Pet smart hardware: the heart of capital, the IQ tax of consumers

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Author｜Chen Yan Editor｜Dafeng

Source: Zinc Finance

Dear cat slaves and dog owners, are you willing to buy pet smart hardware for your pets?

As we all know, the concept of “it economy” has been very popular in the past two years, and pet owners are supporting a market worth hundreds of billions of dollars. According to iiMedia Research, the scale of China’s pet economy industry is expected to reach 493.6 billion yuan in 2022, a year-on-year increase of 25.2%, and will increase to 811.4 billion yuan by 2025.

In this new outlet, the pet economy is giving birth to various subdivisions, among which pet smart hardware has become one of the rapidly growing categories. Automatic feeders, automatic water dispensers, smart cat litter boxes, smart leashes, smart cameras and other equipment emerge in an endless stream, and the brands entering the game are also varied. There are both start-up companies such as CATLINK, Youpei, and Xiaopei Pet, as well as traditional home appliance companies such as Midea and Panasonic, and even big Internet companies such as Xiaomi are also taking a share of the pie.

The ideals of these entrants are very full. It is time-consuming, laborious and troublesome to keep pets, and contemporary young people do not have so much time to take care of pets. It is better to let technology free their hands and replace manual feeding with intelligent hardware. While owners can be lazy, they also enjoy the emotional companionship of pets, which is bound to be the general trend in the future.

The capital market also thinks so. In recent years, pet smart hardware has become one of the popular investment directions. Fengrui Capital, Xianfeng Evergreen, and Amoeba Capital have all spent a lot of money on this track. Not long ago, Youpeigang, a startup brand of smart pet hardware, completed a new round of financing of over 100 million yuan. Investors include Canming Ventures, Amoeba Capital and Zheng Zhiwen.

However, the entire pet smart hardware market is still in a rough age. The so-called smart hardware is not “smart”, product failures occur frequently, automatic feeders do not produce food, automatic water dispensers leak electricity, and there have even been “cat” incidents. It made many pet lovers outraged, and put the hat of “IQ tax” on pet smart hardware.

To this day, there is still a question mark about how much potential growth space there is in the field of pet smart hardware.

Niche market attracts capital players

The strong wind in the capital market blows up the pet smart hardware industry.

As of last month, Accompany Pet, which was only established in 2019, has completed 5 rounds of financing, basically maintaining the rhythm of 1-2 rounds a year. Investors include Qishang Group, Amoeba Capital, Angel Bay Ventures, Zhuode Capital, Challenger Capital and many other well-known investment institutions. The historical old shareholders have invested more than two consecutive rounds on average, which shows the degree of investor preference for them.

Similar companies to accompany pets include Catlink, uah Youha Technology, Comma Smart Pet iKuddle, Furbulous, etc. Their common feature is that they have been established for a short time. The brand appeared after 2017, and the main smart solution for “home pet care” , the products are developing in the direction of intelligence and digitization, and they have received the help of capital with charming technology stories.

For example, Furbulous, a pet smart product brand established last year, announced in August this year that it had completed a multi-million dollar angel round of financing, led by Xianfeng K2VC and followed by Renren Games. According to reports, this round of financing will be used for product research and development, supply chain construction and brand building.

In March this year, uah Youha announced the completion of tens of millions of RMB Pre-A round of financing, led by Fengrui Capital, followed by angel round investor Fang Zhixing Capital. Since its establishment in 2019, uah Youha has launched dozens of smart pet hardware products. Among them, the smart vacuum grain storage bucket Tmall store with a market price of 288 yuan has the best sales, which has exceeded 40,000. According to reports, uah products have also become the same style for Li Jiaqi’s pet never.

In fact, the earliest wave of financing for domestic pet smart hardware dates back to 2014. At that time, the industry paid attention to the project of smart collars, which could quickly locate pets and solve the pain point of lost outdoor pets. At that time, some start-up companies aimed at this track and obtained the support of capital such as Tongchuang Weiye.

However, the anti-lost product has a single function and a limited market. Most startups have not survived. Only a few companies such as Xiaopei Pets that have successfully achieved transformation and upgrading have stayed and continued to be active in the capital market together with emerging companies.

In August last year, Xiaopei Pet announced that it had received US$50 million in Series D financing, led by Sofina and CDH Baifu, followed by investors such as GGV Jiyuan Capital and Qiming Venture Partners. This is Xiaopei Pet’s sixth round of financing since 2014. In China’s pet industry, it can enter the top five of the single financing scale in 2021.

According to the “2022 China Pet Smart Products Industry Overview”, from 2017 to 2021, the pet smart products market will grow from 980 million yuan to 3.86 billion yuan, with a compound annual growth rate of 40.9%. It is expected that the market size will grow to 9.81 billion yuan in 2026, with a compound annual growth rate of 20.5%.

The market is in full swing, and cross-border players also come to share a piece of the cake.

In 2019, Xiaomi completed the A-round investment in the pet smart hardware brand “Cat, Cat and Dog”. The jointly developed Mijia smart pet water dispenser and Mijia smart feeder products have been mass-produced, and cats, cats and dogs have also become Xiaomi’s ecological products. part of the chain enterprise.

In 2020, Midea opened a Tmall flagship store for pet products, and then launched air purifiers, water dispensers for cats, air boxes for cats and other pet smart products; in 2021, Midea also launched “Cat Gravity” and “Fluffy&Floppy” Two independent brands.

In August of this year, OPPO also entered the field of pet appliances and launched an ecological product smart cat litter box.

It is not difficult to see that there are more and more players entering the pet intelligent hardware track.

“High-tech” products, difficult to quality

On the one hand, the pet intelligent hardware camp continues to expand, and on the other hand, there is a steady stream of product quality and after-sales service issues. What consumers thought of as “really fragrant” turned out to be “noisy” in the end.

Last year, Xiaopei Pet, dubbed “the first brand of pet smart products”, issued an announcement. A few months earlier, when a tenant of a community in Tianfu New District, Chengdu, Sichuan went out, his home suddenly caught fire. The investigation of firefighters showed that the cause of the fire was a fault in the wiring of the pet smart water dispenser, which generated a high-temperature arc and ignited the surrounding combustibles.

Although there were no casualties, the pet cat at home was accidentally lost. After more than a month of searching, the owner finally found the cat, but the cat has unfortunately died.

The incident of Xiaopei’s smart pet water dispenser is not an isolated case. Some netizens reported that the power supply of their Xiaopei water dispenser suddenly exploded, and the cover on the plug was directly scorched and exploded. Fortunately, he and the cat were sleeping downstairs at the time, so no more damage was caused. Some netizens said that a friend’s cat had blood in the urine. He went to the hospital for examination and was diagnosed with idiopathic cystitis and dehydration. After he went home and tested it with an electric pen, he found that the smart water dispenser he bought was leaking electricity.

The owner has long regarded the pet as a member of the family, and the purchase of pet smart hardware threatens the pet’s life, which is unforgivable.

In fact, on platforms such as Xiaohongshu and Black Cat Complaint, doubts about pet smart hardware are overwhelming. Some people even shouted, “Don’t buy it, it will become unfortunate”.

In June of this year, a shit shovel officer complained on Xiaohongshu, and the CATTA cat tower smart cat litter box that accompanied the family broke three or four machines in just half a year, and the same part failed every time. It can be said that Refresh cognition. After the warranty period, the smart cat litter box was broken again, and the netizen took apart the machine by himself to see what happened.

It was found that there are defects in the design of the smart cat litter box with the family, the wiring is disordered, the sealing is not strict, the circuit board is not blocked, and the machine is easily damaged after falling into corrosive substances. And this problem does not only exist in the brand of Youpei. Many smart cat litter boxes on the market have similar congenital defects, but the brands have unanimously “ignored” them.

In the comment area of ​​this note, many netizens shared their experience of stepping on thunder, “It’s broken seven or eight times, the base is broken, and the display cover is broken”, “It’s very troublesome to clean up”, “It’s okay to use it. , it is too prone to problems, and once the warranty period is over, I don’t know what to do.”

There are also many consumers who resort to the black cat complaint platform, mainly involving issues such as poor quality and poor after-sales. Many people said that within a year of buying a companion product, it was constantly replaced and broken, and the product defects were never repaired, which was very annoying. On the complaint pages of Catlink and Xiaopei Pet, many netizens reported that their after-sales service was not good. After the product had quality problems, the customer service took time and did not want to repair it.

As the pet smart hardware market is not yet standardized, the industry lacks corresponding standards and supervision, resulting in mixed brands, unreasonable product design, uneven quality, and low technical content.

The track “gimmick” is greater than practical

Although quality problems occur frequently, the price of pet smart hardware is not cheap. Pet smart water dispensers and feeders start at a few hundred yuan, and most of the smart cat litter boxes are more than 1,000 yuan. This makes people wonder, is pet smart hardware really not an “IQ tax”?

It is true that pet smart hardware brands have compiled a lot of stories about the future in these years, such as liberating the owner’s hands and giving pets more precise physical health monitoring, etc. However, judging from their products, these stories have not become reality. The advancement of technology research and development is very limited, and the so-called smart products are just “gimmicks”.

The entire track is in an immature and impetuous stage. Even the pet market should be people-oriented, but at present, many products do not bring convenience to consumers, and because of frequent safety issues, a crisis of trust is caused. Finally, the products are thrown into the corner for various reasons, and consumers only feel that they are being “Cut the leeks”.

In short, the product is immature, but the brand is reluctant to spend more time polishing it.

In addition, unlike cat litter, cat food, deworming medicine and other products that pets just need, pet smart hardware is just an additional product for the owner. If it does not have outstanding advantages in technology, it needs its price to fall back to a more acceptable range for consumers. Hundreds or thousands of “useless things” are destined to be only a niche market, and it will become more and more difficult.

In May of this year, Midea carried out a large-scale layoff, including the business of pet smart hardware. Zhong Zheng, CFO and Chief Financial Officer of Midea Group, said that the optimized business and some SKUs have no impact on Midea’s overall revenue, but are beneficial to profit improvement. This may indicate that business such as pet smart hardware is a loss-making business in Midea.

In recent years, pet smart hardware has been welcomed by the capital market and gained new development opportunities. But if it just wants to make quick money, doesn’t solve technical and quality problems, and doesn’t make the cake bigger, it will still be a “false proposition” after the wind passes.

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