Lockdown saw many of us depending on man’s best friend more than ever. Here, Mike Halligan, co-founder of subscription online retailer Scratch Pet Food, talks to us about dinner for dogs, why you can’t always trust what you read on a label and the power of word-of-mouth. Inside Retail: How does Scratch work? Mike Halligan: Scratch is fixing much of what we hated about the dog food industry. Most people don’t realise that more than 90 per cent of dog foods are owned by multinational
tionals. If you go to a pet store where most dog food is sold, the food is in bulk bags made months ago, with the most ridiculously vague marketing claims on them and absolutely no way of telling what’s actually healthy. Most dogs eat the same thing every day, so feeding bad food can create all these long-term health problems. Scratch makes healthier dog food, which is personalised to your dog and available by subscription. We end up spending about 40-50 per cent more on ingredients than similarly priced foods. We have data to tell us when your dog needs more food, and we can send them something fresh. So it’s convenient for you and much healthier for your pup. IR: How has consumer behaviour around pets changed since lockdown? MH: It’s been really interesting. At first, everyone rushed out and stocked up on what they were already feeding their dogs, but a month or two after the first lockdown we saw people completely open to trying a change. Our new sign-ups doubled! We make these 100 per cent natural beef jerky treats too, and they’re selling like crazy as we look to reward our dogs more for keeping us sane over such a crazy year. IR: Why did you choose a subscription model as opposed to aiming to stock your pet food in stores? MH: It’s really hard to improve dog food within the retail industry model, unless you make your food really expensive. Dog food is a product that we buy regularly, but can still be marked up by up to 60 per cent at the point of retail. We saw a lot of efficiencies to be made so that we could spend more on the actual food our dogs are eating. Subscription really fitted how we were approaching dog health and looking after the customer too. When you buy from a brand at a store, you don’t expect much beyond the food itself, but when you buy on subscription from a brand like ours, you can talk to the people who make the food, so it’s like a contract to say we’ll look after you and we’re here to make sure your dog is in good hands. Our subscribers hold us to that, and it keeps us grounded on our mission of improving the whole process of researching and buying dog food. IR: You say the pet food industry is “dishonest and harmfully misleading”, can you elaborate on what concerns you? MH: It’s actually completely self-regulated – and optional! If you choose to sell in stores and be part of the industry, you have to adhere to a bunch of rules that are designed to confuse the market and hide food quality. We’re the only brand in Australia that shows how much of each ingredient we use. That’s actually a huge deal because with the self-regulated rules, you can have a big premium bag of dog food with this perfect chicken breast on the bag, but it can have as little as 5 per cent chicken in the food without them having to tell you. You can change the ingredients without having to tell the customer for six months, so companies change what’s in it month-to-month depending on prices. If you add all these nice sounding words like “dinner” to the product name, you can get away with more; dog owners have no idea that “dinner” is code for dodgier meat. There’s countless little things like that in the industry. It’s just the complete opposite of what honest business looks like in my book. IR: How does Scratch differentiate itself from the competition? MH: We do that in two ways. One is food quality. We source whole Australian ingredients rather than powdered stuff from overseas, we use the best quality meat and proteins available and we use as much as possible. So if a dog is eating a turkey from Scratch versus a turkey recipe from the store, they both say ‘turkey’ on the label but there’s a huge nutritional difference. The second way we are different is in our customer experience. From understanding what’s in the food and what dogs it suits, through to feeding the dog a month in, we really focus on doing what’s best for the dog and making it fun and personable along the way. We have invested a ton of time into our website and understanding the health problems of the dogs, then call a few weeks into their transition to Scratch to make sure their dog is thriving on it. We continue to mix it up and introduce little things to keep customers engaged with their dog’s long-term health. IR: Who designs your recipes and have any of your recipes been vet-approved?Vet approval isn’t actually a thing. All you have is marketing contracts where you pay vets to endorse it, but vets get very little nutritional training as part of their studies, and then post-study, the big dog food companies provide all of the training. There are some out there that have taken it upon themselves to understand how dogs process different ingredients and how the body works holistically, but unfortunately, food is not something generally given the time of day within their studies. My business partner, Doug, has worked in the industry making foods for the big guys for more than eight years, so we really started Scratch after he finally cracked it at how ingredient quality was sacrificed for cost. He designs and tests our recipes together with two Australian animal nutritionists. IR: Since you are not in stores, how do you market your products and raise awareness of your brand? MH: A lot of our early success came from word of mouth. People who hated how the industry worked but still wanted something easy and healthy for their dogs advocated for us in Facebook groups, and then it started to be recognised more widely. We have some nice packaging and personalise each box with the dog’s name and a cheeky message, so thousands of people have taken to Instagram to share our box with their dog and document their dog’s change in health. This year we turned more to Facebook advertising and have just started some fun outdoor billboard campaigns. However, Facebook has been really challenging for us and a lot of people in the back half of 2020. There’s just so much fun marketing to do with dogs, so we’ll continue to mix outdoor with more targeted digital advertising. IR: How has Covid-19 impacted your business and how have you overcome the challenges? MH: We’ve been remote since the early days of Scratch and are huge believers in looking after our team and making a calm but focused work environment. When Covid hit, we were lucky that everyone felt safe and had their normal routines, but hiring and training remotely has been much harder. It’s not something I want to do again. The biggest impact to our business have been fulfilment challenges. Australia Post completely sacrificed larger parcels, so we’ve had to switch to using expensive couriers for most of the past few months as their systems were horrible, but Covid-19 put them in a really hard place, so no hard feelings. IR: You’ve recently changed your packaging based on customer feedback, how important is it for you to stay in touch with your customers? MH: It’s everything. It’s really easy to think you’ve got it all worked out but tastes and needs are diverse. Between the phone calls we make and the surveys we run from time to time, we constantly look to learn what we don’t know, and see what gaps exist between how we want things to be for the market and how they really are. I’d put so much thought into our old packaging format, but we learnt that only 30 per cent used it in the way I had designed. Many owners of smaller dogs loved Scratch for the freshness of food we delivered, but felt that they lost that over time as their dog slowly got through a 7.5kg bag. So we re-designed things based on that and improved their experience before they thought of moving to another brand. IR: You are members of 1% for the Planet. Why did you choose to partner with them? MH: Most businesses like us don’t make a profit for a while and continue to invest back in the business, so we wanted to build a way of giving into the business that helped from day one and was fully transparent. Donating 50 per cent of profits sounds great, but if you just keep investing instead, raise salaries, get a little looser with your marketing costs or just employ different accounting tricks, you’re not actually contributing much. Businesses like [the environmentally friendly toilet paper subscription service] Who Gives a Crap have the values and honesty to make that hugely effective, but we’d seen plenty of others use it for it’s marketing value and not contribute much. 1% for the Planet requires a minimum of one per cent donated from all revenue, so there’s no bullshitting or greenwashing, and they vet charities around the world down to those that are most impactful. We use resources to make our product, so it was important for us to recognise that and pay back as we went. IR: What plans do you have for the future of Scratch? MH: We want to be Australia’s most trusted pet brand. We’ll never be the biggest, but hopefully sustainably run and big enough to pull the rest of the industry into line with how they market and label their food. We’ve got more than 10,000 dogs on Scratch now, so I’d love to have helped 10,000 more by the end of the year!