PetFlow is a subscription-based ecommerce business that sells pet food, including heavy bags of it, overcoming logistic and service challenges.
The company is expected to have more than $20 million in sales in 2012, succeeding in an industry where others have failed, and demonstrating a sincere customer focus and business savvy that online merchants of any size would be wise to emulate.
At every phase of its business, PetFlow is focused on earning customer trust, and keeping it. The relationships that the company seeks are not one-way communications. Rather, PetFlow wants to learn about its customers, empathize with them, and provide real value long term.
“The Holy Grail is having a customer for life, and having that customer buy from you repeatedly, and I think the only way that you can do that,” said PetFlow co-founder Alex Zhardanovsky, “is by knowing your customers and seeking to serve them.”
“To give you a simple example, if you look on our [Facebook] fan page, we posted a customer testimonial…where the customer…was buying food for their dog, they stopped,” said Zhardanovsky, “Most businesses will just [say] ‘Okay I lost that customer’, but we go a little bit extra. We say ‘Okay, it doesn’t make sense for our customer to stop buying from us. Something has to have happened. Did we do something wrong?’
“So we reached out to the customers, just by way of email, saying ‘You left us, is there anything we can do to bring you back? What happened?’ The customer wrote back saying, ‘My dog passed away and that is why I am no longer buying from you.’
“Immediately when that happened…[we] wrote a condolences card saying, ‘We’re really sorry about your loss. We care about your pet.’ And we sent that to the person’s home.
“Four months later, that person adopted another dog, and sent us an email saying ‘I will never buy from anyone else ever again because of what your company did.'”
PetFlow’s aim is to focus on customers, learning about them individually, discovering needs and concerns, and then meeting those needs and concerns the best way possible.
Online retailers that wish to learn from PetFlow’s example should seek to carry on reasonable conversations with customers, collecting data — if you will — about those customers along the way. Then just treat those customers like real people, not order numbers.
Negotiating With Suppliers and Vendors
Pet food, particularly large and heavy bags of dry food, can be a logistics challenge, especially if, like PetFlow, you want to offer free shipping on some orders. To do this, PetFlow had to overcome margin-stealing shipping rates.
“The shipping component,” said Zhardanovsky, “is a very expensive proposition for use. It’s a major part of the business and that’s something we are continuously working on.”
To address shipping cost, PetFlow depends on an excellent working relationship with its carrier, FedEx. The company shares its vision for growth, and in return, has been able to negotiate rates that are much lower than published ones. The company has also shown a willingness to change carriers, using a third-party logistics service at one point.
To further lower its costs, PetFlow opened regional warehouses — one in the East and one in the West — which use state-of-the-art order management systems — think barcode and scanners, not paper packing slips.
Additionally, PetFlow had to deal with the fact that bags of pet food, in some cases, can be relatively fragile. So the company made the choice to purchase premium boxes and packing materials, preferring to pay a few cents more for boxes and tape, rather than having to explain to customers why a package didn’t make it.
The lesson is to negotiate the best rates possible, but never compromise customer satisfaction.
There are many other things that PetFlow does well, including casting its business as a customer channel and not necessarily a retailer. Small and mid-sized merchants could benefit from adopting PetFlow’s customer centric operations and negotiating lower rates from its vendors.