Barclays on U.S. Retail Hardlines: Wag.com - Initial Take/Pricing Study on New Pet Supply E-commerce Site
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Rating Summary:
65 Buy, 5 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 17 | Down: 14 | New: 17
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Barclays on U.S. Retail Hardlines: Wag.com - Initial Take/Pricing Study on New Pet Supply E-commerce Site
Barclays analyst, Alan M. Rifkin, said, "With the support of Amazon (Nsadaq: AMZN)(Equalweight), the site is able to take full advantage of the company's elaborate domestic distribution and shipping network. Wag.com offers free 1-2 day shipping for any order over $49, with a $4.99 shipping charge for any order that is less than $49. More specifically, the site claims that it is able to ship to roughly 70% of U.S. locations within one day, with no additional charges for bulky items such as large bags of dry food or heavy boxes of cat litter. Additionally, buyers can combine their Wag.com orders with orders from Diapers.com, Soap.com or BeautyBar.com and receive free shipping on any total order that is over $39. In contrast, PetSmart's E-commerce site currently offers $5.99 shipping on orders of $60 or more, with additional charges for larger pet food items and supplies."
"Wag.com represents a credible new entrant into the lucrative market for pet food and supplies. While our study yielded prices at PetSmart.com to be 4.8% cheaper than a comparable basket at Wag.com, the inclusion of shipping costs resulted in PetSmart.com being nearly 12% more expensive. On a market price basis, our pricing study indicates that PetSmart.com is somewhat cheaper than Wag.com. For dry bulk items such as food, however, Wag.com's total basket is cheaper than PetSmart.com's basket after factoring in shipping charges. Nonetheless, PetSmart (Nasdaq: PETM) remains one of our top picks for the remainder of 2011, along with AutoZone (NYSE: AZN), Bed Bath & Beyond (Nasdaq: BBBY), O'Reilly (Nasdaq: ORLY) and Tractor Supply (Nasdaq: TSCO). Additionally, we reiterate our topline growth assumptions for PetSmart, which we currently forecast to be 6.5% in 2011 and 5% in 2012."
Barclays analyst, Alan M. Rifkin, said, "With the support of Amazon (Nsadaq: AMZN)(Equalweight), the site is able to take full advantage of the company's elaborate domestic distribution and shipping network. Wag.com offers free 1-2 day shipping for any order over $49, with a $4.99 shipping charge for any order that is less than $49. More specifically, the site claims that it is able to ship to roughly 70% of U.S. locations within one day, with no additional charges for bulky items such as large bags of dry food or heavy boxes of cat litter. Additionally, buyers can combine their Wag.com orders with orders from Diapers.com, Soap.com or BeautyBar.com and receive free shipping on any total order that is over $39. In contrast, PetSmart's E-commerce site currently offers $5.99 shipping on orders of $60 or more, with additional charges for larger pet food items and supplies."
"Wag.com represents a credible new entrant into the lucrative market for pet food and supplies. While our study yielded prices at PetSmart.com to be 4.8% cheaper than a comparable basket at Wag.com, the inclusion of shipping costs resulted in PetSmart.com being nearly 12% more expensive. On a market price basis, our pricing study indicates that PetSmart.com is somewhat cheaper than Wag.com. For dry bulk items such as food, however, Wag.com's total basket is cheaper than PetSmart.com's basket after factoring in shipping charges. Nonetheless, PetSmart (Nasdaq: PETM) remains one of our top picks for the remainder of 2011, along with AutoZone (NYSE: AZN), Bed Bath & Beyond (Nasdaq: BBBY), O'Reilly (Nasdaq: ORLY) and Tractor Supply (Nasdaq: TSCO). Additionally, we reiterate our topline growth assumptions for PetSmart, which we currently forecast to be 6.5% in 2011 and 5% in 2012."
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