U.S. pet ownersspent almost $37 billion last year on pet food, over-the-counter medicines and supplies. Here’s how to tap into a high-profit revenue stream.
By Mary Scoviak
U.S. pet owners spent nearly $23 billion on pet food and more than $14 billion on supplies and over-the-counter medicines in 2015, according to the American Pet Products Association.
Product sales should be contributing 27% to 33% of your practice’s gross income, according to Gary Glassman, CPA, Burzenski & Company, P.C., an East Haven, Conn.-based accounting and financial consulting firm. If not, it might be time to do some diagnostic work on your practice’s retail program. Rev up your product sales and give a healthy lift to your bottom line with these best-practice strategies.
1 Focus on the three Ps.
Proprietary, personalized and premium products. A recent study by Trone Brand Energy revealed that more than twothirds of pet owners buy pharmacy products from their veterinary clinic. To tap that potential, Henry Schein Animal Health recommends offering private-label and clinic/hospital branded products. Or consider products that have few over-the-counter competitors, tightly controlled distribution channels, and those that are available in unique dosages, flavors and sizes of popular medications that aren’t available online, from pet superstores or big box discounters.
Improve the offer: Take advantage of one-to-one time during office visits as well as personalized emails to inform pet ownersabout new foods, medications and wellness/ holistic care items tailored to the needs of their pets. Provide free samples of these products, either in the office or delivered to the client’s home.
2 Make it easier and smarter to buy products at your practice.
Train staff to ask clients if they have the medications or other required supplies before pet owners pay their bills, suggests Glassman. Give clients one more important reason to buy from their veterinarian by pointing out that all of the products you stock come with a money-back guarantee and a manufacturer’s warranty.
Improve the offer: Create your own online pharmacy and store and/or collaborate with manufacturers to get products delivered directly to clients’ homes for a reasonable fee. For the former, Henry Schein Animal Health suggests that any team member with a passion for the project and basic analytical and computer skills can work with plug-ins or online store setup sites to develop an Internet storefront with transaction capabilities. Reporting from the store’s monthly sales totals can help you identify which products are the most profitable, which are the most popular, and where you have opportunities to address unmet demand.
3 Set the right price.
Pricing decisions start with two key factors: price sensitivity and price elasticity, according to Henry Schein Animal Health. The company defines price sensitivity as the degree to which the price of a product affects consumer-purchasing behavior, while price elasticity refers to how much demand for the product will change if you adjust the price. The higher the elasticity, the higher the price sensitivity. Charge prices that reflect the value of the product to your clients and stand up to comparison with online and brick-and-mortar competitors. Limit your SKUs to select suppliers so you can develop relationships based on volume that should mean lower purchasing costs for the practice that can be passed on to clients.
Improve the offer: Bundling productscan also build sales, especially for the food category, in which volume is key. Offer attractivepricing on combinations of food and treats, food and dental hygiene products or targeted age-, weight- or condition-specific nutrition packages to benefit from this fastgrowing product category.