Sit! Stay! Make Money! Good Company
Beginning as an information site for dog owners, SitStay.com has turned into a profitable online pet supply store.
Published March 2001
EMAIL THIS ARTICLE
PRINTER FRIENDLY
COMMENT ON THIS ARTICLErealbusiness.com
The Mom-and-Pop
A tiny business that sells dog supplies on the Web pulls in profits while big pet dot-coms take a poop
Company: SitStay GoOut Store Inc., in Lincoln, Nebr.
What it does: Sells high-end dog supplies like the gumball- machine-style Yuppy Puppy Treat Machine, $29.95
Number of employees: 4 humans, 4 canines
Conventional wisdom: It's impossible to run a profitable pet site. Witness well-funded fizzles like Pets.com.
Unconventional wisdom: A niche market, bootstrapped financing, and over-the-top customer service make dog supplies a profitable venture for a husband-and-wife team.
Revenue growth: From $85,000 in 1997 to $888,000 in 2000
Profit profile: Profitable from year one. In 2000, profits were $111,000 on $888,000 in sales.
Capital: $20,000 from the couple's 401(k) investments
The telephone is just about the only thing at SitStay.com that doesn't bark. The clock barks the hour. The warehouse doorbell barks. The computer barks when a customer enters the chat room. And, of course, the four resident dogs -- Kari, Bruno, Dancer, and Tilli -- all bark. The telephone, however, still rings, and when it does, owner Darcie Krueger answers it with a lilt, not a bark.
SitStay.com (aka SitStay GoOut Store) began as a hobby for dog-lovers Darcie, 46, and her husband, Kent Krueger, 41. The pair originally launched a Web site for Belgian-shepherd aficionados. Belgian owners came to rely on the Kruegers for product advice. Darcie soon realized that the hobby site could be a business. Today the company has 19,000 customers worldwide and nearly $900,000 in sales. "People always want to know 'How did you do it?'" says Kent. "We did it by accident."
That may be how the Kruegers like to think about their Internet company. But their success is no accident. SitStay exhibits all the traits of a well-run start-up and none of the hallmarks of a stereotypical dot-com. Drawing on 15 years' experience in information technology, Kent built the site single-handedly. Darcie's background in managing retail stores turned her into a service crusader willing to spend an hour on the phone giving training tips to a single customer.
The pair have dug themselves a cozy, high-margin niche market. They generate business by word of mouth -- unlike big E-tailers that spend millions building brands. And they bootstrapped the company by upgrading software, phone systems, and warehouse space only as cash flow permitted. "I'm not risky with money; I'm risky with ideas," says Darcie.
That's hardly surprising, given her previous employment. Darcie quit her job as a city risk-management worker and went to work on SitStay full-time in February 1997. In October, Kent left his position as an information-services supervisor for the Lincoln Electric System. As if quitting their jobs weren't enough, the couple took $20,000 out of Kent's 401(k) plan. At that point Kent's dad proclaimed, "You're nuts."
Though the Kruegers had a head start on a customer base, they needed products to sell and employees to sell them. But instead of staffing up without the sales to pay the salaries, the couple worked around the barking clock until August 1999, when they hired Darcie's son, Sean Kusek, to pick, pack, and ship orders of Icelandic fish-skin chews and Wiggly Giggly balls. (Sean's wife, Amy, took over when Sean went back to college, in January 2000.) As last year's holiday season approached, the Kruegers hired a fourth employee.
As for stuff to sell, the Kruegers asked M.I. Industries, a Lincoln manufacturer of all-natural pet treats, if SitStay could sell its high-protein goodies. The company agreed but eyed the basement start-up warily, taking cash for the first order -- a single box of Macho Stix. (The aptly named treats are made from the male sex organs of beef cattle.) Little by little, SitStay's inventory expanded to fill the basement, then the garage, then a 3,000-square-foot office and warehouse. Little by little, the treat manufacturer extended its terms. Now SitStay sells $16,000 of M.I.'s products in a month, and M.I. president Bob Milligan doesn't give SitStay's credit a second thought. "You know the check's coming," he says.
Unlike the big pet E-tailers that try to be all things to all animal owners, the Kruegers limit their offerings to a relatively small collection of products that, like Macho Stix, meet their personal standards of what's good for dogs. Margins on their 1,500 SKUs range from 15% to 100%. "We don't have 10,000 products," says Kent. "We have the best of the best."
