K9 Cuisine Does Everything Right for Pets — And Success Is the Outcome

Ruby Tuesday Pick of the Week: K9 Cuisine
Why It’s a Gem: Learning from competitors’ customer-service mistakes has helped this pet food supplier leave the others in the dust

When Anthony Holloway experienced lackluster customer service while buying specialty dog food, he didn’t gripe. Instead, he saw the experience for the opportunity it was.  Holloway used other companies’ mistakes as a blueprint for what not to do, a strategy that saw his company become top dog, with a 50-percent growth each month in its first year. (This interview has been edited for clarity and length.)

Lynda Resnick: In this week’s Ruby Tuesday, we’re speaking with Anthony Holloway, president, CEO, and founder of K9 Cuisine. For our readers, could you please describe your business model?

Anthony Holloway: We’re an online pet food retailer. We sell dog and cat food nationwide. We ship nationwide free delivery for orders over $50. Our focus is on the customer and customer service.

LR: What motivated you to go into this business with all the competition out there?

AH: It’s very simple. I was a frustrated consumer. I had a dog that we rescued and she was sick, and we were having a very difficult time finding suitable dog food for her. In the early on, when we got Daisy, we were driving 140 miles round trip to buy dog food.

LR: You were driving Miss Daisy!

AH: [laughing] Yes! We were driving 140 miles round trip, and the supply was very inconsistent. The retailer was cavalier and didn’t care whether he had our business or not. He was just completely uncooperative. So we went to ordering online, and we found a whole new set of problems. We had no communication, no live body to talk to. It was a mystery when the order was going to be shipped. We were being charged $30 to ship a 30-pound bag of dog food. I just felt taken advantage of.

There was a tipping point when I had a conversation with the owner of one of these companies. We’d ordered the food, and for weeks the food hadn’t come. We finally got someone on the phone and escalated it to the owner. He said, “Well, it’s not a very popular food. If you’d order a more popular food, we would stock it for you.” So, when all else fails, blame the customer!

LR: [laughing] Right, of course!

Maggie and Daisy, the inspiration behind the success of K9 Cuisine

AH: I got off the phone and said, “You know what? I can do a better job than this.” And so, we started K9 Cuisine in June of 2007, and we grew at 50% a month for the first 12 months.

LR: How are you doing this year?

AH: We’re up about 10% a month this year.

LR: You’re probably one of the only companies in America that can make that statement. It’s amazing that people will give up a lot, but they’re not going to give up for their pets.

AH: That’s an indication of the depth of affection that people have for their pets. We tapped into that. We care. We actually answer the phone. We respond to emails within minutes. We ship orders the same day. We constantly communicate with the customer. We have free shipping with orders over $50. All the things that really burned me as a customer, I set out to solve as an owner of this business.

LR: This sounds so new age-y, but your unique selling proposition is that you really care.

AH: Absolutely. We have a 100% money-back guarantee. If the customer – for any reason – doesn’t like a purchase from us, we take it back. Our number one goal is to get customers a food or treat that works for them and their pet.

LR: Now, special question. Are you making money?

AH: Yeah, we’re making money. We return about 7% on sales – not after taxes, but before taxes. We could do a lot better if we charged for shipping and didn’t have customer service.

LR: Well, the customer service you need. I know a fair amount about direct marketing. People expect to pay for shipping. They really do. I wish you would charge a fair amount for shipping, not gouge them. What a lot of companies do in this space is they use shipping to gouge the customer.

AH: As a profit center.

LR: And that’s terrible!

AH: Well, there is no free lunch. Our shipping is built into the price.

LR: Okay. You do a wonderful thing. And only people with pets understand that. And who cares about the rest of them? They’re not going to buy from you anyway.

AH: You’re right. But I think the differentiating factor for us is free shipping. And I don’t think our customers think that anything is free. We’re consistently $8-$10/bag higher than most of our competition. But with free shipping, it’s pretty competitive. It’s a competitive space.

There’s nothing wrong with charging for a valuable service that you provide. Our job is to provide value. I think that if you engage in price-cutting, if you engage in some of these ridiculous things that are going on out there, the bottom line is there is always someone entering the market that will take less margin than you will. So, we have to raise the bar on service. We have to raise the bar on quality.

LR: You’re preaching to the choir. I always say, “Price is not a marketing philosophy.”

AH: No, it’s a recipe for disaster!

LR: Exactly. I love when people say, “Yeah, but I’ll make it up in volume.” You’ll be out of business!

AH: You’re exactly right. I think there’s a message that you send to the customer with pricing. When you value your product, your customer values the product as well. We never say, “We are the cheapest.” We don’t want to be the cheapest. Those people come and go. And we are not afraid to charge for the services that we provide. While it’s free, “free” is a marketing term. We build shipping into the cost of our products, otherwise we couldn’t be in business.

LR: How did you choose the brands that you stock?

AH: We have a 29-point evaluation process for every food. But the basics are: no corn, no wheat, no soy, no artificial colors or artificial preservatives, no gluten. Those are the big things. And there are business considerations as well. We buy a lot of dog food. Can we get pricing that would make us competitive? Are [the distributors] a nightmare to deal with? Because we want to be very efficient, so if we’re spending our time chasing down orders and dealing with shoddy product, then those are resources that are taking away from us doing our job.

LR: What percentage of your business is done with dog food versus cat food?

AH: We’re about 85-90% dog food. We started with a very narrow focus—

LR: Good!

AH: And we expanded by our customers asking us to also sell cat food. While it’s not our focus, it is about 15% of our sales.

LR: What percentage of your customers come back?

AH: About 85%.

LR: That’s fabulous.

AH: Lynda, it’s an annuity. That’s how we grow, by customers coming back — and happy customers telling their friends. We do not advertise – no print advertising, no radio, no TV. We do a little bit with Google, less than $1,000 per month. If you look at the testimonials on our site, it’s one after the other saying, “I’m telling my friends.” This is how we grow. And when we get customers, they don’t go away. That’s something that we’re really proud of it.

LR: Talking to you is a dream. When you read my book, you will see that you and I are cut from the same cloth. The things that are important to me in a brand, you have all those things. It’s just wonderful.

AH: Well, thank you very much. It’s a labor of love.

LR: It has to be! If people don’t have passion about what they do, they don’t do as well. It’s just the way it is.

LR: Do you have any sales in the chews and toys?

Decisions, decisions: Another happy K9 Cuisine customer contemplates the website's many offerings of treats

AH: Not much. The interesting thing about this business is that we sell dog food, but we profit from toys, treats, and chews. The margins on those three items are far greater than they are on dog food. So, if we can convince someone to add one of these items to their carts while they’re buying dog food, our profit margins basically double. We don’t sell a lot of them, but they do add quite a bit to the bottom line.

LR: I’m on your site buying dog food. Will it suggest toys and treats?

AH: Cross-sell and upsell? Yes. We have some really cool Flash components in there. When we implemented those features, our toys, treats, and chews doubled overnight.

LR: All you have to do is look at Amazon and do everything they do. What about your SEO?

AH: I like to think of SEO as doing a lot of little things correctly. We build passion about the site. We exceed customers’ expectations and when we do that, they talk about it. They link to our site. That’s a big component of SEO: backlinks. I believe we have something like 15,000 backlinks to our site.

LR: But you don’t buy keywords?

AH: I buy a few, but not much. Most of them are very much brand targeted. Not “dog food.” The return just isn’t there.

LR: If it was there, you would know it.

AH: That’s right.

LR: You would measure it.

AH: And we would be doing it. It’s not to say we haven’t experimented on it, but our cost per conversion on terms like “dog food” and “premium dog food” is about $45 per conversion.

LR: It’s like flowers. It can cost me $50, $60, $150 two days before Mother’s Day to get an order. I’m not going to do that, because it’s a very crowded category. But when it comes to pomegranates, I’m one of the only ones there.

AH: As a premium brand, tell me how you respond to competition, in terms of price. Because there’s a business reality: At some point, you have to respond with price.

LR: We really don’t. Let’s just take . Now, it is expensive to bring it from Fiji. I can’t deal with the fact that Arrowhead is 25 cents on special and I’m $1.19. There’s nothing I can do about it. I have a niche market. This is not even water. This is purer than mother’s milk. So, I do very well. I’ve increased the sales 300 percent since we bought the company. We are a niche brand. I make a fair profit; I do not gouge the consumer.

If you are delivering value, have a unique selling proposition, and are totally transparent, you should charge the fair amount for your product. And there’s either a market for it, or there isn’t. And I’ve been lucky enough to find my market.

AH: That’s what we tell customers. When customers tell me that it’s too expensive, they’re telling me I haven’t provided enough value. If they complain about price, they’re not buying what we’re selling.

LR: They’re not your customer.

AH: If price is the only thing that they value, then they are not our customers, because we are far more than the price that is on the bag. We’re providing so much more. And we care.

LR: But you also have to analyze the complaints. People overreact to complaints. I don’t know what your customer base is…

AH: 16,000 customers.

LR: What percentage are complaining about price? And are they still buying?

AH: I’m hypersensitive to these things. It’s three or four a week. Whether they’re buying or not, I don’t know, but we have 85% repeat business.

LR: If there’s one thing I can tell you to do, it’s have a proprietary product. If somebody was willing to do everything as well as you do, there would be no barrier to entry. But if you create a dog food or a line of dog foods, along with everything else you already sell, then that would be truly proprietary, and perfect in every way. They wouldn’t be able to get the food anywhere else. That would be my message to you.

You know you’re doing it right. It’s a wonderful story. I wish you the best.

AH: I appreciate you speaking with me. There’s so much for me to learn.

LR: You’re an inspiration. Take care.