Pet Warehouse Sales Come to Life as E-Tail Pet Cemetery Fills

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DALLAS -- The demise of two pet retail dot-coms has resulted in a hike of more than 20 percent for Pet Warehouse's Internet sales, Bob Nolen, fulfillment director at the retailer, said while attending the National Conference on Operations & Fulfillment.


Pet Warehouse first saw a sales bump in early January, following the closing of Pets.com and Petopia.com in December. The increase climbed as high as 20 percent during the first quarter and has steadied at that point. The firm's catalog orders also have lifted since the Web companies shuttered, but not as high.


And other than mention of the pet retailer's site in its recent catalogs and monthly e-mail campaigns to its customer base, it has done no additional marketing to encourage the online sales increase. Still, the 15-year-old retailer, which began its e-commerce initiative in 1996, believes former patrons of Pets.com and Petopia.com have migrated to www.petwarehouse.com.


Traditional direct marketers like Pet Warehouse stand to increase their online sales as pure plays dwindle, said Barrett LaMothe Ladd, an independent analyst based in Arlington, MA.


"We are seeing firms that have a multichannel strategy are the ones picking up traffic and sales as some of the Internet companies go out of business," she said. "The old customers for Pets.com and Petopia have to go somewhere. Add on top of that that more people are getting online and getting comfortable with online ordering, and it makes some sense."


Don Laden, president of the Dayton, OH-based firm, would not divulge a dollar amount for the recent sales increase or his firm's annual earnings.


Laden said that even though his firm makes 75 percent of its business off the 5 million catalogs it mails a year, it became worried in 1998 as venture capitalists began pouring hundreds of millions of dollars into Internet start-ups that seemed bent on taking market share no matter what the cost.


"I'd be lying if I said that it didn't keep me up a few nights," he said. "But we stuck to our knitting and did what we had to do to continue to give our customers a high level of service."


The retailer hired seven additional warehouse workers late last year as news worsened for the Internet firms and Pet Warehouse sensed it may pick up customers from its suffering competitors. The hiring increased the firm's fulfillment staff to 55 employees.


Nolen said getting the new employees up to speed as sales increased added pressure to the direct marketer's distribution house.


"We had to maintain a high level of service and efficiency," he said. "I'm an old military guy, so I had to get them to work the foxholes. I had to get them picking and packing together as a team in their foxholes. That's how we get the most efficient production."


Also, picking bins were expanded as sales increased. The allocation of bins and product pallets had to be rearranged to accommodate the packaging of increasingly popular items.


To continue sales growth, Laden said his company plans to expand its e-mail marketing efforts. He said the company wants to augment its 250,000-address e-mail list by finding ways to attract prospects to opt in at its Web site.


Pet Warehouse targets a wide demographic with items that range from dog toys priced at 99 cents to aquatic lighting systems that cost $3,000. The retailer's average order amount is $65.


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