We all know that the backs of innovators and pioneers are often riddled with buckshot, which often dampens the spirit of others to dare to go where they have been. Those that do go forth often prosper, as I was reminded in a story about disposable diapers recently. Procter & Gamble’s Pampers weren’t the first mass-marketed disposable diapers out there. Johnson and Johnson had a now-defunct line called Chux that was trademarked in 1932 (note to fact-checkers: yes, we’re aware that Milkweed leaf wraps may have been used in ancient times but there’s little evidence of a global ad campaign).
All of this brings us to a different type of pampered sentient being -- our pets –- and the attempts to capture the potential vast online market of their enablers over the years. The New York Times’ Darren Dahl has a piece this morning about PetFlow.com, which bills itself as “America’s favorite scheduled pet food delivery service.”
One of the entrepreneurs behind the site, Alex Zhardanovsky, sold an online ad company called AzoogleAds a few years ago and went looking for a new adventure. One of the things he’d noticed at AzoogleAds was that companies that had subscription models seemed to be more successful. Netflix is a case in point.
So, after Zhardanovsky and co-founder Joe Speiser tested the idea of whether dog owners would be amenable to signing up for regular deliveries of their favorite chow with a modest web page and receiving an “overwhelming” response, they launched PetFlow in July 2010. They took in 60 orders that month. Last year, they grossed $13 million and are looking to exceed $30 million this year. Sixty percent of the sales are from people who have signed up for regularly timed deliveries.
“I’ve come to appreciate that subscription models are, in so many ways, the holy grail of business,” Zhardanovsky tells Dahl, who also writes about other companies that are based on a subscription model.
Because of the “predictability,” factor, PetFlow maintains lower inventory levels and is able to negotiate better deals with suppliers, “who appreciate that PetFlow does not discount its sales and that its customers are much less likely than others to switch to a different brand,” writes Dahl.
“We have 60% of our customers telling us that they used to shop at Petco or PetSmart,” Zhardanovsky tells him. “Which means we’re taking a lot of people out of the traditional retail channel.”
And that, of course, is exactly what the poster website for the failed dot-com era -- Pets.com –- intended to do –- a point acknowledged not only at the top of this story but also in a piece by the Wall Street Journal’s Stu Woo on Tuesday that takes a look at “a new litter of Web-only pet-supply stores that have emerged in recent years, with some such as MrChewy.com and Wag.com sprouting just in the past few months.”
Why are they succeeding –- or on the wishful verge of succeeding -- when Pets.com failed, despite raising $110 million, going public and infesting the airwaves with its infamous sock puppet commercials?
Well, for one thing, the cost of entry has gone way down even as the customer base has expanded –- both in terms of people who regularly shop online, as well as in those who are kept by pets.
Julie Wainwright, the Pets.com former chief executive, tells Woo that it took $7 to $10 million to get Pets.com running, before acquiring inventory. Now she says it costs about $25,000 to $30,000 –- presumably the amount she spent in launching TheRealReal, an online luxury-clothing marketplace, last year. Zhardanovsky estimates it took about $50,000 to get PetFlow.com going.
Forrester Research’s Brian Walker doesn’t see quite the differential that Wainwright does, but does say that it cost three to five times as much to launch a decade ago. "The technology to run the site, the physical warehouse, site hosting, and staff would require a significant investment before you were even live with the site," he says.
Not to mention those requisite Super Bowl ads.
One thing PetFlow doesn’t seem to have neglected is good, old-fashioned PR. “PetFlow.com Ships More Than One Million Pounds of Pet Food in January, 2012” went out on BusinessWire on Feb. 15.
“PetFlow.com Names Michael Lackman as Vice President of Operations; Online Pet Supply Retailer Hires New Management to Keep Pace with Growth” went out on BusinessWire on Feb. 21.
And pieces in arguably the most prestigious business sections in the country went out to the masses this week. I’m not saying that either reporter was prompted by the releases or prodded by a publicist. I’m just saying, “good job,” somebody, in getting what we used to call ink.