Doggedly importing products for pets in the face of slowdown

Doggedly importing products for pets in the face of slowdown
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First Published: Thu, Feb 12 2009. 01 15 AM IST

Dogs and the downturn: PetSetGo’s Modi says the pet industry has always scored during economic slowdowns. Madhu Kapparath / Mint
Dogs and the downturn: PetSetGo’s Modi says the pet industry has always scored during economic slowdowns. Madhu Kapparath / Mint
Updated: Thu, Feb 12 2009. 09 48 AM IST
New Delhi: If there has been a slowdown in the market, Raghav Modi, chief executive officer, PetSetGo, has not noticed it.
“I don’t feel affected at all,” he says.
Dogs and the downturn: PetSetGo’s Modi says the pet industry has always scored during economic slowdowns. Madhu Kapparath / Mint
Despite launching a brand new pet accessory and food import company in January, Modi doesn’t flinch at all the dire financial signs in the market. “The people who own pets have to service them. It’s like having kids.”
Modi has been confident enough to invest Rs1 crore in the new company, though he did have the security of taking the loan from his father’s export business Avanti Overseas Pvt. Ltd.
“He’s been very supportive of it all throughout,” says Modi. “He thought it would do well in the market, but he didn’t want to take the initiative to do it himself.”
Modi began working with Avanti after graduating from Southern Methodist University in Texas in 2004. Avanti manufactures and exports stainless steel pet products to companies around the world. Modi would travel abroad to pet trade fairs, meeting potential clients and learning about pet industries abroad.
About two years ago, he started concentrating on the pet market at home, weighing possible entries into it.
“The pet industry (in India) is at a very nascent point right now,” he says. “And it has been growing at about 15-20% per year.”
Rather than follow in his father’s manufacturing footsteps and start his own production centres in India, Modi chose to focus on retail: “Manufacturing takes a lot of time, effort, labour laws. I feel that the retail segment is going to be a big boom in the next five, 10, 15 years. Consumerism in India has just begun.”
Modi hired LB Associates Pvt. Ltd, a publishing house and consulting company, to run a market survey with Your Monitor, a databanks company. The results were encouraging. “The total pet market is valued at Rs300 crore. There are about five to six million pet dogs in the major metros, and the pet population is growing at about 20% per year.” And Modi says that the only trend that has likely changed since the survey was conducted prior to the market downturn is that more pets have been purchased.
“In times of depression, the pet industry has always boomed,” Modi says. “The concept is that if you’re getting laid off or if you’re spending more time at home, and if families are small, you’re probably spending more time with your pet than with any other person. The more time you spend with your pet, you want to lavish more attention on them.”
Prior to the downturn, Modi saw that the biggest gap in pet products lay in the higher-end “quality products” that would come with a costumer satisfaction guarantee.
Modi says the pet industry “is really, really disorganized in India. Retail is just starting in the market and quality pet products just do not exist.”
At pet fairs abroad, Modi says he would see many Indian distributors making one-time purchases of outdated products abroad and importing them back to the market. When customers “go back to the pet store to find the product, they aren’t there”. He also saw that people were paying “a high price for a cheap product: Distributors would buy a product for X amount and sell it at X times 20.”
He thought there was plenty of space for a company to do well if it guaranteed consistency of the product and promised that the product could be returned if something was wrong with it. Using the contacts he made at pet fairs around the world, he linked up with major international pet brands—from Korean haircare line Forbis to Italian brand Nova Foods—and he plans to launch the products in pet stores by 1 April.
For the first stage of the company, Modi will primarily focus on setting up warehouses in three areas of the country. One is operating in the NCR region, while two more, likely near Bangalore and Mumbai, will be launched within the year. “A state-of-the-art warehouse facility I see as (a) very important factor,” he says. The warehouses will be based on an SKU (stock-keeping unit) system, a computerized marking of every product so there are data records of each—when it arrives or leaves. He took his model from some importers in Germany and Italy where he says he was amazed to see 50,000 sq. ft of warehouse space run by five people. “Here, you would need 200-300 people for the same space.”
The company will at first appoint outside distributors in different areas of the country, likely in Delhi, Uttar Pradesh, Mumbai, Goa, Gujarat, Bangalore and Chennai, as a middleman between PetSetGo’s warehouses and the smaller pet stores. Petsetgo will market directly to large retail chains.
Modi says, though, that the company will train its own sales team to pitch its products and then deliver the orders to its distributors.
Modi has big plans for the company, from private labelling of pet products to a large flagship store with a grooming centre and a veterinary clinic. “I want to be the number one pet brand in the country.”
“We’re definitely a small company, with maybe a turnover of about Rs5 crore this year,” he says. “I still might have a loss the first year, but I think we should be able to break even.”
Modi says the pet trend in India has dramatically changed over the past few years and likely won’t slow down any time soon.
“Pets were always viewed as guards, but now pets are viewed as companions,” he says. He says the breakdown of the joint family has spurred on pet purchases, and as families become smaller, people are more willing to add pets to the family. He also says that older generations viewed pets as unhygienic.
Modi’s own pet tale follows a similar trajectory. When he was 10 years old, he bought himself a pair of rabbits and proudly brought them to the home he shared with his grandparents, parents and sister. Three months later, he came home from school to find the rabbits had mysteriously disappeared.
“They said, ‘You can’t have them in the house.’” he recalls. “And they were gone.”
His grandparents did not think pets were hygienic—a philosophy Modi says is prevalent in the older generations. Even though his father ran a manufacturing company for stainless steel pet accessories, the family never had another pet until Modi finally said 14 years later: “We gotta get a dog!” It was not until he and his parents moved to a new house down the road from his grandparents that the family finally relented on the pet policy. Now, three years later, they have six, thanks to a recent litter of puppies.
This is the sixth in a series about entrepreneurs starting business during the economic slowdown. Next: A former CEO takes the plunge.
melissa.b@livemint.com
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First Published: Thu, Feb 12 2009. 01 15 AM IST