Opinions expressed by Entrepreneur contributors are their own.
Lola and Tobías are the Maldonado dogs. Both exercise between 3,600 and 4,000 pesos of the monthly family budget, derived from the consumption of 12 and 15 kilos of premium food, four to six bags of prizes, several rolls of waste bags, baits, toys and clothes. In addition, the eventual purchase of a bed, a strap, a harness or an identification plate, as well as the home beauty and spa every four weeks.
These dogs are part of a new generation of pets known as perrhijos, which in many families replace or delay the arrival of the offspring, and which are fueling new businesses related to animal care .
The sector includes specialized stores, spas, beauty shops, hotels and hospitals, training centers, nurseries, party halls and funeral services: a true amalgam of businesses that feeds a national market of 1.988 million dollars and that by 2022 will reach 2,735 million. , according to data from Euromonitor.
If these numbers make sense to you and you want to participate in a segment that meets the needs of pets that seven out of 10 homes in Mexico have, according to Inegi, keep reading and start a store specializing in products and services for these new kings of the home. .
Customer segment
Products and services for dogs, far from being a fad, will continue to gain a foothold in the country. According to the study Mexico: Pets in our homes , by Consulta Mitofsky, the presence of pets is concentrated in the center of the country (with 59%), with the dog being the preferred companion animal, with 87% of the preferences. The owners of these animals do not hesitate to offer them a special diet, which is why eight out of 10 people of level A, B, C + acquire this type of food.
Perhaps that is why there are those who claim that there are already two categories of dog lovers: doglovers and dogparents. The former are the classic owners who adore dogs, place them at the level of companion pet and offer them the satisfactions necessary for their well-being. The latter take this to a higher level by showing a more active and informed participation in the raising, feeding, recreation and education of your pet, giving it a place in the family.
Value proposal
In a store everything for your dog in addition to finding services and material goods, you will have the security of finding expert personnel in the aesthetic care of dogs and of being one step ahead in the needs of doglovers and dogparents .
It aims for an expedited service where the consumer does not have to wait for a bag of croquettes. What’s more, it ensures that you receive them at your home door on a regular basis from an automated monitoring and customer supply system (for example, a CRM or ERP). Additionally, it offers quality products that meet safety standards, as well as services supervised by experts in animal welfare and care.
In this sense, the opportunity is in premium products, that is, those of a superior quality that are only found in specialized places. Euromonitor points out that with the trend of the ‘humanization’ of dogs, the opportunity arises to innovate and create new items, especially the range of high-end products because the mid-range offer is already saturated.
It is precisely because of that need that Petn’Go arose, an ecommerce of pet products that was born from Alejandro González’s need to have top quality food for his dog Fender.
“In Mexico there was not what I was looking for for him, so I began to try things that were recommended to me from the United States. There the business idea arose and in 2013 I started the company in partnership with my brother, Andrés González, and my friend Julio Cesar Calvo. On the one hand, we made a B2C called Petn’Go; and on the other, a B2B called PetMarket, to sell to companies like PetCo and Liverpool ”, recalls Alejandro.
After overcoming financing problems and a learning curve due to not having knowledge of the business, the entrepreneur and his partners have matured the business. Now, they have performance indicators, controls and processes, as well as differential values that place them in the consumer’s taste. For example, they make deliveries the same day and absorb the cost of shipping in minimum purchases of 2,500 pesos; all with the advantages of immediacy and ease of ecommerce.
Like this entrepreneur, define a business model and establish your value proposition. You may find it in a product line (for example, a vegan line) or in the service. The important thing is that you find something that distinguishes you.
Distribution channels
If you are determined to open a specialized shop for dogs, you must be clear about the business model and then define the distribution channels. If it is a physical store, the most logical channel is direct sales; that is, buying and selling in situ . This requires trained personnel to guide the buyer and conduct the transaction, as well as stock merchandise.
Is your store online? Then do what Alejandro González, from Petn’Go: set up a platform with a shopping cart, install a chat and a phone line. The objective is to ensure that that customer who refers to the immediacy of the internet and who wants everything quickly, feels attended and makes a purchase on the page.
There are other possibilities, such as Spa Canino Móvil , a company founded in 2005 by Víctor Kurt and Jorge Ulrich, who to date have a network of 15 own units and eight franchisees. These entrepreneurs carry the canine spa and beauty service at home, so they necessarily use an adapted vehicle with a tub, work table and water tank and the necessary tools to beautify the dogs.
“Our model offers the advantage that the customer can see their pet at all times. In addition, we adjust to your schedule by taking the service to your home, which helps you streamline your times. To schedule your appointment, just call the call center and schedule according to availability and coverage area ”, explains Víctor.
Relationship with customers
These stores have a special feeling, as consumers expect to feel part of a community, receive information and good treatment (including their pets) and access innovative and quality products and services promptly and on time.
To fully comply with it, personalized treatment is essential. Depending on your business model, you can complement it with chats, WhatsApp groups, social networks, phone calls and email campaigns.
Casa Luna , a pet store with 60 years in the national market, is aware of this, so in addition to having trained personnel in each of its four points of sale in Mexico City, it is in permanent communication with its customers from the online store through the chat on its website, while reinforcing communication through its social channels.
“We take great care of the details. Our commitment is to the well-being of pets by offering innovative products of excellent quality. We also have our own line of products called Lunipet ”, explains Héctor Luna, its general manager.
Just as Héctor maintains a direct line of communication with his clients, make sure the same happens in your business. Establish which communication channels will be to underpin the sale and do what is necessary so that the customer feels listened to, cared for and satisfied.
Source of income
A recent report from the Strategic Communication Cabinet indicates that there are people willing to spend just over $ 200 a month on food and services for the well-being of their dogs, so one thing is clear: there is money and a market.
Against this background, it establishes which business areas, product lines or services generate the resources. In a physical store, for example, the flow comes from the sale of food and accessories at the rate of average tickets of between 1,200 and 1,500 pesos (it is calculated that a good customer makes two of these purchases per month); while in a canine spa the bulk comes from the sale of bath, beauty and grooming packages whose amount ranges between 250 and 400 pesos.
What about the sale of animals? The decision depends on your business model and expectations. + Kota, for example, ensures that this ‘category’ does not represent an important contribution to the business because it barely represents 8% of the income.
“In the chain, the sale of food is by far the most important thing. Along with certain consumables, such as cat litter. The category represents 70% of the income. In that sense, the superpremium food category in Mexico has grown 18% annually in the last five years, which is hardly observed in other markets. The market definitely continues to grow and represents a great opportunity, ”says Murry Tawil, CEO of + Kota.
Key Resources
In this part of the puzzle you should focus on identifying the physical, economic, human or intellectual resources that your business requires. For example, if your store is physical, you will surely have the premises (adaptation and equipment), initial stock , working capital, software and human resources, among other aspects.
It begins with the premises. Its dimensions can be between 70 and 90 square meters. Preferably it should be located in a residential area with a high population density and be anchored to a street mall or commercial area. Opt for a space with an attractive view to the public and that offers facilities to park one or two cars.
The sales floor equip it with several shelves and install a closed circuit. Complete the space with a computer, management software, telephone, printer, tall bench, calculator, and medicine cabinet.
The aesthetic zone must be in sight; preferably in a showcase type area. It has a tub, stainless steel work table for veterinarians, water heater, instruments for canine aesthetics (hair clipper, cold air dryer, brushes and combs, scissors, nail clippers, towels, shampoo, flavorings, sanitizers, bandages).
The store operates with a manager or manager (can be the entrepreneur), a salesperson, a pet stylist and a delivery man. The accounting service can be outsourced.
If you opt for a franchise, the requirements change. Casa Luna, for example, has a model that requires a premises of between 60 and 70 square meters for the sale of food, textiles and toys; + Kota, meanwhile, has proposals that adapt to spaces from 40 to 60 meters.
As additional advice, consider a scalable store model, in which you can integrate / add new products or services as the business consolidates. Take it into account when renting the premises.
Key activities
A physical store operates from Monday to Friday from 10:00 am to 8:00 pm, with supply, logistics and daily operations being three of the activities to have on the radar. “The turn lends itself to making mistakes; much more when you do not know the secrets of the operation. For example, we brought a first container of food at the end of 2013. We were only able to place 40% because we had not studied the market well; the rest, we put it at risk due to an expiration issue. In the end, we sampled it and placed it, even if it was free ”, remembers Alejandro González, from Petn’Go.
Derived from this experience, the entrepreneur recommends placing emphasis on the expiration of products, sticking to the ‘first-in, first-out’ warehouse system and planning the buyback according to the sales pattern.
“You have to have a stock of 30 days at the most. The ideal thing for a business is that you can work with a stock for 10 days or for a week. We at PetMarket are able to deliver orders in two or three days ”, he explains. You also have to ensure that the food you buy has all the records before the health and regulatory authorities of the country. This is because the aunt who makes great cookies for the dog is never missing, and it turns out that not following processes make the dog sick.
Another important activity is home delivery distribution logistics; it depends to a great extent that this buyer remains a faithful and committed consumer.
In order not to fail you, make sure that your platform correctly records all the requirements, that you have an efficient and secure online payment system, and that the people who process the orders in the store / warehouse fully comply with the purchase orders. The rest falls on the delivery man, who can be his own job or part of a ‘uberized’ home delivery service.
As for the daily operation there are no black threads: take care of the administration, the cleanliness of the place, the presentation of the products and very important: the customer service. To do this, you can use a software, such as Víctor Kurt, from Spa Canino Móvil does.
“We have an ERP that helps us measure the business: profits, losses, turnover, areas of highest growth. It is a software that helps us to zone the service at the same time that it yields important data to support our clients. Thus, we have a proactive and non-reactive position regarding their service needs ”, adds Víctor.
Key alliances
In a petshop there are certain relationships that you must take care of: one is with the suppliers (who depending on your consumer behavior can give you credit, discounts or training) and another is with your employees / collaborators (because they are the face of the company before customers).
You can also make alliances with other entrepreneurs in case your store does not offer all the services you want at first. For example, you can partner with a veterinarian who periodically offers talks in your store for dog owners. With this, you win by offering added value to your clientele and he obtains visibility and possible ‘patients’.
You can also look for partners to outsource the spa and training service. In this case, consider a profit of 15% to 20%.
Cost structure
A good first step to quantify the cost structure of your venture, part of your business model: will it be an independent venture or will you go for a franchise?
If you opt for the former, you will have to throw all the meat on the grill in order to limit the learning curve, minimize risk and, of course, optimize your capital, since this option can be up to 35% cheaper in relation to a scheme franchise. But if you go for a franchised business, you will have the support of a brand, the corresponding know-how and the necessary support during start-up and operation.
In both cases, a first step is the rent of the premises, which can range from 150 to 500 pesos per square meter, depending on the location and facilities it offers. To the current rent, add the payment of one or two deposits and the annual amount of a legal policy equivalent to one month’s rent (it protects the owner of the premises against damage and refusal of eviction by the tenant) and if you enter a shopping plaza, add the cost of the famous glove.
Once the issue is resolved, foresee the costs of adaptation, which depend on the state of conservation of the property and whether you must align the look & feel to the standards of a franchise. In any case, reserve a budget of between 50,000 and 120,000 pesos.
“There are many ways to get started, but I recommend doing it through a franchise. This saves you a lot of headaches. The model we suggest is an anchor store, selling food, toys and accessories. The initial investment is 854 thousand pesos, 120 thousand of franchise fee and 35 thousand for other expenses. The return on investment is between 16 and 20 months, ”explains Héctor, from Casa Luna, a 100% Mexican company that is already in the hands of the third generation.
Another franchise alternative is the one offered by + Kota with the + Kota Food scheme, which is a store specializing in the sale of food and accessories for spaces ranging from 40 to 60 square meters. The investment is around 1 million pesos and the return on investment is three years.
“We have another model of ‘corral stores’, so called because it has corrals that house the animals for sale. These stores are located in Power Centers and are between 80 and 150 square meters. The investment they require is between 2 to 2.5 million pesos, which includes the franchise fee, adaptation of the premises, initial inventory and working capital, ”adds Murry.
If you are looking for something different, you can explore the aesthetics of Spa Canino Móvil. His proposal is based on an investment of 1 million pesos and calculates a return on investment of 18 to 24 months with profit margins of 30%.
If you decide on a franchise, solve all your doubts; pay attention to the issues of supply, payment of royalties and exit clauses. On the contrary, if you go it alone, keep in mind that you will not have the shelter of a recognized brand, nor will you have (at least initially) direct access to various providers. You also won’t master the key processes. The good news is that everything is learned.
As you can see, undertaking in the world of pets requires knowledge, time, capital, a taste for customer service and a love for animals. Lose the fear to undertake! Find out and join the entrepreneurial community in Mexico.
