“People would rather sacrifice their own spending than their pet’s food. That says a lot about how recession-proof this sector really is,” says PetShop.co.uk CEO Adam Taylor.
This is the ethos that drives Taylor and his now-wife Lexi, who co-ran this subscription-based, tech-heavy pet supply business from their family home in London as early as 2009.
“I lost my job, and so did my wife during the recession, and we were looking for business opportunities that were recession-proof. Honestly, I have my mother to thank for this,” he adds.
Taylor credits his mother’s “forgetfulness” for his business idea. “When I was made redundant, I had to live at my family home with all of our dogs and cats, and she’d always forget to pick up pet food. I had to keep running to the shops,” he adds.
“Pet food is heavy. You throw it in the larder and forget about it. My mother’s arthritis makes it hard on her to keep stocking up on these massive bags of food. I looked into a subscription service for pet food, but in 2009, nobody had set something like that up,” Taylor explains.
“I didn’t fully appreciate it back then, but pet food is amazing for the subscription model, because pets generally eat the same food for most of their life. The market was bigger than I thought, and there hadn’t been much innovation in the space for years.”
Taylor’s data-driven approach helped him set up what is primarily a tech business. Looking at the market, he identified that those who buy pet food tend to be 55 to 65-year-old women. “Unfortunately, this (demographic) doesn’t get as much technological innovation or attention. There’s absolutely a niche for the older market,” he says.
In their first year, the Taylors built a large database of pet owners in the UK, and had 149,000 followers on social media. The market was ripe for disruption, and consumers were hungrier than they thought, he adds.
Rapidly after PetShop.co.uk’s launch, the subscription-as-a-service model started to become mainstream in the UK and beyond. Taylor saw newer entrants trying to make their mark, as well as large pet food brands dabbling in what was once a unique and niche space. This is where investing in technology became Petshop.co.uk’s unique selling point.
“Our whole thing is about using technology to offer the most convenient options to our customers. We’re competing against the likes of Petsathome, and Zooplus, big publicly-listed German company,” Taylor says.
“It’s all about embracing a culture of innovation, backing the technology we need to stay competitive, and relying on social media to tell our story and connect with consumers.”
Why investing technology presents tangible ROI
It’s not easy for a homegrown brand to keep pace with competition. For PetShop.co.uk, future plans include diversifying its services to new subscription-based models and expanding internationally into France, Germany, Spain, Portugal and the Nordic region.
“When we set off, we started out with off-the-shelf software for our individual needs. We used Quickbooks for accounting, and Google Calendars for reminders. It was very primitive and manual, but we achieved up to £1m in sales.”
Taylor realised that the company was offering a subscription services without building an automated system, which wasn’t sustainable for scale.
“Standalone systems don’t talk to each other,” he adds. We wanted an ERP system, a CRM system, an email marketing system all in one. It was an obvious choice for us to turn to a unified cloud platform we could access anywhere. It was a blank canvas; we needed the flexibility to build anything we wanted when we wanted.”
“We had all these ideas, but we were held back by the restrictions of our standalone software. What’s exciting for us now is we’re able to invest in technology, push the boundaries of what widgets and tools of ordering pet supplies with recent funding.”
Taylor feels thankful for starting out with those ‘primitive’ systems when they did. “We benefitted from being frustrated with the off-the-shelf software. We switched to NetSuite when we were making £2m revenue, when we had been going for about 4 years. We looked at Shopify and Magento, but these options were e-commerce platforms, not an entire ERP system. Even with the APIs and unlimited amount of widgets, there are still a lot of restrictions because of the core platform.”
Old school marketing still has a place in business
PetShop.co.uk was founded with the help of a £5,000 Prince’s Trust loan in 2010 by Adam Taylor and his partner Lexi. PetShop.co.uk and the first-ever subscription pet food service, Bottomless Bowl, was born from a gap that the couple perceived in the market for a faster and more convenient way to buy pet supplies.
But their true market differentiator was the founders’ view of using new technology and old marketing values.
“It’s all about personalisation for us. I’ve always had jobs in retail, even selling trainers at SportsDirect. I love the direct customer interaction, which can be lost online,” Taylor says.
“We call is the ‘mum promise’, because we treat all customers like you’d treat your mum. And our Trustpilot score reflects that.”
Using NetSuite, PetShop.co.uk collects pet information, such as breed, size and age, to suggest what food would be best for them. “We educate customers on that, and allow them to order weekly intervals as well, using NetSuite again to suggest how frequently they could order pet food,” he adds.
“We usually have an influx of sales at the end of the month, around payday, but not everyone gets paid at the end of the month, so subscriptions can be selected on any day to suit our customers. It’s the flexibility that makes us who we are.”
Email marketing is crucial tool for PetShop.co.uk. Using automation and personalisation, the company has an average 13% of conversion rate of people who open their emails. “This is a really exciting time for e-commerce and retail. If (customers) bought a certain food in the past, we can suggest a complimentary food. It’s still in the very early stages across applications, but e-commerce’s ability to personalise is getting more and more exciting as software is improved.”
“Personalisation is absolutely key. I still handwrite all of our emails, and we let our customers in. Often, they call up and ask about my mother and family pets.”
Personalisation may be the mot du jour for big companies like Amazon, but for Taylor’s 10-person team in the office (and an addition 15 in their warehouse), competing with the big guys on scale is not an option. It’s the flexibility to automate a personal environment that makes them unique in the market, he says. “After all, big companies are slow moving.”
“A key decision for us, competing against big players, was the ability to innovate and have a blank canvas and play around with,” he adds. This culture of experimentation has helped PetShop.co.uk become a ‘preferred marketing partner’ for behemoth brands like Colgate Palmolive, Nestle and more.
“They can’t try things like automating a trial campaign. In the past you’d hand out free samples and hope customers buy it again. Data insights are not available to them, but are through us.”
“We can give out samples and collect email addresses, see the pages customers have visited, and if they come back, we can look at if they subscribed, if they left a review, and other key insights that are invaluable today. Big brands are getting a lot more ROI using our platform.”
A 50% growth rate is no small feat. PetShop now stocks over half a million pounds’ worth of merchandise and a range of over 10,000 products. To build on its success and backed by the recent £400,000 grant, Productivity Grant from the UK Government, PetShop.co.uk has plans for further expansion, including an increasing focus on its subscription business and international customer base.
“A large amount (of the funding) is going into our NetSuite development, because we pretty much use (this platform) for everything. We’re moving our website onto a new SEO platform, and most of the development is going into back-end and front-end to personalise the website even more.”
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Taylor lets the data do the talking. The repeat pattern for pet food shoppers means the scope for personalising the homepage can be invaluable. “It can expedite the process of ordering and make our customers feel specifically catered to. We’re also innovating the checkout stage.”
“The big brands are moving a lot of their marketing money online, so that’s where we’re going to use NetSuite going forward.”
“I think brands and retailers need to get better investment out of marketing money. How do you create new customers? That’s important, but the real question is ‘how do we grow brands?'”