Why Smart Pet Toy Startups Are Adopting Subscriptions

Entrepreneurs can sometimes find inspiration for their next projects from their pets. The founder of Internet of Things (IoT)-based pet subscription service PupPod was inspired to start his company after observing his dog. “He would react to things on TV that you wouldn’t expect,” PupPod CEO Erick Eidus told PYMNTS in an interview. Eidus said his dog wouldn’t bark at cartoons playing on the TV, but he would recognize a cartoon dog – and other cartoon animals – over the other characters.

But when Eidus looked at all the products on the market for dogs, such as plush toys, he noted that none of them truly captured a dog’s intelligence, which inspired him to start thinking about building technology products for animals. With his experience designing early smartphone products, it became clear to Eidus that there would be a product category of IoT-connected devices for animals. “They just need to be designed from a dog’s perspective,” he noted.

The PupPod toy, which is called a wobbler, is essentially a puzzle game connected to a smartphone that uses a combination of lights, sounds and timing in conjunction with a separate Bluetooth-connected treat dispenser. To earn a treat, Spot has to figure out when to touch the toy at the right time. At first, the canine only has to sniff the toy as a motion sensor detects the action. But as the game becomes more complicated at higher levels, he has to complete more complex actions to score a treat.

The Pricing Model

For now, PupPod works with Smart Animal Training Systems’ Pet Tutor dispenser, as the company doesn’t make its own tool to dole out treats. Consumers can buy the wobbler – as well as the dispenser – through the websites of both companies. On the PupPod website, consumers can pay either through the PayPal or Stripe payment gateways, and they choose a membership plan when they purchase their wobblers on PupPod’s site.

Eidus noted that his company was selling everything for a fixed price before last winter. However, he later decided to shift to a subscription business model, as his product is “way beyond an impulse buy” and “a pretty big commitment for a lot of people.” He moved to a pricing model where consumers buy the wobbler and Bluetooth dispenser at a lower price in exchange for signing up for that offering.

Eidus’ company offers three subscription tiers, basic, premium and concierge, as “a way to test the market.” But so far, he has noticed that roughly 30 percent of his subscription customers have chosen the concierge plan, which is the highest tier, and most other customers went with the middle-tier plan. Hardly any customers opted for the basic plan. The top subscription services often incorporate plan options into their offerings: According to the PYMNTS Subscription Commerce Conversion Index, nearly all – or 95 percent – of the top performers in Q4 2018 offered plan options.

The IoT Pet Toy Market

Eidus said many of his early customers are dog trainers, as they recommend puzzle toys to their clients almost universally. Other customers range in demographics, but share a common thread: They have dogs that need more activity than they can provide. They also might also feel guilty when they leave their dog home while they go to work, or their dogs might have mild separation anxiety. The PupPod stimulates and wears the pup out during such times.

In comparison to other tools on the market, Eidus described his product “a modern puzzle toy” and “the future of puzzle toys.” By contrast, he noted that traditional plastic puzzle toys have many downsides. While this class of product isn’t expensive, Eidus said dogs tend to get bored with them, or might try to destroy the puzzle toy when it runs out of food. His device, however, smells like a cell phone because it doesn’t have any food inside, so “there’s not a lot of incentive for a dog to try to tear it apart.”

In all, Eidus sees the market at an inflection point as the relationship between people and pets continues to evolve. (Dogs, for instance, have moved from the backyard into the home, and even into the bedrooms of their pet parents.) In fact, Nielsen noted in its paper on pet care trends last year that “the humanization of pets has played well for brands and retailers that have developed or pivoted their strategies for consumers looking to treat their furry friends to the best that life has to offer.”

Entrepreneurs, then, are designing products for dogs that appeal to the evolving demands of modern-day consumers and seek to solve some of the problems with pet toys on the market. And, with the help of the subscription business model, they are making their products more accessible for consumers (and their pups) heading into the future of entertainment for dogs.