I am Skeptical of the APPA’s Pet Report

Every other year, the American Pet Products Association (APPA) produces an in-depth report on various US pet industry statistics. The report gives numbers for things like pet ownership, sales totals for pet products & services, and tracks details such as how often dog owners walk their pets. The report costs a hefty $3,500 and is treated like gospel by much of the pet business community.

However, I have serious doubts about the accuracy of some of the claims in the latest report.

First, the report wildly overstates the popularity of pet insurance. The APPA claims that 10% of dog owners and 5% of cat owners have health insurance for their pets, resulting in more than 13 million pets (9 million dogs and 4.5 million cats) being insured. These numbers are not accurate.

Before I started this blog, I was involved in the pet insurance industry for almost 10 years. And as one would expect, the pet insurance industry is made up of a bunch of very smart, very nerdy actuaries, who closely track their customers. (Present company excluded – I may be nerdy, but I am not that smart.) And according to their own customer data, the number of pets insured in the US and Canada in 2017 is 2 million, or just over 1%. Note that this number includes both the US & Canada, so the number of insured pets in the US alone is even less than 2 million.

Now the pet insurance industry would love nothing more than to be able to claim that 10% of dogs and 5% of cats are covered by insurance in the US. However, this is not even close to being accurate and it was widely known within the insurance industry that the APPA’s numbers on this issue were way off. Indeed, the APPA stats on pet insurance are off by more than a factor of six.

The second part of the APPA report that appears questionable is the claim that 43% of dog owners and 27% of cat owners have an electronic tracking device for their pet. This would mean that 38 million dogs and 24 million cats (totaling 62 million pets) have electronic trackers. (Both this and the insurance claim above are based on APPA stats showing about 90 million dogs and 94 million cats in the US.)

Sixty-two million electronic pet trackers seems awfully high. Unfortunately, unlike the pet insurers, the various pet electronic tracker manufacturers do not share sales data in an industry report that we can simply review in order to see the total number of customers.

However, we do have some good data on the $15 billion US pet supplies market.  Pet supplies are divided into two categories: pet durables and pet medications. Pet durable goods are items not for immediate consumption and able to be kept for a period of time. Things like dog beds, leashes, collars, toys and all pet tech products, including electronic trackers.

Durable pet goods account for approximately $5 billion in sales, while pet meds account for about $10 billion in sales.  (FTC, Packaged Facts pet med report, APPA, Packaged Facts pet supplies report)

Market research firm Packaged Facts further notes that tech products make up $400 million of the $5 billion dollar pet durable market. This includes all tech products, not just electronic trackers. So the 62 million pet trackers are a just a slice of the $400 million pet tech pie.

Now lets do some back-of-the-envelope calculations and try and test this number.

I am not sure what the lifespan of an electronic pet tracker is, but if we spread these supposed 62 million trackers over a period of 4 years, we can assume that approximately 15 million trackers are purchased every year.

The most popular tracker, the Whistle Go, retails for $99.95. Other electronic tracker prices range from $25 to $495. If we assume an average price of $60, that would put us at $900 million dollars in smart tracker sales per year (15 million x $60 = $900,000,000.)

This supposed $900 million in electronic tracker sales is almost double that of the entire pet tech industry!

Now it is possible that the APPA is correct and that Packaged Facts has vastly underestimated the size of the pet tech industry.  However, $900 million is still almost 20% of the $5 billion pet durable sales. That means that almost 2 out of every 10 dollars spent on pet toys, beds, leashes, etc, is spent on electronic trackers. This does not pass the smell test (or sniff test either.)

Now I don’t wish to be overly critical of the APPA. It is probably very difficult to quantify data about pets, their owners and the purchasing behavior of pet-related products and services. And other than the claims about pet insurance and pet trackers, I have no reason to doubt any of the other conclusions in the APPA report.

Feb 2020 update:  Whistle Labs has estimated that more than a million electronic trackers have been sold industry-wide since 2012.  Assuming “more than a million” means a number between 1 and 2 million, this number also contradicts the APPA’s claim that 62 million trackers have been sold.