Innovative Retailer – Pet Shop Bowl

Umm. OK, give me the business model du jour and the retail category investors love, and what have you got?

Errr. Look, I’ll just do it myself. I give you … a subscription service for the pet supplies market.

I was just about to say that. Quiet. In 2008 Adam Taylor was an ex-investment banker with Lehman Brothers and neither he nor his partner Alexandra Tamasan had a job.  And then like so many before them, they stumbled upon a beautiful idea based on personal need.

Which was? Pet expenditure comes under the realm of household shopping, women do the household shopping, pet food is heavy and bulky, and it needs to be bought with alarming regularity. Tamasan’s mother, disabled with arthritis, struggled. So he suddenly thought ‘Eureka! This is a classic commodity product – why is no one selling this stuff online?’

And so they did?… And so they did but Taylor added a killer USP in his unique subscription service ‘bottomless bowl’. As he says 50% of their competition is against supermarkets and 50% is against pet specialists and they’re all online but no one else has the subscription service.

But why not if it is such a good idea? Taylor reckons the changeover to a subscription service platform is possibly too big a cost for the large companies, with implementation not that easy. Also the logistics takes some sorting out too. But I’m sure I don’t need to tell you the business benefits of the subscription model in the long run.

Well, perhaps if you could mention a few. I’ll start with the consumer – it is a godsend for the customer who doesn’t want to worry about pet food. The average age of a pet is 15 years – that’s a lot of munching time and chances are, unlike people, it eats the same thing at the same rate day-in-day-out. The average pet-parent knows exactly to the day when they will run out of Whiskas again.

I just need to stop you there. Pet-parent! Yes, is there a problem? What Taylor calls the ‘humanisation’ of the family pet is a key trend in the pet market. Forty per cent of all households own a pet and they spend £3 billion a year on supplies for them. More and more people buy high-quality brands not just grocery lines for their pets and treats/accessories are also seeing a big level of growth. With the rise of single households and the recognition that pets fulfil an emotional need we’re only going to spend more on them.

And I thought children were expensive. Anyway, what are the business advantages of the ‘bottomless bowl’? Numero uno – you have a great deal of future clarity on the stock you need to hold, secondly you can use this kind of onward financial security as a confidence booster with the bank and thirdly, hallelujah,  you do not need to market to this customer, they are already retained by default. PetShopBowl’s sales are 50% food and 50% non-food and even though the subscription service can only really apply to food, treats and some items such as flea collars that’s still a lot of business on subscription.

 Subscriptions: that’s where the action is.

What is the number of customers using the service? Taylor will not reveal what the split is, or indeed what the average order is, but PetShopBowl has 30,000 customers with sales this year of £2.5 million and we will have to come to our own conclusions whether a high number of customers pay on subscription with the added attraction of a three-month price guarantee.

Oh I have. It’s a total win/win: Taylor says the negatives with implementing it were insufficient to not do it, there is no minimum or maximum subscription time, no-one is forced into doing it, and the consumer simply adds a delivery code at the checkout process so there is no hard sell. But still…I think we can assume it’s good for everyone. A one-time sale becomes a recurring sale and builds loyalty, and a high lifetime value with a low customer acquisition cost.

What’s not to like? And investors luuuurvve subscriptions. You don’t have to bet on who has the best marketing or who has the best storage facilities, you just need to bet on the sector and as we have already ascertained – pets are hot.

Talking of investors what are the future plans for PetShopBowl? Another round of fund-raising beckons. Taylor wants to double the staff and raise revenue to £3 million. The business runs a call centre which takes around 100 calls a day from people asking for advice and has 60,000 Facebook friends (the largest of any pet business in the UK) so Taylor is keen to use that forum for customer engagement and become a hub for pet information and advice.

60,000 Facebook fans smells like money to me. Are shops part of the plan? Taylor thinks that to ensure longevity a retail business should have stores too, yes. So far PetShopBowl has been resilient in the downturn and he feels that possibly being an independent helps as consumers sense the personality behind the company but he concedes that pet food pricing online is ‘surprisingly’ important with a real focus on the leanest margins, especially as it is now very easy to compare.

Dare I ask what’s next for the pet market? Oh yes, if America is anything to go by there will be a big hike in pet insurance and pet aftercare.

Aftercare being? You know, when the big dog-walker in the sky beckons. There’s money in death so expect elaborate pet funerals with a celebrant, pet crematoria and pet cemeteries.

A hole at the bottom of the garden is so last year. Absolutely.

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