Why Wag.com will not end up like Pets.com

Amazon-owned Quidsi launched Wag.com for pets, and there was much gnashing of teeth

Now before we all go raving about a bubble, let’s just take a minute to take some deep, cleansing breaths, make ourselves some warm soy chai lattes, and talk this out. Now, what’s all the ruckus about? Amazon-owned Quidsi, the parent company of Diapers.com, Soap.com, and BeautyBar.com, has launched a new site just for pets, Wag.com. And despite the fact that virtually every major pet store chain on the planet has an online shopping option, the world is screaming about the four horsemen drawing nigh because Pets.com tried the same thing and went down in flames ten years ago.

Calm down and go change your pants. Let’s look at this critically: go to Petco.com or PetSmart.com. Like Pets.com, PetSmart.com and Petco.com both offer free shipping and discounts. Petco offers free shipping on orders of $49 or more, while PetSmart offers free shipping for specific items. Why haven’t those online pet shopping endeavors incinerated in a glorious blaze similar to that of Pets.com? It’s certainly not their brick-and-mortar stores that are saving them—if that were the case, then Borders would be swimming in a vault of money a la Scrooge McDuck.

It’s because 1) over the last several years, consumers have made the definitive shift to online shopping (which is why Borders was doing great in 1999 and 2000, but is now filing for bankruptcy), and 2) Pets.com was going about it all wrong. Pets.com was selling its dog food for a third of the price it paid to obtain the food in the first place, so it was losing money on every sale. While it hoped to shift customers towards higher margin items, that plan never panned out. Thus, Pets.com lost oodles of money and was liquidated less than a year after its IPO.

So what will Quidsi do for Wag.com to avoid ending up like Pets.com? For one thing, it’s not offering steep discounts on pet food, so it’s avoiding Pets.com’s primary mistake, but it is offering free shipping on items of $49 or more. Secondly, Quidsi already has an established and highly efficient automated warehouse, which has been previously credited with its massive success. Quidsi’s warehouse uses robots to find and retrieve inventory (saving employees the time and the hassle), which is how Quidsi has been able to quickly and cheaply ship massive orders of diapers and other baby goods for Diapers.com.

AND, unlike Pets.com, Quidsi already has several other established revenue streams already in place. In fact, Wag.com shoppers can use the same shopping cart to shop at Diapers.com and Soap.com, which allows those other already successful sites to bolster Wag.com as it gets settled in.

"Since we launched Diapers.com in 2005, our customers have been asking for a site dedicated to the other baby in the family,” said Marc Lore, CEO of Quidsi, in a statement. “Today, we're thrilled to include Wag.com in our family of sites committed to world-class customer service, fantastic selection and lightning-fast shipping."

My prediction: Quidsi’s new Wag.com will not only avoid the dramatic flame-out of Pets.com, but will actually do remarkably well. I, for one, will definitely be using the site, because there’s nothing sadder than watching a girl trying to lug a 50-pound bag of allergen-free/grain-free dog food (my dogs have sensitive stomachs) out to her car in 103-degree heat.