Barking Up the Right Tree: How PetFlow Went From Zero to $50 Million in 3 Years
Fifty million dollars worth of pet food is a lot of kibble to deliver. But that’s what PetFlow, a New York City-based startup, expects to do this year.
Founded by veteran online marketing execs Joe Speiser and Alex Zhardanovsky, PetFlow brought in $1 million in revenue its first year and closed out 2013 with $39 million in sales of pet food and pet-related products. And that’s in a market where goliaths Petco, PetSmart, and Amazon have challenged the company from day one.
Speiser and Zhardanovsky succeeded by bucking convention while still paying heed to it. They did it by studying the competition. They did it the old-fashioned way: with lots of hard work and trial and error.
Creating awareness of your brand is a challenge for any company, and PetFlow was no exception. “The challenge in the pet food category,” Zhardanovsky says, “is that most people are not out of pet food when you need to sell them product. They run out infrequently, about every five and a half weeks. So, building awareness was important. When they get close to the point of reordering, they need to know we exist.”
PetFlow did that, in part, by cultivating a robust Facebook community and staying consistently engaged with its fans. The company posted cute (branded) pet photos, ran contests, and asked for comments. It also invested in boosting posts and advertising on Facebook, keyword advertising and search marketing, and direct-mail coupons. “Our ideal customer is a woman over 45 years old, and Valpak reaches that market,” he says.
New Media, Old Methods
Much of PetFlow’s success in social media ties back to tried-and-true marketing. “We offer order starters,” Zhardanovsky explains. “For example, we offer a pet-safety LED light [to put on dog collars] for 1 cent.” The deal acts as a loss leader to draw people into the online store, as does its homepage, which is designed to look like a daily deal site offering myriad bargains.
“Once people have three, four, five items in their shopping cart, we find that they are less likely to abandon it and more likely to shop for more items,” he explains.
PetFlow follows up its order starters, or any first order really, with a strong second offering. This might be a code for 15 percent off pet food or $12 off its auto-ship shipping service. Or, it could be a deal, such as $15 worth of pet food for 99 cents, which PetFlow can afford by offering new product a manufacturer wants to test-market.
Pricing, Testing, and Refining
Despite these deals, PetFlow does not try to beat larger competitors on price. “I challenge the notion that e-commerce has to be cheaper,” Zhardanovsky says. “You already have a major chore removed by not having to go to the store, to the same aisle, to buy the same dog food every time.”
Because PetFlow’s owners are so steeped in online marketing, the company tests just about everything it can to see what works and what doesn’t. “You can tweak your website to perform better,” Zhardanovsky says. “We changed our Add to Cart buttons to green from blue. That raised sales by 8 percent.”
It’s the little things that matter, Zhardanovsky says. And those little things can add up to big sales: This year, PetFlow expects to report $50 million in revenue.
Dave Clarke is a business writer for Intuit and is passionate about solving small business problems.