From The April 2003 Issue of Natural Foods Merchandiser

Feeding Fido Online

Randy Barrett

It seems there's a new kind of dog kibble invented every day. Unfortunately, your shelf space isn't growing with the same abandon. What to do?

Take it online. Even though the utility of e-commerce has been bashed from Bangkok to Boston, the Internet is still a viable way to make a specialty-item sale. Forrester Research estimates online grocery sales can boost store revenues by as much as 3 percent as the number of households using the Web to buy food and household products grows to 14 million in 2006 from a slim 4.5 million in 2000.

And more than a few outfits are ready to help retailers start wooing those new customers. They can seamlessly expand your online inventory and offer you a commission on sales of their products generated through your Web site.

For example, NeXpansion of North Brunswick, N.J., last fall signed on Montgomeryville, Pa.-based PetFoodDirect.com to provide pet products for its Endless Aisles program. Endless Aisles is the company's private branding platform for retail Web sites.

NeXpansion, formerly Netgrocer.com, handles order fulfillment of sales made through major retailers' Web sites, including Lowes Food, Pathmark, Big Y and Harris Teeter. In each case, the client retailer has integrated specific NeXpansion categories of products into its own site without the retailers' shoppers ever knowing. Retailers benefit by being able to offer more products to their customers without sacrificing shelf space or taking inventory risks.

"We provide the opportunity to expand what they offer in their stores," says NeXpansion Vice President Debra Davis.

The pet category is rapidly expanding. In the first eight months of 2002, about 130 new pet food products were introduced, according to Watt Publishing Co.'s The Petfood Report.

Using the PetFoodDirect.com connection, NeXpansion now offers more than 9,000 pet products. The selection includes 42 premium food varieties, including a number of natural brands. Retailers get a commission for every sale they direct to NeXpansion from their store sites. NeXpansion would not give details about its payment structure.

If this sounds like too many middlemen, PetFoodDirect.com offers its own private, branded online service and pays retailers 10 percent of each sale, after credit card and shipping charges. The company also offers a 600-product Animal Wellness Center that carries vitamins, nutraceuticals and specialty foods.

"We can custom tailor a wellness program and the invoice will have your name on it," says PetFoodDirect.com Chief Executive Officer Geoff Walker. "We do all the work at no extra cost."

PetFoodDirect.com currently supplies pet products to QVC.com and Amazon.com.

Other big pet-supply retailers such as PETCO.com and PETsMART.com offer affiliate Web programs, but they don't customize their content to an individual retailer's Web site. Instead, they'll put a banner or link on your site and give you a percentage of each sale that comes through your gateway.

"The order is tagged and we pay a commission," says Heather Black, director of e-commerce marketing for San Diego-based PETCO.com. She wouldn't give commission specifics, but said payments are made on a 60-day cycle. PETCO.com brings in about 9 percent of its revenue from online sales.

Brockport, N.Y.-based PETsMART.com's affiliate program offers a 15 percent commission for first-time customers arriving from your site and 5 percent per sale for repeat customers.

Though the commissions might not be grand, they beat losing a sale altogether because a customer can't find what he or she wants on the shelf. Still, getting the customer from the store to a PC is a challenge, Davis says. NeXpansion tested Internet kiosks in stores, but found the terminals were a bust with busy shoppers.

Soulful bluegrass singer Randy Barrett is president of the Business Writers Group in Falls Church, Va.