May 30, 2008, 12:00 AM

What Now?

(Page 2 of 2)

While space wasn’t a problem-PetsUnited had recently built a large warehouse in anticipation of acquisitions- “it doubled our size in Pennsylvania from a people standpoint,” Patterson says. “We had to staff up from the operations side. But because we already had Country Supply in place, we had our in-house horse experts, understood the products and knew the vendors.”

State Line Tack, founded in 1980 and a well-known brand even before its acquisition by PetSmart in the 1990s, remains separate from Country Supply/Horse.com. State Line Tack specializes in English-style riding gear, while Country Supply/Horse.com serves the Western-style market. Both share the Horse.com community forum.

Time to digest

Together, the horse-related retail operations make up well over half of PetsUnited’s business, Patterson says. And that itself illustrates one of the biggest challenges when making acquisitions: Understanding how they will change your business. “We’re now a horse company that also sells pet products,” Patterson says.

Though it might seem like a fundamental strategic change, that shift is temporary, as the company eyes other acquisitions and plans the development of additional powerful domain names, such as Garden.com. The acquisition of State Line Tack was so large that PetsUnited wants to take plenty of time to digest it.

As the company grows, the horse segment will shrink as a percentage of its business. Patterson says the ultimate goal is to be highly diversified, with 100 to 300 separate domain names, in spaces where customer hobbies and passions are a driving force. “We want to speak to the enthusiast,” Patterson says.

Elizabeth Gardner is a Riverside, Ill.-based freelance business writer.

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