Upping The E-Commerce Pet Supply Ante

By Matt Pillar, chief editor

May 2016 Innovative Retail Technologies

Trading partner management software enables a broader selection of merchandise and minimizes order exceptions at PetFlow.

Since its launch in 2009, pet food and supplies retailer PetFlow has firmly established itself in its niche with a thriving, profitable e-commerce site that ships more than a million pounds of dog food per month and drives more than $50 million in annual sales.

Recognizing the web as a major contributor to its future growth, PetFlow CEO Michael Lackman oversaw the launch of a new e-commerce platform in 2015, replete with a new approach to sourcing and onboarding vendors. “We see opportunity in the e-commerce channel to be a better retailer than our competition,” he explains. “Specifically, we saw a clear case to invest in technology that would broaden our online merchandise assortment and minimize order exceptions.”

Competitive Advantage Drives Trade Partner Investment
The company’s decision to implement TPM (Trading Partner Management) from Enspire Commerce was based more on a desire to innovate and outpace the competition than on fixing a specific problem. The efficient expansion of its online assortment was considered a key objective. TPM is essentially a cloud-based managed file transfer, or “enterprise content management” service, that allows PetFlow to onboard new trading partners, manage inventory updates, send and receive orders, and receive order confirmations through virtually any means of connectivity, such as .doc, .csv files, Excel and XML files, or EDIFACT and EDI documents.

In the context of PetFlow’s goal to quickly expand its online assortment, the solution allows the company to bring on new vendors, catalogs, assortments, or even specific products via drop-ship, mitigating the expense associated with taking on large quantities of inventory. If the company wants to introduce a new brand of dog food, for instance, it can quickly bring the brand online, promote it, monitor sales, and make smarter inventory decisions. “If the product hits, we can quickly add it to inventory. On the other hand, we can choose to continue the drop-ship arrangement or cut the product altogether, if it doesn’t meet our criteria to inventory it,” explains Lackman. The approach reduces the company’s risk with experimental merchandise large and small. “On high ticket items that fall outside the core of our merchandise assortment, it’s much more flexible to work with trading partners who can get these products into the hands of our customers. On smaller ticket and niche items, we’ll use TPM for exploratory purposes. We’re not likely to inventory pet hoodies that come in 20 different NCAA team designs, for instance,” says Lackman. “With TPM, we have the flexibility to off er them, but we’ll continue to have them drop-shipped.”

Customer Service Gains Through Redundant Distribution
PetFlow also uses the system to maintain its 97 percent or better in-stock rate and positive NPS (net promoter score). By driving down time in transit, Lackman says PetFlow has reduced the number of active detractors to its e-commerce experience.

“Because it’s easy to add vendors to the system for drop-ship, we can leverage those vendors in some cases to back up our own inventory standing. Where out-of-stocks threaten to damage our inventory and speed of fulfillment perceptions, we can simply use our bifurcated distribution model to ensure orders are filled per the customers’ expectations,” says Lackman. The multipronged distribution environment is ever more broad with TPM, which enables seamless connection to a seemingly limitless pool of vendors. Enspire Commerce CEO Jim Barnes likens the solution to connecting all the ATMs in the world to all the banks in the world and exposing deposit, withdrawal, and other information to users, regardless of the source of that information.

TPM brings the greatest value to PetFlow by lowering the stakes associated with merchandise expansion through onboarding new trading partners. “When you can lower the stakes, you can spread creative merchandising risk around and increase the return on a more creative, prolific offering,” he says. “If doing that requires a bigger bet, it can be too risky for a small or self-funded business like PetFlow, and as a result, we’ll never bring on the next big vendor.”