Pet Project: Learning From a Product Launch Success This former veterinarian wowed major pet-product retailers and got her invention on their shelves. Here's how.
By Don Debelak
Opinions expressed by Entrepreneur contributors are their own.
The Entrepreneur: Dr. Mary Burns, 49, former veterinarianand founder of Veterinary Ventures Inc. based in Union, Kentucky
Product Description: The Drinkwell is a pet fountain withfree-falling water, a one-gallon-plus water reservoir, a pump and acharcoal filter for removing bad tastes and odors. The Drinkwelloffers pets a daylong source of fresh water and has a suggestedretail price of $49.95 to $74.95, depending on size.
Burns initially got the idea because her cat, Buckwheat, wouldonly drink running water from a faucet. Tired of getting up duringthe night to give Buckwheat a drink, Burns created the Drinkwellafter observing a decorative desktop water fountain that seemed tooffer a solution for faucet-drinking cats.
Startup: Less than $3,000 for a vacuum-formed mold, someinitial inventory and an ad in Cat Fancy magazine
Sales: Just over $3 million in 2004, with sales to petsuperstores such as Petco and Petsmart, and to independent petstores, as well as specialty and pet catalogs nationwide
The Challenge: How an independent, one-product inventorwith limited business skills can get onto the shelves ofcategory-dominating major retailers
Pets can be an important part of people's lives, so it'snot surprising that every year, individual inventors come up withdozens of new pet inventions. But the days of the independent petstore are over--and nearly all small shops have been replaced bycategory-dominating stores like Petco and Petsmart. Inventors canenjoy big-time success once they learn how to penetrate the bigpet-store chains.
Steps to Success
1. Obtain strong patent protection. "I knew the keyfeature on the Drinkwell was the free-flowing water," saysBurns. "I started by reading the book Patent ItYourself by David Pressman. I wrote up much of the patentdescription myself, but I had an attorney write up the actual claimto be sure I had strong protection." Burns' protectionpaid off--she sold the product without competition from 1995 to2001 and, even after a competing fountain was introduced by a majorpet-products company, the Drinkwell held its sales level becauseshe had the market's only free-flowing water fountain.
2. Develop convincing proof the product will sell. Burnsexplains her sales success: "I started out in December 1995,selling directly to consumers through small ads in Cat Fancy,Cats and I Love Cats magazines. Then, in 1996, HammacherSchlemmer called and wanted to carry the product, and Alsto'sHandy Helper catalog picked the product up at the end of 1997. In2000, I started to promote the product in trade magazines like PetAge and started to pick up independent pet stores." Burnsdidn't just have some initial success; she had $2.2 million in2002 sales, which also included Petco sales of her product.
3. Ensure the product has a "big company" look.Burns started with a functional product that was not stylish."My initial vacuum-formed tool was very cheap (less than$1,500), but the product didn't have aesthetic appeal,"she says. "In 1999, before approaching pet retailers, Idecided to convert to an injection-molded product, which had asix-figure tooling cost, but which also provided aprofessional-looking product. That look was essential to Petco andPetsmart."
4. Get expert help when negotiating contracts, pricing,allowances and returns. Burns' growing business wasstarting to overwhelm her in 2000. "My investment counselorsuggested I contact Howard Consulting [a business managementconsulting firm in Reno, Nevada, now called Meridian BusinessAdvisers], who initially provided help with my financialbooks," she says. "But they came to my rescue whendealing with Petco and Petsmart. I didn't know how to fill outvendor qualification forms, deal with allowances and discounts, ornegotiate final agreements."
Howard Consulting helped Burns get the initial orders, and Burnswent one step further in 2002. "I ended up selling the companyto [Meridian's parent company] for an upfront fee and ongoingroyalties. I felt that I was out of my league negotiating with thebig retailers, and was also overwhelmed by the concepts ofproducing the product overseas and dealing with a major pet-companycompetitor," Burns says. "I felt turning the company overto experienced businesspeople was my best choice."
Lessons Learned
1. Manufacturing costs should be no more than 25 to 30percent of the suggested retail price. Big retailers will wantat least a 50 percent discount from the suggested retail price, andthey will also want allowances, which are a percentage of theirpurchases--typically 2 to 6 percent--to cover the costs of damagedproducts and advertising. You won't make any money if yourmanufacturing costs are greater than 30 percent of the suggestedretail price.
2. Big retailers don't take chances. Big retailerswill rarely be the first companies to take on an inventor'sproduct. They want to see that the product has succeeded in severalother outlets, including some retail outlets, before they will evenput the product into a few test stores.
3. Hire professional help. An inventor's lack ofmanagement skills is a severe problem to major retailers, as theywon't have confidence in the inventor's ability to deliver.Paying for consulting help might cost money, but losing thebusiness is an even bigger problem. If you don't know who tocontact for help, visit your local Small BusinessDevelopment Center.
4. Inventors can succeed. Inventors have obstacles toovercome, but the market is always looking for unique products thatcustomers want. Retailers will buy if you can prove your product isunique in the market and meets an important customer need. Even thebiggest retailers will want your product if their customers areasking for it.
Help! I Need Somebody
Inventors who need engineering or manufacturing help can contacttheir local SCORE office, where you can find experienced executiveswho can suggest product improvements or cost-effective productionmethods. Log on to www.score.org to access a list of local SCORE chaptersnationwide.
If you only need a contract manufacturer, check out the Job ShopTechnology magazine website. Job shops are firms that makesmall to midsize production runs for companies and often help withdesign assistance for new products. Job Shop Technology alsohas frequent regional shows where manufacturers looking for newproducts will exhibit.
Don Debelak is author of Entrepreneur magazine'sStart-Up Guide #1813, Bringing Your Product to Market, andhost of inventor-help website www.dondebelak.com.
