In 2006, the Pennsylvania-based company generated revenue of $62.4 million, and that number has continued to grow during each of the last three years. This past year, it generated roughly $85 million. Across all of its sites, the retailer boasts a combined product offering of more than 50,000 products.
Up until 2004, Dog.com had been operating as a forum for dog lovers, and when Alex and Carlo purchased the Web address in 2004, they immediately began to integrate products but made a conscious effort to maintain the community aspect the site’s visitors seemed to embrace.
Within one year, the brothers were able to double the amount of traffic generated by the site. According to Alex, one of the major components of the brothers’ strategy lies in the names of their URLs. He said they make a conscious effort to purchase URLs with simple names.
“We like all of our Web sites to have very simple names because it has proven to draw a lot of traffic,” he said, noting that the company has had to pay between $500,000 and $1 million for some of its URLs, simply for this reason.
Currently, Pets United has two warehouses, one in Pennsylvania and one in Missouri, and it ships to most US states. By the end of 2010, the company hopes to begin selling products to an international customer base, shipping from its two existing warehouses.
“Our expansion will depend mostly on operational aspects. There are rules about what you are and aren’t allowed to sell across certain boundaries; even within the US there are laws about what you can move from one state to another,” Alex said. “We want to make sure we’re not pinged by a bunch of fines when we open up an option like international shipping, but we do hope to introduce it next year. We estimate we’ll be able to ship to Canada by early 2010.”
To improve the efficiency of its domestic shipping capabilities, the team at Pets United is in the process of implementing a multi-warehousing strategy that will allow it to ship a wide assortment of products from either of the two locations. Right now, certain products only ship from one location or the other.
Alex said the new strategy will improve operating efficiency as well as the customer experience. “We hope to have this up and running within six months,” he said. “This will help us get orders out to our customers more quickly because we’ll be able to ship from whichever warehouse is closer to a particular customer.”
The best option
Primarily, the footprint of Pets United has grown through a series of acquisitions. Of course, as in any industry, there are advantages and disadvantages related to purchasing an outside company.
“It’s our belief that acquisitions are the best option for us in terms of being able to put a lot of traffic through our existing infrastructure, which is quite large,” Alex said. “A good amount of the products we want to sell can’t be sold unless you have the rights to them, and you can only attain the rights if you’re already in the business, so that’s an aspect we have to consider.”
With many of its recent acquisitions, Pets United has purchased a specific company as well as its existing database of clients and products. One aspect of acquisitions the organization is looking to tweak in the future, however, is staff. For the most part, staff hasn’t transferred to Pets United during these deals, but looking forward, Alex would like that to happen.
“We haven’t retained staff with the acquisitions we’ve done, simply because that was the nature of the deal, but in the future, I would strong advise against us bringing on a company without retaining its employees. That breadth and depth of product knowledge isn’t something you can replace quickly or efficiently,” Alex said.
Although the pet arena is Pets United’s primary focus, the organization has a presence in the outdoor space and the green space. In terms of the former, it owns Garden.com and Camping.com, and in terms of the latter, it owns Green.org, Solar.com, and Wind.com.
Many of these sites will be launched in 2010, which should spur more growth for Pets United as a whole. The green space is proving especially promising, with a recent spike in interest in sustainability.
On Solar.com, for example, Alex and his brother hope to offer everything solar, from solar panels to garden lights to installation kits and water pumps. In addition, they plan to post a lot of information for customers looking to install solar-energy products in their own homes.
Accompanying the introduction of these new sites will be a back-end transformation, which will allow the organization to take advantage of its efficient infrastructure. “Because we purchased a lot of companies, we’re running different systems for each of them right now, and we’re working on the back end of things to get them all running on one system by first quarter 2010,” Alex said.
“This will create huge efficiencies for us in terms of operations, merchandising, and finance,” he added. “It’s an important step forward as we continue on in search of more growth through acquisition.”