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E-commerce

Pet Circle’s plan for growth

After receiving an injection of capital in November last year, Pet Circle has dramatically ramped up its marketing efforts and invested in a new warehouse facility, as it looks to eat up a bigger slice of the $182.5 million Australian online pet food and supplies market.

Drawing on funding from Francisco Partners and existing investor AirTree Ventures, Pet Circle recently kicked off a several-months-long, seven-figure marketing campaign to increase awareness of its online-only pet food and supplies business through TVCs and outdoor advertising on buses and billboards in Sydney and Melbourne.

“We have been advertising on digital channels for a long time. But to tell people more broadly that we exist and that there is a place you can come and get great pet products for a great price and have them delivered to your door, we had to turn to offline channels,” Pet Circle co-founder James Edwards told Internet Retailing.

The size of the investment is indicative of the retailer’s rapid growth since it started selling pet food online in 2011. According to a recent report from IBISworld, Pet Circle has doubled its annual revenue for three years straight, recording $80 million in revenue in the 2017 financial year. This means Pet Circle accounts for nearly half of all online pet food and supplies sales in Australia.

While the privately-held business has not provided any financial information itself, Edwards said Pet Circle is “far bigger than any other retailer when it comes to online sales. We’re far bigger than Petbarn in that space”.

He noted that in comparison to overall pet retailing, however, Pet Circle is still a long way off Woolworths, which he said has the biggest pet food business in the country.

Triple the warehouse capacity

Indeed, Pet Circle’s recent move to a new warehouse that is three times the size of its former facility in Alexandria suggests this is just the beginning for the online retailer. The newly-built, automated warehouse in Eastern Creek will allow Pet Circle to dramatically increase the number of orders it can fulfil each day and reduce the delivery time.

“We see ourselves as underperforming if it takes longer than two days [to fulfil an order] in an East Coast metropolitan region. We’d like to expand that further afield to Perth and to regional areas like Bendigo,” Edwards said.

The new warehouse together with the recent appointment of an experienced supply chain director will enable the business to cope with the influx of new customers that Pet Circle is anticipating off the back of its marketing campaign in the coming months.

“There’s a big unknown in terms of what [the marketing campaign] is going to do to the infrastructure. We had to get some things organised. The biggest one was the website. We had to have the infrastructure in place to ensure it wouldn’t crash. And the other was around the warehouse,” Edwards said.

“We want to position ourselves to continue fulfilling really quickly to people even under high levels of growth. It’s exciting to me to look at the ability to reliably fulfil hundreds of orders an hour.”

Despite a recent report in The Australian, Edwards said he and co-founder Mike Frizell have no intention of selling the business any time soon.

“We only recently took some funding. We’re not looking for any sort of exit or merger,” he said.

“Strategically, we’re focused on growing the size of the online market for pet products. We don’t see that as a zero-sum game. There are a whole bunch of people who don’t know where to find great products.”

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