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The Nordics have already played a prominent role in introducing the term “pet tech”, and now its startup protagonists are hoping that leads to the region shaking its “testing ground” status to become top dog of the burgeoning sector.
The tag of being a playground to trial new applications and sub-sectors is nothing new; the region’s market size naturally lends to it being a stepping stone towards larger-scale international traction. However, when it comes to the rise of digitisation across pet ownership and management, the events of last year have accelerated these Nordic players towards the top of the international food chain.
One of these leaders is internationally renowned business, Pets4Homes – a UK-born company now benefiting from Nordic ownership and entrepreneurship as it looks to innovate and expand.
Axel Lagercrantz, CEO of Pet Media Group, who acquired the business together with co-founder Eyass Shakrah back in August 2019, explained: “I think the Nordics are driving development of this pet-tech trend, because of that very trend’s nascency.
“Digital proficiency and the preference of mobile applications to manage previously traditional activities is very common in the region. So, when it comes to pet transactions, training, maintenance, insurance or health, there are both companies and consumers in the Nordics who see the potential of carrying these out digitally.”
When noting the health side of the equation, Lagercrantz pinpoints the rise of sector neighbour, FirstVet who similarly has a growing international footprint for its online veterinary offering. “They’re a great example of a company from the Nordics pushing the digital disruption of what is a traditional industry,” he said.
FirstVet’s CEO, David Prien said the events of 2020 have given the company’s innovation a sudden boost: “The whole shift feels enormous, with people realising what can actually be done from a distance, or digitally. Some of the traditional pet care partners we are having conversations with now would never have been so excited about online veterinary tools a year ago. It feels like such a big leap for the pet space as a whole."
The buyer-seller lag
This “leap” has been brought to fruition by the Covid-19 pandemic. Pet ownership was taken to new levels among a consumer base that was now working from home and in need of a positive life-lift, yet unable to buy and then manage these animals in traditional face-to-face ways.
The result was a huge boom in general interest, all being channelled through a still-evolving mobile or online channel.
“Pet ownership as a sector has seen the biggest upswing as a result of the pandemic, with a whole new wave of people entertaining the idea of having a dog or cat, and then actually having the time and lifestyle to entertain that possibility almost immediately,” said Prien.
“This naturally led to a reactive shift, where everything was accelerated towards digital across the entire sector, and everything that comes with it. From our perspective, as a company that was already theoretically ready for this eventual shift, it has accelerated our own progress to a huge degree. It has not only pushed forward our own expansion ambitions, but has brought our next funding round ahead of schedule.”
When looking at the direct stats, it’s clear to see how the digital space could have been propelled to such heights, so quickly.
Lagercrantz broke down the figures: “At the peak in May, Pets4Homes was getting seven million users a month, double what we would usually expect. This caused a mass lag between demand among consumers, and availability of pets from breeders who were struggling to keep up.
“At the peak of lockdown, we had an average of 420 people competing for every pet on our platform. This led to a dog price increase of 130% on average, from £800 the year before to £1,900.”
More than just catering for new volumes, this massive upscale in demand has forced the innovators to innovate.
Lagercrantz added: “Our platform could cope with the numbers of visitors and the extent of re-homings, but what we’ve had to react to is the way in which the market was now operating.
“Fundamentally there has been a business model shift as people couldn’t visit, view and then purchase animals as they used to. Suddenly they were having to view animals online, and then because of the demand, sellers were demanding deposits up front.”
In this sellers’ market, this unsafe trend of people handing over large sums of money for a ‘product’ they hadn’t seen, via a portal that hadn’t factored in such an occurrence, presented a problem.
“What we did as soon as the trend was noticed, was introduce our own deposit functionality, where that money was essentially held in escrow,” said Lagercrantz. “This way, the principle of a holding deposit was still there to address how sellers needed to operate, but without putting buyers’ money at risk.”
Old dogs, new tricks
This ability to react quickly to a suddenly fluctuating sector is what best epitomises the Nordic influence – especially considering that both companies in this case believe pet care to be behind the digitisation curve.
Lagercrantz noted: “These past few months have been great for business, for those who were anticipating a switch to digital, but it has also exposed how far behind the industry as a whole is when it comes to this transformation.
“For instance, despite the proliferation of pet buying and ownership, there still isn’t a transparent database that people can access, to guarantee the status and background of what they’re buying.”
Lagercrantz has long noticed this concerning trend through the ownership of online horse marketplace, Hästnet.
“If you want to buy a car, then you can find out its owner, its ownership history, the mileage, its faults, service history… the transparency is very high between buyer and seller,” he added. Despite all pets and horses in the EU requiring an ID and microchip, there is no central database to offer that same level of visibility.”
Following a year in which the whole sector has been accelerated in the direction of digital, the onus will now be on moulding its future development and sustainability towards this wider infrastructural maturity. Teaching old dogs new tricks isn’t always easy, however, and these Nordic innovators will be expected to lead the charge.
“I think the development we were hoping and planning for over the next two to three years has all happened in one,” said Prien. “With that brings huge opportunities, but also the likelihood of new operators seeing the prospect of value, and joining the sudden wave.”