Veterinary product sales are changing? Get on board

Veterinary product sales are changing? Get on board

Your clients want convenience and low price—the same things you look for as a consumer.
Sep 01, 2010

Karen Felsted, DVM, CPA, MS, CVPM
Ever since PetMed Express opened for business more than 10 years ago, the handwriting has been on the wall: Veterinary practices can't keep all product sales in-house. The recent decision by a major animal health company to sell flea and tick products directly to pet owners via pet stores and websites didn't create this reality—many of the drugs and other products veterinarians prescribe or recommend have been available elsewhere for years.

The truth is, clients' preferences about where to buy pet products and what they're willing to spend are changing, recession or no recession. If those clients have made it clear that they want to buy products somewhere else, shouldn't we be asking why instead of assigning blame? If I wanted a TV and I could get it cheaper and more easily from one store versus another, I would. So would you.

Of course, many practices have already responded to the increased availability of products online and at pet stores with agility. They've lowered prices, set up their own product websites, shipped products directly to clients, and built better reminder systems. They've worked harder to add value to the practice visit experience.

And it's worked. In spite of all the predictions that product revenue would soon be a thing of the past, studies from AVMA, AAHA, NCVEI, and Veterinary Economics all show that product revenue as a percentage of total gross revenue remains steady at about 30 percent. In fact, all those studies show product sales revenue to be slightly higher in recent years.

Certainly there have been changes in how that revenue is generated. Margins are lower, volume is higher, and the mix of products sold has shifted. But clients are still buying a lot of food, prescription drugs, and nonprescription items from veterinarians.

There will no doubt be more changes in the future, but instead of fighting those changes, we need to focus on adapting to them. We do this by providing services to our clients that no one else can provide in a way that clients value and will want again and again.

The recent decision to sell products through other venues wasn't a personal attack on veterinarians. In fact, this particular company continues to support the profession in many ways. Its leaders based their decision on the same reasoning you use every day: They want to offer high-quality products and services to pet owners in a way that pet owners value, and (gasp!) they want to make some money doing it.

What's happening to us has happened to other industries before. Consider travel agents. Fifteen years ago, most of us used travel agents to book our flights. Agents made a lot of their money through airline commissions. Then the airlines started their own websites, and the traveling public—including veterinarians and their families—started booking flights online.

We didn't say to ourselves, "If I book my flight online, my poor travel agent won't make any money, so I'll keep using her even though it's more expensive and not nearly as convenient." No, we said, "Wow, booking online is great!" And we never looked back. If we thought of travel agents at all, we said, "Tough—business changes. They need to get over it." We need to do the same.

Dr. Karen Felsted, CPA, MS, CVPM, is CEO of the National Commission on Veterinary Economic Issues. Send comments or questions to