01 Sep 2014
Case Study: Declawing the Competition
A startup focused on clawing its way to the top of a competitive pet market seeks advice from alumniRe: Stacy Schwartz (MBA 2003); Laura Viaches (MBA 2008); D.B. Banchik (MBA 1984); Glenn Perkins (GMP 11); Katina Stefanova (MBA 2005)Topics:
Illustration by Peter Arkle
KitNipBox is a monthly subscription service for cat owners. Each box contains products designed to keep cats happy, healthy, and fit: toys, treats, health and hygiene products, must-have accessories, innovative new gadgets, and other unique products.
A core part of the company’s mission is social responsibility: A portion of the proceeds and products is donated to animal welfare organizations. KitNipBox regularly works with artisan suppliers who create handmade products and support animal welfare.
KitNipBox launched in early 2014 and has gained great traction, both in subscriber growth and customer feedback. However, the lucrative market opportunity ($8 billion, growing at 4 percent year-over-year) and the low costs of entry are attracting new competition. New cat-focused subscription boxes have been popping up every few months.
KitNipBox cofounder and president, Deena Malkina (MBA 2008), offered this case study query to alumni: “KitNipBox is laser-focused on differentiating its brand by sourcing the most unique, high-quality products on the market, committing to healthy and natural goods, being socially responsible, and providing excellent customer service. However, we know this is a race that others can compete in, too, and that—with enough investment—our differentiators are replicable. What fundamental changes can we make to this market dynamic and/or our business model to erect sustainable barriers to entry and secure a market leadership position?”
Create an Etsy-like program for subscribers to sell and distribute their own cat products. After being vetted for quality and fit, independent producers receive distribution and a percentage of sales. This develops a network of cat-loving entrepreneurs who want to support each other and who see the value in all-natural and homemade.
— Stacy Smollin Schwartz (MBA 2003)
A few ideas: 1) Create a kitty mascot that has a Twitter feed/Facebook presence. Use posts to hint at presents in the following month’s deliveries. 2) Reward loyalty—special extra gifts for every fifth box? 3) Consider partnering with local humane societies. For example, offer a reduced-cost first package after an adoption—the goal being to associate the joy of bringing a pet home with your product.
— Laura Viaches (MBA 2008)
Vertically integrate through a branded line of patented innovative products. Offer a rewards program that for every X number of boxes purchased through subscription, a box will be sent free to a friend or family member of their choosing. The objective is to convert the recipient into a subscriber. Use social media extensively for the purposes of making your brand into a community of cat lovers.
— Doris Banchik-Moxley (MBA 1984)
1) As a subscription service, invoke a simple recurring mechanism to allow faster feedback on your customers’ preferences. This will allow you to improve products and services and stay more connected to your customers. 2) Based on the recurring product and service preference feedback, consider vertically integrating those items that are most desired, allowing you to fine-tune and evolve the product, [as well as] developing a cost advantage for part of your kit over others who must source independently. 3) Seek out a partnership and/or alliance with a pet food supplier—get your kit endorsed.
4) Consider the new B Corporation status, which allows additional tax benefits for socially responsible corporations.
— Glenn E. Perkins (GMP 11, 2011)
Take a page from the book of Zappos.com: Make customer service your primary priority and try to build personal relationships with your customers that encourage loyalty. It is not the products that you sell, but the experience and relationships you create. Thus your call center and the quality of the interactions your team has with the customer matter the most. You can also create events where cat owners can meet and share their experiences with your products and their cats.
— Katina Stefanova (MBA 2005)
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Class of MBA 2008, Section I