Identifiable private labels & engagement with pet owners our advantage over horizontal e-tailers: co-founder Rana Atheya

10 Sep, 2014

Pet care is a niche vertical for e-commerce, and just a few players have stayed long enough to build a platform., run by Gurgaon-based Petsglam Services Pvt Ltd, is one such platform. The firm, which had raised an undisclosed amount in funding from India Quotient last year, is now close to securing fresh round of VC funding. Founded in 2007 by the husband-wife duo of Rana and Vizal Atheya, DogSpot is looking to fight at a time when large horizontal e-commerce firms like Amazon and Snapdeal have also added pet care as a category. spoke to Rana to know more about the firm, its expansion plans and more.

When you started in 2007, e-commerce in India was at a nascent stage. How did you survive those years?

We started as a community of people having dogs and when the internet and the whole landscape evolved. In 2011, we became an e-commerce platform for pet lovers to sell their pet supplies. The main focus of the company has been to increase the number of products for pet lovers. We began with focusing on cataloguing because this category was lacking on the cataloguing side. So, we started by organizing information about the products for users.

We also have a lot of content on our site. About 75 per cent of our traffic comes through the content.

What is the business model like?

We follow an inventory led model. We work with merchants separately. We buy products and distribute them across India.

Since 2011, e-commerce has been growing as has been the pet and pet-care category with more focused logistics. This is not a very easy category when it comes to operations. We have also built a lot of new content related to products. For instance, if you are looking for specific thing for your dog and want us to help you find products around it, then we can provide you with specific content around it.

Are you working with offline retailers, too?

No, not yet. We do have plans to work with offline retailers in the next six months. Having an offline partner will also mean direct competition and the partner may start cannibalizing our business.

As of December last year, you were doing around 4,000 orders in a month with an average basket size of Rs 1,300. How have these numbers changed?

We are seeing around 10 per cent increase month on month. In the next 7-8 months we are looking at a run rate of about 8,000-10,000 orders a month.

We have served a total of 30,000 pets till date. In terms of revenues, the growth rate is 65 per cent year-on-year.

How is pet care and supplies different from other e-commerce verticals?

We are in a niche segment. There are two important things when we talk about focus on niche segment – one, the understanding of our customers to focus and sell what they are looking for. If we did not have the understanding of pets as a category, we would have been unable to build what we have. Secondly, it is not a volume-based category so market size will always be a challenge. The fact that the market size is small means that we have to do a lot of things. We may even have to be the first ones to introduce some new categories to just increase the market size.

For instance there was no concept of waste management in petcare in India. When people take their dogs out, they excrete wastes. However, there was no product to take care of that in the market. We discovered those products, promoted them heavily and now it is a big category for us. In a niche category, one needs to create the category itself. In our case we help people through the whole lifecycle of the pet from the beginning till the end. Like what MakeMyTrip did for the travel market, we want to do it for the petcare industry.

What is the growth rate for the pet needs market?

It is a double-digit growth that the market is witnessing. In addition, this growth can be further split at two levels - one is the pet population increment and the other is people wanting to invest more in their pets. More people want to keep pets due to their socio-economic condition and the stress and distress levels as nuclear families and single living numbers increase. In any city, many pet shops are coming up. In addition, the number of pets is also going up. People are also investing more in their pets. The industry is growing and I expect it to be around Rs 10,000 crore in the next five years.

Recently, Amazon, Snapdeal and Pepperfry started selling pet foods. How do you look at competition from horizontal e-tailers?

While there is no stand-alone pet portal to compete with currently, the marketplaces like Amazon, Pepperfry, Snapdeal have pet category and they happen to compete on the e-commerce side of our business. Having said so, our biggest advantage is our unique strategy to influence early adapters in the target segment society. We have more than 4,000 products on our platform and have also started selling products under our own label. We have a wide community of 7,000 registered pet owners which no other company possesses. All of the services and content that we offer on DogSpot - pet expert, Wagpedia content etc -are purely for engagement and are for free, and no other business can claim to have similar services for customers.

Every e-commerce company is landgrabbing which means they want to get the maximum customers. Pet-care is a niche segment and keeping the same in mind, we are trying to launch a lot of private label products. Launching our own label will help us in landgrabbing as well as optimize profitability. Unlike the big brands that you have spoken about, we have the opportunity to create a private label. If you are in the volume market like the example you have shared, it is difficult because customers will not remember you due to the sheer number of existing brands. In our case, however, there are top 3-4 brands that you will remember. That is where the opportunity is. We have already started integrating our own label. We have close to 200 products on site and we are building the whole supply chain.

How is your expansion plans charted out?

We are not a brick-and-mortar shop. So we are everywhere. This is a big differentiation for an e-commerce firm. We are looking at each and every city for growth. While, urban areas are crucial from a pet population perspective, smaller cities are equally important because they do not have many pet shops. For us, tier 2 and tier 3 cities and north-eastern regions are important.

However, the logistics is a challenge sometimes but our focus has been to crack this concern too.

Are you looking at break-even anytime soon?

Not anytime soon. We are looking at a healthy cash flow, but not break-even. We are looking to do a lot of innovative things and we have just started on the growth path. However, we do have profitability as one of the metrics and we definitely look at it. On the operation side, we are profitable and we have one of the best unit economics size in the industry because the average order value for us is very high. Our average order size in the industry is good as compared to other e-commerce firms.