E-commerce platforms have become an indispensable part of the pet industry, but their assessment often falls into two extremes: either seen as an opportunity or a threat. At the industry level, the relationship between e-commerce platforms and pet shop retailers is far more complex. The platforms are simultaneously helping a whole class of retailers expand their market and eroding their profit margins.
Re-examining the relationship between e-commerce platforms and pet shop retailers.
A common question is whether a particular retailer should sell on an e-commerce platform, and the answer depends on the individual’s operational skills. But there’s a bigger question few people bother to ask: if we view the entire class of pet shops as a single link in the industry, is the impact of e-commerce on that link positive or negative? These are two different questions. A store might fail on an e-commerce platform for its own reasons, while the entire industry benefits from its presence; or conversely, many stores may still have consistent orders while the overall profit margin of the specialized retail channel is thinning. Therefore, instead of asking whether to go online, retailers should ask which aspects of their business model the platform is strengthening and which are weakening, and then allocate resources accordingly.
The platform expands its user base and removes geographical restrictions.
The platform’s biggest contribution to the industry isn’t in sales, but in popularizing the concept. According to the Ministry of Agriculture and Rural Development, only about 5% of dogs and cats in Vietnam are eating specialized pet food, meaning the biggest barrier for the industry is awareness, not competition. Every day, millions of pet owners browse pet stores and see dry food, pate, and snacks as ordinary items they can buy. This is the most expensive part of market education that the platform is providing free of charge to the entire industry, contributing to expanding the customer base in a way no distributor could do on their own. This comes with two practical benefits: significantly lower initial customer acquisition costs compared to opening additional sales points, and provincial distributors can sell beyond their delivery radius. For distributors, the sensible approach is to view the platform as a channel to reach pet owners who have never used specialized pet food, rather than a place to steal customers from neighboring stores.
Livestreaming and content are creating unprecedented ways to sell at the counter.
The second benefit is that the platform has created a new sales method, not just moving the display counter to a screen. According to Metric data, TikTok Shops account for approximately 30.6% of pet supplies industry revenue but only 18.5% of sales volume, meaning the value per order is significantly higher than the average. This figure refutes a common misconception that going online means selling cheaply. The difference lies in the content and livestreaming: sellers explain ingredients, compare different types of food, address concerns while viewers are still undecided, and customers are willing to pay more for a decision they find reasonable. This is a sales mechanism based on the ability to explain, something that pet shops already possess behind the counter. Any retailer that considers content creation as a specialized task, rather than a side job for idle staff, will be able to convert behind-the-counter knowledge into revenue on a scale larger than a traditional store.
All competition is drawn towards a single price axis.
The downside begins with the platform changing how buyers compare prices. In a physical store, customers compare based on advice, convenience, and their relationship with the store owner. On the platform, all those factors are compressed into a few identical lines of information, and the only differentiating variable is the final price. When thousands of sellers exploit nearly identical product codes from a few suppliers, price undercutting on the platform becomes a common reflex. The publicly displayed price level thins the profit margins of all dealers, even those who don’t sell online but still have customers bringing their phones to the counter to compare prices. This fragmentation also prevents any seller from achieving a large enough scale to negotiate better cost prices, so the price war has no natural end. What dealers need to learn is not to choose a competitive area where they are certain to lose; instead, maintain prices and shift differentiation to bundles, services, and advice.
Customer relationships belong to the platform, not the seller.
A more insidious loss is customer ownership. On the marketplace, buyers search by keywords, choose by price and offers, and the relationship formed is between them and the platform, not the seller. Dealers spend money on advertising to get orders, but the buyer’s data, the right to contact them again, and the right to remind them to make repeat purchases are all in the hands of a third party. For most industries, that’s an acceptable price. Not for Pet Food, because the true value of a customer lies in the repeat purchase cycle that lasts for years, not in the first order. When that long-term profit margin is cut off from the seller, dealers are forced to constantly acquire new customers to maintain sales, essentially shifting from a customer asset accumulation model to a monthly traffic rental model. The only solution is to make each order a starting point, including a reason for customers to return to the channel the dealer actually controls.
Commissions, advertising, and the platform dependency trap.
Platform costs have a dangerous characteristic: they don’t remain static. In the early stages, the platform needs sellers, so platform commissions are affordable and organic views are abundant. As the number of sellers increases, free visibility shrinks, sellers have to pay for advertising to maintain their position, and the cost per dollar of revenue gradually increases. The problem is that this process happens slowly enough that no one has time to react. The more a seller concentrates their sales on the platform, the harder it is to withdraw, because withdrawing means immediately losing the revenue that sustains the system. That’s the nature of platform dependence. A more extreme risk lies in the fact that the rules of the game aren’t written by the seller: a change in the display algorithm can cause revenue to evaporate overnight without anyone having to explain. The principle of defense is therefore very simple: don’t let a channel you don’t control become your primary source of income.
The advisory function that algorithms cannot yet replace
If e-commerce platforms are so powerful, the logical question is why specialty stores still hold approximately 72.44% of industry revenue, according to Mordor Intelligence. The answer lies in the nature of the product. Pet food is an item ingested by a living being, and buyers often lack the confidence to make their own decisions. They need to know which brand to switch to for an overweight seven-year-old dog, how to adjust to a recently spayed or neutered cat, and where to find a responsible party if their pet doesn’t tolerate the food. These are questions specific to each animal and cannot be answered by a generic product description. Add to that the large volume of goods, the need for careful storage, and the urgent need for same-day purchases. Therefore, e-commerce platforms excel at creating awareness and selling easily standardized items, while the high order value is ultimately determined by the point of sale. Distributors should invest wisely in this area instead of chasing after e-commerce platforms.
Good tools to access, bad environment to depend on.
Combining both sides, the most balanced conclusion is that e-commerce platforms and pet shop distributors should have a tool-based relationship, not a dependent one: platforms are a good tool for reaching customers, but a bad environment for dependence. From this principle, a disciplined approach to using platforms can be derived, consisting of three constraints. First, set a ceiling on the proportion of revenue coming from the platform and consider it a risk limit; exceeding this limit should halt advertising spending rather than celebrating growth. Second, only list small, compact product lines that are affordable and easy to standardize, keeping large-scale products and those requiring consultation in areas where the distributor has an advantage. Third, design a pre-defined customer transfer path from the platform to the direct sales channel, where the distributor has established relationships and profit margins, and measure the platform’s effectiveness by the number of converted customers rather than by the revenue displayed on the store’s dashboard.
The distributor maintains price order throughout the system.
One aspect of the problem that individual distributors cannot solve on their own is price regulation. When the price level on the platform is disrupted, all retailers selling the same product suffer, even those not participating in the competition. Only the source has the power to intervene, and this is the responsibility of the distributor, not the retailer. The minimum responsibilities include three things. First, the distributor should not open a retail store that competes with its own partners, because then the distributor, positioned at the discounted price level, is forced to compete at the original price level. Second, they should issue and enforce a minimum selling price policy on the digital platform, with clear penalties to prevent it from becoming mere advice. Third, they should provide standardized product images and information, and support training so that distributors can compete on content rather than price. Distributors should verify these three points before discussing discounts when choosing a long-term supplier.
How does Petkin view the relationship between e-commerce platforms and pet shop distributors?
Petkin is an importer and distributor of pet food, operating on a wholesale model, not direct retail. Therefore, we evaluate the platform from the perspective of the health of the entire system, not just the sales of a single store. We believe e-commerce is playing a major role in bringing pet owners closer to the concept of specialized pet food, which benefits every link in the chain, especially since 95% of pets are still outside the market. However, we also don’t believe that an industry requiring consultation and repeat purchases can build a future on a channel where sellers don’t own the customers or the rules of the game. Therefore, our role is to maintain a stable supply of legitimate goods, uphold a transparent tiered pricing policy, and avoid competing with retail partners. If you want to use the platform to grow without losing core profits, start by choosing a supplier with disciplined pricing.