A detailed study of the situation follows: what exactly has changed and how significantly. Then the necessary actions are taken to remedy it.

Feed lists are also used to create advertising campaigns:
  • Dynamic remarketing,
  • Product Ads (PLA).

Based on the data obtained, product ads are generated for the assortment with the lowest price.

Who Uses the Price Monitoring Service and How

At the moment, the Priceva service is used by two people in the company: the director of the company for strategic purposes and the manager of the marketplace of goods for daily price adjustments.

Dmitry Aksenov, CEO of the company:
“I don't have a clear schedule, I may constantly come in to monitor something, or I may only do it when a specific need arises. Dashboards are often used. Filters are conveniently provided to us by Priceva. This helps when you need to assess the situation.

There is no need to do data unloading, pivot tables and so on and so forth. In my personal account, I see which categories saw changes happen in the price index dashboard, and then I study in more detail the dynamics of price changes and the percentage of goods whose prices are lower.

The data also shows me which items are in stock or not. Moreover, we do not even use our own feed when working with Priceva, we use theirs, it’s more convenient for us.”

How Low Price Data is Used

As soon as the monitoring of prices for the entire customer base began, an information block was added to the email newsletter to notify readers that the ”Lowest price” filter appeared on the site, which allows them to make purchases at really low prices.

The entire customer base was notified about this convenient feature.

Price monitoring also helps when interacting with partners. It gives both you and category managers a common footing regarding the current competitive situation.

Price Monitoring Result

What does price monitoring contribute to the project:

1. First of all, this is a marketing ploy, the service shows customers that it has the lowest prices for many commodity items.

2. Secondly, it is an analytical system that provides the project team with a daily updated report on the competitive situation for strategic decision-making and orientation in a competitive price situation.

3. Thirdly, price monitoring helps to focus advertising communications and allows you to automatically put products with genuinely the best prices in advertisements (context, target, e-mail messages). This strategy significantly increases the conversion to sales.

Dmitry Aksenov, CEO of the company:
“If we take contextual advertising, price monitoring allows us to understand which brands are profitable for us to advertise. If we understand that a brand or product category is not acceptable for the customer in terms of price, we will not advertise it, since the conversion to sales will be minimal.

And if we see that we currently have the best offer for a specific category/brand, of course, we set up contextual advertising for these product positions

The information obtained through the Priceva service certainly affects sales. In the commodity direction, we are growing by 30% month to month.

It is very difficult to isolate the contribution that price monitoring as such makes to the overall piggy bank of achieving KPIs, but in any case, the tool is useful, as it helps to navigate, keep our fingers on the market’s pulse and make the right strategic decisions.”

P.S.

Expert Opinion on the Pet Supplies Market

Dmitry Aksenov has been working in the pet supplies market for a long time, and in addition to the questions directly related to the case, we were interested in getting his opinion about the pet supplies market and its peculiarities. The material did not fit into the format of the case, but it seemed to us that a pro's view of the market would be interesting to our readers. Here’s what we had time to talk about during the conversation.

How the Pet Supplies Market Operates

The pet supplies market is divided into two categories: Pet stores (niche stores) and Grocery (traditional retail).

Certain brands of feed can only be purchased in niche stores. Grocery has neither ROYAL CANIN, nor Pro Plan, nor Hills. They are sold exclusively in online and offline pet stores.

This is a historical fact. Brands with a serious reputation position themselves this way. This underlines their high quality and expertise.

Initially, Mars Petcare was present on the market. Its brands (PEDIGREE®, WHISKAS®, ROYAL CANIN®, SHEBA® and others) were sold everywhere.

In order to survive the competition and break away from Mars, the brands that produce feeds decided to showcase their high professional level, and to display their expertise in the fact that they will no longer be sold in ordinary grocery stores, but exclusively in pet stores, where a consultant will be able to give professional advice to the buyer.

This is how the market has historically developed in the West. The legend still works well that everything that is sold in ordinary mass-market stores is consumer goods, but really high-quality products are sold in pet stores.

Although in fact, it often happens that there are decent products in the mass market, and complete nonsense can be sold in pet stores. Some brands in different countries position themselves as a premium class, despite them being mass-market in their country of origin.

Novelties in the Feed Niche, Why are there so Few of Them

“The pet supplies market is, first, standardized, and second, conservative. The articles do not change from year to year, for example, Pedigree brand pet food is produced with one barcode for several years, and it does not change.

There are also few novelties in this market, everything has already been invented a long time ago. The only novelty I remember was two years ago. Pro Plan made cat food for people with allergies. Cats that eat it do not emit allergens, and the owner who feeds the cat this food does not need to take antihistamines.”

There are, of course, one-day brands. There are thousands of them who go out for one year and disappear. Products with an existing composition are produced under new brands. Companies come to a large feed production plant and simply order the packaging of a long-developed feed recipe under their own brand, most often these are their own trademarks or umbrella brands. And the plant stays afloat thanks to such inconsistent orders. Today it makes food packaging for one company, tomorrow — for another, this time under a different brand, but in fact it is the same product. Such firms occupy a small market share and are not considered to be serious competitors.

And so, launching a large plant that can produce genuinely high-quality goods from scratch is something that happens very rarely.

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