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The e-retailer digs into sales analysis and finds opportunity with wholesale.
ValuePetSupplies.com modified its product lineup in June to offer bulk pricing on some of its best-selling pet products. Three months later, sales of wholesale-sized packs represent about 50% of revenue, says Nick Carter, director of marketing and sales at the e-retailer.
Carter calls the decision to sell in bulk, including acting as a wholesaler to small pet shops, one of the best the company has ever made. ValuePetSupplies.com established its own online storefront in 2007 after three years of selling through online marketplaces operated by Amazon, eBay and Buy.com. Today, about 70% of sales come through the ValuePetSupplies.com storefront, and 30% through marketplace sales. The e-retailer expects to generate $6 million to $7 million in sales this year. By comparison, 2008 sales were $2.1 million and 2009 sales were $3.4 million.
The idea to add wholesale-size SKUs to its core lineup of dog treats, puppy pads and specialty pet supplies came after the family-owned firm’s president, Zachary Piech, dove into the e-retailer’s analytics data. Carter says it was possible to take this step because the e-retailer hired more staff and sales are growing. The company now has 12 employees and processes about 7,000 orders monthly.
In the analysis, Piech found, for example, that pet apparel products represented 1.1% of total sales but also comprised 52% of customer returns, which taxed the customer service team. On the other hand, low-return, high-volume, repeat-purchase items such as puppy pads and treats generated more sales and fewer customer service issues. “We have to question and look at each product that goes out the door and see if we should be shipping it,” Carter says. “This is the first year that Zack was able to divest enough hats to the point where he could be more in an analytical mode and see what was working and what was not.”
Wholesale-sized packages also represent a niche other pet product e-retailers, or online general merchandise sellers such as Amazon.com, aren’t filling, Carter says. Having a bulk-sized product SKU that Amazon is less likely to stock means ValuePetSupplies can beat Amazon on pricing. For example, one of ValuePetSupplies’ best-selling products is a dental chew called Greenies. Amazon sells 27-oz. packages of Greenies for $27.51 each. ValuePetSupplies sells a case of 12 27-oz. packages for $249.99, an $80 savings from buying packages individually on Amazon. Buyers of the wholesale packages include individual consumers and pet shops.
Carter says ValuePetSupplies.com’s direct buying relationships with manufacturers means it can offer lower prices on bulk products than the owners of small pet shops can find through other channels. The economic downturn made it easier for the e-retailer to buy directly from manufacturers. “The bad economy opened the door with a lot of direct vendors,” Carter says. “In years past we weren’t direct with anybody and weren’t in the position with premier product lines to offer this pricing.”