Automation next in PetShop.co.uk's purrfect tech strategy to fuel e-commerce growth

Online retailer PetShop.co.uk experienced a huge boom at the start of the pandemic. The business had been turning over about  £1 million a month pre-COVID, which jumped to about £3 million from late March to early May 2020. 

To support the huge surge in orders, PetShop increased its headcount from 30 to 100 people, and was operating round the clock, seven days a week. Adam Taylor, founder of PetShop, says:

We outperformed our peers during the next year and a half because we were willing to dig down and keep up with demand, whereas a lot of people were shutting down their websites at times. They didn't have the infrastructure or ability.

In 2021, PetShop turnover was just over £20 million, continuing a trend of 50% year-on-year growth for the past six years. For a company selling commodity pet products, competing with the likes of Pets at Home, Amazon and Tesco, its growth is impressive, and something that Taylor attributes to its use of technology.

As noted previously, PetShop had invested in NetSuite as its core financial and e-commerce platform back in 2015, which proved vital for meeting the demands of this hectic period. Taylor recalls: 

We had 10 people arrive in the office and we had to get them up to speed. We basically bought a bunch of NetSuite licenses and it was made easy because we have everything in one environment, so we only needed to teach them one system.

One of the firm’s recent innovations is an SMS repeat order system, which was made possible because its entire business system, accounting, stock and e-commerce website are all built in the NetSuite infrastructure.

If a customer buys some cat food from PetShop, the system will predict when they should reorder based on how many cats they have and how much food they ordered. The system waits to see if they reorder of their own accord; if not, it sends an email. If there is still no response, it sends an SMS saying ‘You ordered Felix cat food - chicken, the price is £31.99 including shipping. If you’d like to reorder, reply miaow.’ Pricing is then taken live from the NetSuite system, explains Taylor:

All they have to do is reply ‘miaow’ and then it instantly converts that into an order. It's another clever medium to offer convenience because people often will run out of cat food. We turn orders around in 12 hours, so can be very quick.

PetShop has also used technology to find ways to be the cheapest by not just focusing on price, via subscription, bulk-buying and auto-pricing, he adds: 

Plus all the data we collect from the transactional side, from the website performance and so on, we anonymize it and share it back to the brands. That's become a whole revenue stream in itself. So technology is the backbone of our business, it's been key to our success.

Vaccine Economy kicks in

However, this year has been much tougher for the business, which Taylor says has had to be very agile to navigate the challenges:

Every month there's a new hurdle or a new thing to do. We've had crazy supply issues, we probably were shorted about £2 million worth of orders buying from big manufacturers that weren’t delivered.”

PetShop was able to mitigate some of these issues via the NetSuite technology, including dealing with massive rises in product costs. The retailers sells 8,000 products, which were all being priced manually. Taylor explains: 

With every month or two months prices going up, along with packaging costs going up, we identified that we were selling some products at a loss. We built in a NetSuite auto-pricer, which we just completed recently, so we've got live stock feeds with our suppliers. If their costs go up, we can have a set margin on a product and it just automatically adjusts this to ensure we're profitable.

The company has also used technology to help cope with staff shortages that have been affecting local businesses, he adds: 

People had to increase their salaries and were offering crazy sign-on bonuses. We did increase our salaries, but at the same time we built a KPI performance tracker for pickers and packers just in the nick of time, utilizing the fact that NetSuite is all in one place. We could basically measure productivity and that helped reduce our cost because we could keep the top performers, train the people that weren't performing and then if they still weren't, we would look to recruit new.

Without that – and we didn’t have that before - we would have been in big trouble because it was hard to get good staff in and it was very competitive.

With so many challenges to deal with, PetShop’s focus this year has been on running a strong business, rather than growing revenue. But Taylor believes that by Q4, the company will be going back into growth mode, thanks partly to the various automation processes it is setting up via NetSuite.

PetShop is now turning its automation focus to the warehouse, exploring the various robotics options available, from automating product storage with items stored in cubes, to automating the picking, packing, transportation and lifting. Taylor says: 

Pet food really is quite heavy, average orders can be 15-30kgs, so you’ve got to be physically quite fit. We're looking at ways to reduce the manual element of it.

Since the pandemic and staffing challenges, Taylor says there has been a lot of innovation in robotics, along with cost reductions for the technology. This means robotics is becoming readily available to smaller businesses like PetShop, rather than being limited to online retail behemoths like Amazon and Ocado:

We're looking at how do we remain agile by bringing in automation. The cube scenario is a bit too fully automated. We're a bit worried it doesn't provide enough flexibility, particularly during things like lockdowns and pandemics. We even heard some of that from people that have had the cube, that it is quite restrictive.

What we have identified is automating the packing process, and there's some really cool box-making machines out there; and automating the transportation from the picking from the aisle and bringing it over to the packing station.

Whichever robotics route it goes down, Taylor is adamant PetShop will continue to maintain its own warehouse on-site:

As an e-commerce business, if you outsource your warehousing, then really you're just a marketing company. If you outsource that, you outsource 50% of your customer experience.