The COMPETITION:
PetSmart (Nasdaq: PETM), a brick and mortar based retail chain, has just begun its online catalog with a limited assortment of products. Its prime competitor is Petco, also a brick and mortar based retail chain.
pets.com offers about 8,000 pet products. In March of this year Amazon.com agreed to purchase a 54% ownership interest for $50M, making its capitalization $110M. The company has expended almost half of their capital on the development of their warehouse, inventory, and overstaffed management team. They have recruited two executives from Petco and seem to be following that company's business philosophy of selling dog/cat food as the nucleus of building their customer base. While this theory may have validity in a brick-and-mortar situation, we believe it will fail with the high cost of shipping of such products, and will not offer a true added value to the consumer. Their web site is new, they have yet to establish a viable customer base, and the management lacks a background in the pet industry. Their site lacks a specific niche area. Their shopping cart is restrictive, requiring users to input unnecessary information to shop. The user cannot process his order and mail a check. They also do not ship overseas, including APO/FPO addresses.
petopia.com recently completed a venture capital investment of $9M. The company has just secured a $66M financing second round from LVMH (Nasdaq: LVMHV) and Petco (Nasdaq: PETC). The affiliation with Petco will obviously strengthen the position of Petopia. However, their web site only offers pure e-commerce, with no added value, and lacks any specific niche area.
petmedexpress.com symbol "PETS" specializes in prescription medications and treatments for dogs and cats. Their market capitalization is approximately $32M. They do not offer any live animals, and their selection of general pet supplies is very limited. Their site offers a niche market in pet pharmaceutical products. The company, oddly enough, does not employ a veterinarian on staff. Their last fiscal year's sales were almost $10M.
petstore.com recently completed a venture capital investment by Battery Ventures of $10.5M. They just started their web site in May 1999. The founder is a recent graduate, lacking experience in the industry.
petquarters.com symbol "PDEN" offers about 2,000 pet products, however they use a fulfillment company to ship all orders, and lack product control. They are currently negotiating the purchase for $9.2M of an existing mail-order company in PA whose sales are $15M. However, the sales of the company in the last fiscal year were only $154,000. Their site lacks a specific niche area. Their market capitalization is approximately $28M.
petplanet.com completed a reverse acquisition transaction in May 1999 with Techscience Industries, Inc., a publicly held company symbol "EPET". They intend to seek a listing on the Nasdaq SmallCap Market. Their web site is in the early development stage.
Source: Pets Warehouse petswarehouse.com |
