ON'T bring out the sock puppets just yet, but there are signs of life in the online pet supply business.

For two years, that category has been held out as the prime example of what went wrong during the dot-com craze. Companies like Pets.com and others helped put a face on the e-commerce lunacy — the face of the Pets.com sock puppet — and inspired lore of missteps like companies' giving away 40-pound bags of dog food, with free shipping.

Advertisement

Now, the traditional companies that preceded and survived those sites say their businesses have been helped by the Internet in many cases, sometimes significantly. Yet their praise of the Web is often faint.

"I believed a good bit of the hype for awhile," said Philip L. Francis, chief executive of Petsmart, the industry leader among traditional pet supply retailers, which withdrew a planned $115 million initial public offering for its online unit in late 2000. "But before all of that, I'd believed the Internet was really just a more efficient front end for a catalog. And that's what it is."

Mr. Francis said Petsmart, which is publicly traded and sells $2.5 billion of pet supplies each year through its stores, Web site and catalog, continues to rely on the Web for sales, but mostly to steer traffic to the stores. He declined to characterize how much of its stores' sales could be attributed to the Web site but said the most highly used feature on Petsmart.com was its store locator.

And, Mr. Francis said, the company uses the site to sell goods that are impractical to carry in stores, like dozens of varieties of 50-gallon fish tanks. He said about 75 percent of the goods sold on Petsmart.com were so-called hard goods like these, whereas in the stores, those items account for just half of sales.

Given such muted enthusiasm, it is difficult to conjure the former runaway enthusiasm for the online pet supplies category, which, after books, CD's and toys, was one of the darlings of the e-commerce venture capital community. Hundreds of millions of dollars were poured into companies like Pets .com, Petopia.com and Petstore.com in 1998 and 1999.

Like many dot-com executives of the day, in 1998 Julie Wainwright, who left the defunct online movie e-tailer Reel.com to create Pets.com, cited the $15 billion size of the pet supply industry and suggested that if online retailers could take just a small share of the market, they would thrive. The problem, though, was that few e-tailers understood that dog and cat food represent nearly half of that figure and that such bulky, relatively low-price goods are nearly impossible to sell profitably when shipping to remote customers.

But as the pet supply market continues to grow, the share of nonfood items grows, thus lending some hope to the smaller number of companies now in the online pet supply market. According to a study by the research firm Business Communications, the total market will reach $33.5 billion by 2005, despite a soft economy.

"This is a recession-proof industry," said Colette Fairchild, associate editor for Pet Age magazine, a trade publication. "Even in a big recession, people still buy for their pets. It's an emotional buy."

That, and a number of other factors, lead some other industry executives to predict that the Internet could generate a more meaningful amount of money to pet supply merchants in the coming years than the $100 million in sales estimated by Forrester Research this year.

One of those executives is Mike Woodard, senior vice president for business development for Petco Animal Supplies. The company, with $1.3 billion in overall 2002 sales, is the second-biggest pet supply retailer.

Mr. Woodard, whose company bought Petopia.com early last year and now operates the site under the PETCO.com name, said the projected growth in overall industry sales was at least partially from a demographic bubble in the number of families with children from age 5 to 17, "which is where you find the highest incidence of pet ownership." Moreover, he said people were living longer, and seniors were buying pets in greater numbers, "and people are postponing childbirth longer, and having pets as surrogate children."

Like many executives with an eye on the long term, Mr. Woodard says that he expects that when today's teenagers reach their 20's and start buying pets for their own homes, they are more likely to buy a greater share of their pet supplies online. While the sales growth rates of the company's online division are much higher than the roughly 13 percent growth rate of store sales, he said, sales growth in the future will probably increase further.