PetMed Express Inc. (NASDAQ: PETS) stock dropped to a 4-year low of $15.85 on Thursday as pressure has been mounting for the pet pharmacy operator. Investors remained concerned about the venture of Chewy (NYSE: CHWY), Amazon (NASDAQ: AMZN), and Walmart (NYSE: WMT) into the pet medications space and this could turn fatal for PetMed Express.

Chewy, which is an online company owned by PetSmart, entered the prescription business only in July 2018 but it quickly pushed hard into the prescription pet market by lowering prices and flooding the market with advertisements. Following the steps taken by Chewy, others in the space like Allivet lowered the prices. This is likely to create pressure for PetMed Express, which has been enjoying a huge profit margin till fiscal 2018.

In addition, Amazon has been taking away business from competitors and PetMed could fear of Amazon for being more efficient and taking less profit. However, Amazon is still not the primary competitor due to the non-availability of a license to sell prescription products for pets. Another competitor stepping into the market is Walmart, which is rolling out online pet pharmacy and products as well as expanding in-store veterinary clinics.

PetMed Express
Photo Courtesy: PetMed Express / Facebook post

The billion-dollar pet market remained lucrative for other retailers as 68% of US households own a pet and spend up to $1,285 a year on their pet, according to TD Ameritrade. A new study from Fortune Business Insights found that the increasing demand for advanced drugs is likely to create lucrative growth opportunities for the global veterinary drugs market. The market’s valuation could jump from $17.87 billion in 2017 to $27.57 billion by 2025.

The pet industry is experiencing significant and sustainable growth. The animal health industry is more attractive due to superior growth, less regulation, cheaper R&D projects and lack of third-party payers. Americans, on average, spend $73 billion in 2018 on pets, which represents a 4% increase over 2017, and spending will exceed $75.3 billion this year, according to the American Pet Products Association.

Along with this, the recent fourth-quarter results of PetMed Express remained unsatisfactory as the online pet medication market continued to be more competitive. The company plans to be price competitive and lift advertising for promoting brand awareness and reinforce brand loyalty. Also, PetMed will be investing in its e-commerce platform.

Shares of PetMed Express opened higher on Thursday but changed course to the negative territory on the Nasdaq. The stock has fallen over 64% in the past year and over 25% in the past three months.

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