Being small is hard enough. But being small and in retail? That's like having two strikes against you before the game even begins. From setting up relationships with banks, to finding trustworthy suppliers, to building a loyal customer base, being a small retailer is a challenge many businesses can't meet. And if you're an online-only small retailer? Well, that adds a whole new set of pros and cons into the mix.
K9cuisine.com is one such business that's so far been able to meet all the challenges of being a small, internet-only retailer. The nine-employee company sells premium pet foods and accessories from a warehouse in the remote town of Paris, Illinois -- about 100 miles west of Indianapolis and 200 miles south of Chicago. Owner Anthony Holloway launched the company in May, 2007, because he was frustrated with trying to find quality dog food locally and online.
After opening K9cuisine.com, he learned there were a lot of other pet owners sharing his frustrations. "Our business took off quickly and has grown at the rate of 50% each month for the last year," Anthony says. The web site, he says, currently gets close to 5,000 unique visitors per day, and has generated about $2.5 million in sales in the last 12 months.
K9cuisine.com is using customer ratings and reviews to add credibility to its online store; it's not unusual to see dozens of ratings on the store's products, and one brand of dog food has an astonishing 300-plus ratings. They also talk about all-things-canine on the K9 Chronicles blog, which includes a helpful section called Ask the Experts where readers can get free tips and advice from pet care experts.
They've also started experimenting with a Facebook page. Put it all together, and you have an interesting small business that offers plenty of lessons for other small, online retailers.
As with the previous small business success stories I've featured, I have no relationship with Anthony Holloway (or anyone at K9cuisine.com) and have never met him. Here's our interview.
Matt McGee: How does a small retailer compete today against the Big Box stores and the Amazon.coms?
Anthony Holloway: Customer service, customer service, customer service! Know your customers, provide for their needs, maintain a dialogue with those customers, and continue to find ways to exceed their expectations. Box stores and many Amazon.coms have done very little to "nurture" their customers. They rely on price alone. That formula has worked to a certain extent, but there is a niche market out there [of people] who demand more from their buying experience. Those customers are our market.
In my experience working with small retail clients, it really takes a lot of upfront spending -- on inventory, storage, staffing, etc. Does that fit your experience? How did you get "over the hump," as they say?
I was lucky. I did not depend on the business for an income. Funding was not an issue. We were well funded but we started small. The initial goal was to solve my own problem of getting quality food for my dog. We started with a handful of super high quality core products. We did not have to stock a store full of product. We stocked one or two bags of each item and added items one at a time to the site as we went. In the beginning, we were buying by the bag, with a warehouse of less than 1000 square feet. We currently buy by the truckload and maintain a warehouse of 26,000 square feet.
In the beginning, our largest expense was web development. That was a challenge. But we had a specific model and had a good idea of what we wanted. We have a great development team. They can do virtually anything I ask with the site. We continue to add features and tweak the site to make it more user-friendly. With creative and skilled technicians, so much is possible. We are fortunate to have such a great team in place.
But by far our toughest hurdle was in establishing consistent supply of the highest quality products by gaining credibility with suppliers. There are literally millions of web sites that sell dog food. Not many are successful. Suppliers are very leary of online merchants. It takes time to establish positive vendor relationships which are key to securing consistent supplies of the highest quality, most sought after products. It took us awhile, but I am pleased with the strong relationships we have developed. In addition the suppliers are pursuing us. They now see us as legitimate.
You mentioned your web development team. Are they in-house, or did you hire a design/development company?
We outsourced the development. I have worked with this group for the last 10 years on various projects. We bid out the graphics.
What advice would you share with small business owners who are trying to hire a design team right now?
The most important thing is to have a clear idea of what you want the end product to be. The vision needs to be clear and you need to be able to articulate that to designers. The biggest mistakes I have ever made in development was when I started and tried to figure it out along the way. Communication is also critical. A good design team has to be able to communicate the pros, cons and alternatives.
My group never says something can not be done. They may scratch their heads and give me a cost but they never say it can not be done. They are also extremely good at articulating alternatives. I am very careful not to micro manage them or tell them how to do their jobs. I communicate a concept they bring it to life. You also have to work with people that you feel comfortable going back to them multiple times when things do not fit your idea of the concept.
Whether you're big or small, retail has its own set of challenges. One of them is content. I see a lot of customer reviews on your product pages. Are you getting those direct from your customers, or from a review provider?
We want to keep it real. We never pay for reviews. I would never risk the loss of credibility with customers by paying for reviews. All of the reviews are customer generated. This is one of the coolest parts of the site. Our customers are passionate about their dogs and cats. We survey new and existing customers about their purchases. These reviews are not moderated. Our customers are actually very eager to share their experience. I really believe in transparency and providing information that has long term meaning to our customers. If you fake it, you may get a sale but not a repeat customer.
What methods do you use to encourage customers to leave reviews?
Whenever a customer purchases something for the first time we survey them on the item. We try to keep it simple and quick.
How exactly do you do that? Do you wait a couple weeks so they've had time to feed their pet, and then send an email? Or some other method?
We survey them 20-30 days after the purchase. It is an email with a link to a survey. The survey asks the customer to rate the new item on a one-to-five star scale. There is also an opportunity to include comments. The system knows what items are newly purchased. If they have completed a survey for an item they will not be asked to complete another one for the same item. We are careful not to annoy or bother customers. The way we do it is very respectful of their time.
What's your policy on handling negative reviews?
In general we do not moderate the reviews. They are added automatically to the site when a customer reviews a product. Unless the comments are completely off-topic, we do not touch them. For example, we had someone complain about a damaged shipment or they have not tried the product yet -- because these comments are not relevant to the product itself, we would then remove this type of comment. However, if they say my dog peed on the food bowl after trying the food -- that comment would stay. I see this as a survival of the fittest. The best products win.
Are product reviews good for business? What's the impact on your sales from having customers review what you sell?
This is very difficult to measure on the site level. To be honest, I am not sure. I know there is a lot of data out there that suggests user created content is more credible. I do know it provides transparency and honesty, key values of K9Cuisine. We do have customers tell us they read the reviews and they appreciate them being there. While we have not heard from those who it may have turned away, I believe for the most part the reviews are beneficial.
You're also creating content via a blog that you launched a little over a year ago. What made you give that a try?
Our goal was to personalize the experience and convey the values of the company. I also did not want to clutter the store. Not that the blog is clutter but we try and keep the store focused on products, sales, and conversion. We have reached out to a number of experts that contribute training, nutrition, and general pet info. The blog is the space where we have fun. It really has a nice following. It is something I am really proud of.
Was it difficult when you were starting, in terms of figuring out what to write about, how often to post, and things like that?
The most difficult thing as we grow is finding the time. We try and make it a priority. We do not have a ridgid schedule on how often. Having multiple contributors helps.
We just experimented. We felt pretty comfortable taking risks in this space. You can see a growth or maturity to the blog. We started out way too serious. We wanted to provide great content and we did. The problem was it was boring.
Do you have a company blogging policy in place? If so, can you share some of the guidelines you have for your employee bloggers?
We do not have a set policy. There are broad guidelines. Again, I do not micro-manage creativity. We want to keep it fun, on-topic, and PG. I want my kids to be able to read the blog. We engage like-minded bloggers and experts on their blogs and sites.
Tell me about that "Ask the Experts" feature on your blog.
This was obtained as a result of our reaching out to like-minded professionals. They have recognized our offerings as an opportunity to make a positive difference. We share similar values and a common goal to provide healthy alternatives for pets and their owners. These are not local vets. They are professionals that are passionate about pets and helping people. Further, they do not always suggest items we sell and I do not always agree with them. They are independent to suggest whatever they want. I think that is one of the attractions to them.
How did you go about marketing the blog and getting the word out to customers, other bloggers, etc.?
I really do not see what we are doing as marketing. I am an accountant by training. Marketing has always been a mystery to me. We are just passionate about what we are doing and that passion is contagious. The vast majority of our growth has been word of mouth or more precisely electronic word of mouth. It has been customer driven.
We generally do not do much paid advertising. We have a small adwords budget. We have tried to get some conventional press but there has been very little interest in online dog food. We truly live our mission statement. Every day we try to meet or exceed our customers' expectations of value, service, and delivery. These are not just words on a business plan. It is a culture, a way of doing business, that is honest, transparent, and truly customer focused. Many of our customers recognize this and respond by telling others of their experience. That is worth more than any paid advertising we could buy.
What benefits are you seeing from the blog? Do you consider it a success?
Again, this is hard to measure. I enjoy it. The blog is fun. It feels right and it conveys the values of the company. I know this is probably not the most useful answer, but I do not have an objective, numbers-type answer on this.
Why did you create a page for your business on Facebook?
Similar to the blog. We use Facebook to convey the values of the company. Again, we are trying to personalize the experience for our customers. We are trying in all of our efforts to narrow the divide between the impersonal process of completing an online transaction and truly connecting with customers. I believe that internet businesses who are able to secure this connection will be the ultimate winners in the online market.
Have you seen any benefits from it?
Not really. At least not to my satisfaction. We are still working at it. Our page on Facebook is growing and developing. Again it feels right, it conveys our values, and I believe it will pay off in the long run.
Do you do any PPC, or are you focused on organic and social traffic?
We do very little PPC. I believe most PPC lends itself to transactional price shoppers. We use PPC to supplement our organic traffic. We do quite well in organic traffic. I have been very successful at generating organic traffic. The social media space is still developing for us. We are exploring social marketing because I believe this is where the net is headed. We want to be positioned to be out front as it happens. This is truly a work-in-progress.
How important is SEO to you? Have you done any linkbuilding efforts, for example?
SEO is huge for us. Everything on the page is there for a reason. The challenge here is satisfying the search engines while maintaining a page that is attractive and usable for customers. We do not do any conventional link-begging. We get a substantial number of links pointing to our site but this is really a result of the way we run the business. People talk about our site. We do not have a links page. We have a few links on the blog but that is it.
Do you have time to stay on top of SEO best practices, or is that the responsibility of the web development team?
I do not trust anyone with this. It is just too important. I do it myself. I obsess about SEO. The design team has a pretty good idea of SEO after working with me over the years but they are not SEO experts. Much of SEO is in the nuances. I drive them crazy at times with tiny changes.
What marketing ideas do you want to try in the future?
I would like to try video, viral, contest, and go deeper into social media.
Last question: When it comes to online marketing, are you more of a "try everything and see what works" guy, or do you prefer a more careful and studied approach?
This is an interesting question for me. I think I am personally careful and studied in general. However, this business allows me the opportunity to take risks and explore. I have learned to do much more by feel and intuition. You have heard me say more than once, "it just feels right". So with this business, I would say I am more of a try it, measure it, and refine it. The nature of this business requires that the model remain fluid. This will forever be a work-in-progress.
Thanks so much, Anthony. Best of luck in all you do in the future.
Whether you're a small retailer or not, Anthony's final words probably rings true: "This will forever be a work-in-progress." That's the nature of running a modern small business, and I think it applies to all of the small businesses who've shared their success stories in this space.
If you are (or know of) a small business owner with a great story to tell about how you're using the Internet to grow your business, please contact me at Small Business SEM.