Mike Halligan: So ended up quitting my job and said, all right, I'm going to try to take on the dog food industry, which is like Mars and Nestle and just a few small companies like that. We also said early on we're not trying to be the biggest dog food company in Australia. And so knowing what we were we didn't want to do and what we were happy not being kind of allowed us to kind of optimize for certain things. We still get dozens and dozens of new customers each week who are posting photos of their dog next to their box with a personalised sticker that we put on every box saying, hey Max. Welcome to Scratch.
[Voiceover]: Welcome to Add to Cart, the podcast that Express delivers all you need to know in the fast moving world of e commerce. Every month, Nathan Bush from 12 High and an E commerce industry expert will share the news, research and insights that you need to know to keep you at the top of your game and of course, keep your customers adding to Cart. Hello and welcome to Add to Cart. My name is Nathan Bush, host of Add to Cart and director at E commerce talent agency E Suite. Sometimes you meet businesses that are doing things a little bit differently and it's hugely inspirational. Today's guest is one of those. They sell online, but it's not easy to buy products as a first time visitor. Their new customer acquisition strategy is outdoor billboards. Their founders still place personalized phone calls to their customers and they have a CRM which is specifically set up for dogs. Of course, we're talking about Australia's self proclaimed best dog food brand, Scratch. Mike Halligan is the co founder of Scratch. He has a long history of helping grow Australian e commerce brands and took the leap into his own e commerce venture when his dog got sick. Determined to reinvent the world of dog food, Scratch was born and it's certainly making a mark. So far he's attracted investors such as Mick Fanning and our previous guest on Add to Cart, Simon Griffiths, for their innovative approach. So let's get into it. We'll let Mike tell the story. Thanks to our partners Shopify plus and Signet. Here's our conversation with Mike Halligan from Scratch Pet Foods. Mike Halligan, welcome to Add to Cart.
Mike Halligan: Thanks David.
[Voiceover]: Thanks for joining us. You're in lockdown.
Mike Halligan: Yes, I am passing the time by talking e Commerce in lockdown. 14 days. So you want to do another 500 episodes of this? I've got the time.
[Voiceover]: Brilliant. Let's go deep. You've got a bike in the background there. Is that just teasing you?
Mike Halligan: Well Yeah, I hired it yesterday. I went online to get like a. Just a standard exercise bike. Something just to get a sweat and keep myself moving while I'm, you know, stuck in a 15 square meter area. And they gave me something ready for the Tour de France. So, yeah, I actually, I jumped on it last night. It's with that Zwift sort of program. So it's got like a little like the bike just like plugs into this thing in the back wheel. And then I was. Yeah. In front of the tv. It's actually good fun.
[Voiceover]: Yeah, I want to get a Peloton bike and I know.
Mike Halligan: I get it now, having. Having done this last night. Yeah, it makes sense.
[Voiceover]: Awesome. Okay. I know Peloton bike's a bit of a wanker thing to say.
Mike Halligan: Are they even in Australia?
[Voiceover]: That's the problem.
Mike Halligan: Yeah, yeah.
[Voiceover]: Apparently Biden took one into the White House and it caused all sorts of security problems because people could see when he was on his bike and when he. What he was doing and.
Mike Halligan: Yeah.
[Voiceover]: Mike, give us a little bit of an overview on Scratch. You're the founder of Scratch, but you've got a long history of different projects and before that. But give us a little bit of overview on Scratch and where we are today.
Mike Halligan: Yeah, sure. So Scratch is maybe just over two years old and our thing is basically improving the dog food industry. So we're sort of the original direct to consumer dry dog food company. There's one or two others out there these days. But yeah, we started basically, my business partner and I, he's from the pet food industry and I am not, but from the E commerce sort of background, same sort of world as you. And then turned over to the other side and tried my hand at kind of starting my own brand again and grew up with dogs. And then sort of about maybe three years ago, sort of like really tuned in as my, as my dog was unfortunately getting really sick. Sort of in our last six months of life. Yeah, really tuned into how dodgy a lot of the dog food is, how misleading it is, how basically impossible it was to tell healthy food was for someone and, you know, feed, you know, humans. We've got choice, we can make decisions, but we also got variety in our diets. With a dog, you know, if you're feeding something unhealthy or even unbalanced, that kind of adds up over time, day in, day out and you don't know it. And an industry set up for you not to be able to know it very easily. It just didn't sit right with Me. So ended up quitting my job and said, all right, I'm going to try to take on the dog food industry, which is like Mars and Nestle and just a few small companies like that.
[Voiceover]: And was it the link between your dog being sick? Did you, did you see the link between your dog being sick and the food? Did that come immediately or.
Mike Halligan: Look, in the end it's hard to tell. It's you know, cancer and tumors and stuff like that. You know, diet and stuff have to play a part and things like that. But I mean it's so hard to actually link something together. But I mean when I was, when I was thinking about what food to feed her and just becoming more aware of the industry and started comparing recipes and all that kind of stuff, you just like, it's got to be causing so much and like the cancer in particular within dogs is so rife, let alone all the skin conditions and stomach conditions that so many dogs are just plagued with throughout their whole life and like the anxiety that dogs have and yeah like blood sugar swings and all sorts of things, it's just like, you know, there's a lot of room to be feeding dogs better. So ended up finding a business partner who came from that world and was really pissed off with how it operated. I was probably about to get out of it really, I think. And then I convinced him to leave the well paying job and give this
[Voiceover]: a crack because that was going to be my next question around. You've come from an E Commerce and a digital background as well. How much can you know about dog food going into it?
Mike Halligan: But it sounds like there's a nice
[Voiceover]: pairing of skills there.
Mike Halligan: Yeah, I'm sort of more the consumer, so I'm really the consumer advocate in a lot of ways. And yeah, he's a really honest guy that. So he made a lot of the foods for, for a lot of the big companies. So he'd sort of at the start get the briefs of like this is what we're trying to do and then he'd see it at the end to like what it gets watered down to and you know, the decisions that get made across the way and how it costs the cart and you know, and the discrepancy between what ends up on the packet that's being printed and put in the shelves versus what actually, you know, has gone into stuff.
[Voiceover]: One particular story from that old world of dog food that's really stuck with you and went, I would never go down there again.
Mike Halligan: Where to start. I think one thing that really galvanized early on, me particular before I think I'd even met Doug, where this was just an idea. I thought, hey, there's gotta be a better way of doing this. There's gotta be a business model that's set up to be able to spend more on the ingredients and you know, with people who have ethics and want to do it properly and set a new standard for transparency. And I thought, yeah, makes sense. But it wasn't until there was a. There was a case of really big dog food. One of the top sellers in Australia ended up making a lot of dogs sick, including a bunch of police dogs. It was sort of much publicized sort of case at the time. And as it turned out, I think over 100 dogs passed away. Unfortunately with it, many, many more got sick. And it turned out that the brand were aware of it over six months previous. And then on top of that, and so they kept selling it and kept selling it, dogs kept getting sick. And it was only because it was one group of dogs all in, you know, there was a police dogs all in the one place that were getting fed up that people put two and two together because the brand obviously wasn't going to do anything about it. But then from that it was like there was no regulation, there was no. The brand didn't have to do anything. Even to this day they could keep selling the product that this has happened to if they wanted to. So. So it was a whole industry problem and it really got me fired up, so I kind of went all in, far out.
[Voiceover]: And so where do you start when you're creating dog food, when you're trying to do something that's completely different for that industry, how do you start?
Mike Halligan: Well, you sort of like just deep dive and become the biggest product expert you can understand where on a nutritional basis, where the problems lie, why the things are the way that they are. For me, having been sort of E commerce and some of the brands I've worked in B2C brands and sort of managed and run a few actually in the last few years I'd sort of gone from agencies and consulting for most of my life to, with a few odd little side projects to then actually kind of on the tools and running marketing and then running kind of companies. So I was sort of becoming more and more exposed to the D2C world, seeing what was coming out of the US and then, and then sort of worked out that a lot of the problems were because of cost constraints. Essentially you're trying to like mass produce food for a price. You know, it's regularly consumed item like dog food. But it's also really high markup. You know, dog food is marked up, you know, up to 60, 50, 60% at the point of retail. And for something you're buying on a regular basis, that shouldn't be the case. It's one of those categories is like, you know, the raises, you know, they got whittled down over time, but dog food hadn't. It was still a very retail heavy model with the retailer taking a fair chunk of the margins at the end. So worked out the DTC model just seemed to suit it absolutely perfectly. And so that allowed us to focus on ingredient sourcing and being able to spend money on things that other companies couldn't afford to put in their food or even more of the expensive stuff, more of the stuff that dogs actually do better from.
[Voiceover]: With over five and a half thousand products in their range, Aussie e commerce packaging supplier Signet will no doubt have packaging that can take your e commerce experience to the next level. Want to give something new a try? Visit signet.netu and enter the coupon code. Add to cart and you'll get $20 off your first order. That's add to cart, one word. For $20 off, Signet helps with everyone from small family owned businesses through to Australia's largest e commerce powerhouses like Ikea, Mecca Lush Cosmetics and T2. They help them protect their products during transit and they'd love to help you too. Visit signet.net and enter add to cart at the checkout for $20 off. Your site is fascinating, right? Like you can tell that you've come from an e commerce background. So it's so well put together but it's actually really hard to buy from you.
Mike Halligan: Right.
[Voiceover]: So it's not something where you go, hey, I need dog food, I'll go on to scratch and then I'll buy something. It'll be here in two days, right? It's a little bit more involved than that.
Mike Halligan: Yeah. It's subscription only. So we optimize for a long customer lifecycle from the beginning, from the website. I mean we arguably could, we're not necessarily right in this, but we arguably could sell one off food and then try to convert those people into subscribers and you know, have that kind of like hybrid model where you spend half your effort trying to upsell and retain customers. But we said, look from the beginning, I mean the dog food industry and buying dog food is just an absolute mess. You go to the store and there's 50 different varieties and they've all got whatever they claim and they've all got a celebrity vet on there and a different breed of dog running through a field and like just tell me what's healthy kind of thing. And you know, each brand has a really big product line too, so you get more space in the shelves. So a lot of the decisions we made early on were about simplicity. How do we make it as simple as possible. So we started with classic D2C thing of like one recipe. This is the best version of you know, whatever insert product. But for the website too, it's like subscribe or not. A lot of it is about because us as a brand and us as a team and how we, what we care about and how we're sort of geared is essentially like how do we do the best thing by the dog? And so that is to get less people in that we can, that we can service amazingly well, you know, so we give all of our customers a follow up phone call a few weeks in like things like that. You know, if you increase the scale of if, let's say we had two or three times more new customers a month, we wouldn't be able to do a lot of the things that make the business run and make retention so high and make dogs ultimately healthier and the customer, you know, really looked after. So we sort of optimized for that and said we're not trying to, we're also said early on we're not trying to be the biggest dog food company in Australia. And so knowing what we were, we didn't want to do and what we were happy not being kind of allowed us to kind of optimize for certain things. So yeah, the whole thing's based around having a relationship from the start and we wanted the website to signify this is from us to you. And we are here from the get go to understand your dog and make sure they're fed.
[Voiceover]: Right, yeah, that makes sense. And for anyone who hasn't been through the process, I think at the moment you have three core dog food ranges available and if you click into any of them, you've got to go through a quiz which asks you about your dog, what's your dog name, how big is your dog, how active is your dog? Like it's, it's a really beautifully designed form and then it spits out, you know, what we, what you think you should be feeding your dog, how often and, and I assume that it gives you order quantities and your subscription rates from there.
Mike Halligan: Yeah, yeah. So the frequency. We don't, we don't use like the, do you want a new box every two weeks, four weeks, six weeks, eight weeks thing. Ours is tell us about your dog. We'll work out how many calories they need and thus be able to work out a box of scratch those, you know, that amount of calories will last, you know, 21 days. Or if you know you've got a little Chihuahua, it might be 79 days. If you've, you know, Chihuahua or your puppy grows and you update its weight, you know, that goes from box every 39 days to 34 days. It's like it's down to basically what the frequency is down to basically what the dog needs and the style of feeding, whether you're feeding scratch morning and something else for dinner or all scratch. So yeah, that whole checkout is basically optimized for that. And then we use that information as well to. For the customer experience. We know as soon as we're speaking to someone, we know all the stuff about their dog, use it for product recommendations so that we. Which is something we launched a few months ago. Once we had a third recipe, we sort of asking for dog's health problems and we use that to work out which recipes aren't suitable and don't recommend that. So instead of you having to work out, okay, they got three recipes. Which one's right for my dog? We can say based on your dog's skin conditions and breed or whatever, this is the recipe for you.
[Voiceover]: Cool. Should do kids food as well.
Mike Halligan: A lot of the same principles would really work well for.
[Voiceover]: Can you tell us about how your CRM is set up then? Because you're collecting a lot of data along the way, both about your customers and also their pets. How do you pull all that together?
Mike Halligan: Yeah, it's a mix of two different things. There's a lot of acquisition data. So we look at that as like, I can be able to tell you the conversion rate between one dog families versus two dog families versus people who get recommended one recipe or people who we say all three recipes are good. Dogs with no health concerns with dogs with health concerns, you know, so we use a lot of that stuff to understand who scratch is best for or where our website and checkout funnel might fall short or where there's product opportunities as well. And we know all this data we're logging essentially, and we look at monthly, if not more frequently. And then there's the subscription data, which is, you know, a lot of it because we're pure subscription. A lot of what makes us work is being able to plan the inventory really know our retention and where that drop off happens and where the customer experience might get stale after a while or you know, all that kind of stuff. So probably our biggest tools are Google Analytics, a lot of custom events, particularly for that onboarding stuff. And then we use a tool called Metric which is made by a Melbourne based company. That's an incredible tool. It was Woocommerce only, but now it's available for Shopify and it's just like the most unbelievable data insight and a really easy to use and segmented kind of thing. So for a subscription business in particular, it powers everything it powers like automated emails. So like, you know, like if we want to send out a review request after a certain amount of time, if you want to promote our referral program before the, you know, seven days before the third order, if you want to give, you know, power, all right, we're going to send you more food in seven days. Click here. If you want to delay like a powers a lot of this but it also powers a lot of segmentation reporting. It's, it's like you know, the Standard Shopify and WooCommerce reports but like on absolute roids. That's ridiculous.
[Voiceover]: So is METRC your CRM and email marketing tool or does it plug into those?
Mike Halligan: We actually don't do much email marketing so it's more of our transactional marketing kind of tool and internal reporting tool. We occasionally do email marketing but you know, we really don't follow find much success from it. We have funnels for people who are interested or say that hey, I'm interested in scratch but remind me of all weeks or you know, whatever, but email's never been to. I really want to know if other brands in our space make it work for them but for us it's never really done much. Even if we've got big lists, we've run competitions, we've done like our conversion rate on email has always been woeful even though we've reevaluated it, redesigned it so many times and I think it's because something like dog food, yeah you've sort of got a window where you've got only a small amount of dog food left so you're open to switching. But most of the time, because it is, especially at retail, you're buying in bulk, you're buying 20 kilo bags that might last months. So if we, if we hit you in marketing wiser get you to click through to the website, there's a fair chance that you're, you're not in that window yet to actually really consider switching. So it's harder as an impulse item. And so emails have to hit you at the right moment.
[Voiceover]: It's a big risk, isn't it, to switch dog food.
Mike Halligan: Yeah. Particularly if the dog doesn't like it. You know, we do money back guarantees, but I mean, most people like, oh, you know, it's going to be a pain in the ass sending the food back and, you know, we don't require that. But also. But most people don't even dismiss it kind of thing. And even just another charge on the card. Yeah, absolutely.
[Voiceover]: Where do you get most of your. What channels work best for new customer acquisition? Because over. I could imagine it'll be different for you because there is that process to go through. And there's an education piece here too. It's like shifting people's perception of what dog food can be.
Mike Halligan: Yeah, we're pretty mixed, I think. We didn't advertise on Facebook for the first 18 months at all. We said, because we were first in our market and so we were basically like, all right, we're going to learn the hard ways to market. We're going to learn the things that will really hold us in good stead and be really defendable and that. And then you upstart who jumps into Facebook ads and whatever won't have these other things worked out, worked out how to talk to our market. All these like, the little nuances of any market. And through that. So there's a few ways one's content. So we actually early on made a separate content site, a dog magazine called off the Leash, which is sort of like a puppy education tool. If you're getting a dog. Everything you need to know about getting a dog or if you're about to. So we get a. A lot of discovery through that. Do a bit of YouTube for people who, you know, are browsing the puppy space. I think we do Facebook, of course, and probably slowly wean ourselves off Facebook. We do a bit of adwords a lot is because we've got a product that we can do a really good product experience once it arrives. Box of scratch arrives. The packaging looks good. It looks sort of Instagrammable, even though it's a cardboard box. The bag, you know, even though dog food is at least. Honestly, it's the least sexy thing in the world. But we still get. We still get dozens and dozens of new customers each week who are posting photos of their dog next to their box with a personalized sticker that we put on every box saying, hey, Max working to scratch, enjoying new food or something like that. And people love having that personalized thing. So that ends up coming back with a lot of organic and direct traffic from people who have seen us know over a good, you know, two, two and a half years that we've been doing it, where thousands of thousands of people have posted photos of their dog with a. With a box of dog food. That's awesome. Weird behavior.
[Voiceover]: But we, we just had Simon Griffiths join us on ADD to from who Gives a Crap?
Mike Halligan: And he's one of our investors as well.
[Voiceover]: Oh, is he? There you go. I was about to say your model reminds us a lot of who Gives a Crap from both obviously the subscription side of it and turning what can be a very boring product into something that's interesting.
Mike Halligan: Yeah, I think that's where a lot of. A lot of Australia's best E commerce seems to be boring. Category made interesting. You know, the Australian personality and I mean Bellroy was actually one of the original brands that really inspired me for that way of thinking. Like, what's something that people dismiss but it's not a sexy thing to work on. Like wallets weren't sexy. Bellroy made them interesting diet Bellroying right there actually. Yeah, yeah. And so they actually, you know, the way that, the way that one of their founders, Andy spoke about it and what they were able to do as a brand really taught me a lot about where prop. You know, where the good ideas are in E commerce.
[Voiceover]: Yeah. Cool. That makes total sense. How did the investment come from? Simon? Did that. Was that from the start or did that kind of come along the way now?
Mike Halligan: We went pretty lean for the first 18 months and then probably about this time last year we ended up closing around where we'd said, all right, cool, let's take this to another level or two up. And then we sort of. Yeah, just spoke to a few people. I mean, I'd kind of met him along the. Along the way, along with some other ECOM founders. So we ended up being able to get a good little group of people to kind of raise it at a level that kind of sat with our sustainable business, profitable business, sort of model of doing things.
[Voiceover]: Yeah. Beautiful. And I understand you've got a pretty high profile investor on board now.
Mike Halligan: Yeah, yeah, yeah, that was, that was good that we got. Definitely got our PR's worth out of that one. Yeah. With McFanny Vest and I think it was, it ended up happening about October 2019. And then we, you know, we, we went to pitch PR and then sort of said oh, oh, Christmas is coming. And my partner, she's a ex journal and she's like newsrooms have nothing going on in early January. So I think we basically said to them hey, do you want to wait until early January and we'll give you an exclusive and do a proper thing, we'll give you a photo shoot, access to him with an interview, all that kind of stuff. And it ended up on like January 2nd. It was like front page of the Harold sun and all the News Corp kind of papers and stuff like that. Nick Fanning investing in dog food business and had news channel 9 news segments and everything. It went absolutely wild. So we ended up, yeah, we ended up having to put up a wait list for a month. It was, it was, it was absolutely wild.
[Voiceover]: Tell us how, how did you meet Mick Fanning?
Mike Halligan: Friend of a friend. Okay, yeah, friend of a friend. And then he, because his dog had, Harper had had all these chronic skin issues and Harper was about 5 years old and just, he'd just never really been able to sort it. And then my friend knew that I was doing scratch and that a lot of why scratch is better for dogs stems from basically the ingredients we use and how that changes gut bacteria and builds up kind of better gut health which is at the heart of skin and irritation issues for the most part. So said hey, let's try this out and then tried it out. And Harper did really well in it. And then once I'd heard that Harper did really well in it, I just a lot of constant nudging to my friends saying hey, you should mention we might be after some investment if he's interested. And then I actually ran into him. I went up to visit my friend up in Queensland and then got him to introduce us in person and made it happen.
[Voiceover]: That's brilliant. So obviously people like Mick will give you capital to help grow the business. Do people outside that come from outside that e commerce industry and retail industry? How else can they help a business if they invest? Obviously you mentioned PR there is really great for you.
Mike Halligan: Yeah, there's, I mean there's a bunch of different ways. He's probably the only one that we've really leveraged in any sort of marketing sense. And we only did that as a one off. I mean he's got a young family now and so we've been really careful not to like be that investment that just like keeping on asking. So it's just really a one off thing for us. But some investors really will do a lot of intros, particularly brand introductions it might be marketing program, might be affiliate kind of deals. It might be, hey, contra promotion. It might be a lot of information sharing. I think that's probably the best thing that a lot of good investors who are well connected can do. If we're seeing something in our performance marketing or even subscription analytics, logistics, whatever it might be, I can call up Simon and say, hey mate, we're really struggling with this at the moment. Any direct experience with this or do you have someone in the company that might be interested in talking or he just might see something, give me a shout and say, hey, I thought this might be interesting for you too. So most of our investors are people who are in the space or love dogs and really no consumer, consumer businesses. So probably one of the biggest ones, Connections, is a big one, I think. And look, you know, everything's like for us, it was working out where our blind spots, where are the things we're not good at? We're not supremely connected with media. We're not. We don't spend that much time networking with other brands that much. Like we're pretty heads down just working on our own thing. So we sort of tried to get investors that really suited where the path that we wanted to grow the business, the speed that we wanted to grow the business, the uncertainty we had about how this would end up, you know, it wasn't the thing we said, hey, we're going for an exit from this brand by this date for this amount. So finding people who sit within that profile and then after that the bonus is working out what stuff that you don't do well do they cover for and contribute to.
[Voiceover]: Yeah, that makes sense. You mentioned before, which I thought was really nice, is that you're not trying to be the biggest dog food brand and you're actually trying to limit growth so that it's sustainable and you can have that connection with your customers. I could imagine that Covid might have thrown a bit of a spanner in the works into that nice steady growth plan. How did it treat you?
Mike Halligan: Yeah, yeah, it went a little bit mental. You know, it didn't, it didn't go as crazy as what I thought at the beginning because everyone went out and bought this, you know, basically bought whatever they had been feeding. It wasn't a time to make decisions about trying something new. So we thought like a month in, everyone's like, oh, you guys must be killing it. We're like, nah, you know, it's just, it's just another, it's just another month for us. But then basically Once they got through the thing, the bag of food that they panic brought then yeah, they're really big. It was a really big five months. We talk about cohort analysis like a lot of cohort analysis between we analyze what are the customers, what's retention like on customers between Facebook compared to organic or this state compared to that state or whatever. And people in that time was just as sticky for us. I think. Who gives a crap Said the same thing when they. Some of the stuff they've released about how the year ended up. Yeah, the customers we got there were just as relevant, just as into scratch just as their dog. Their dogs thriving on it just as much as other customers. That was really good. But yeah, it was a crazy five months and supply chain wise that's where it really got crazy. And especially for us because it's a food product with natural ingredients. Our recipes are like 97% Australian ingredients. They're only whole ingredients. They're like animal proteins and stuff. You can't just wish up more, more stuff to be farmed.
[Voiceover]: So what's the shelf life?
Mike Halligan: Usually to be at least nine months. But our model is, Our model is basically because on subscription we know when your dog needs more food. So we send you food made in the last few weeks as opposed to sort of dog stuff. Every six months it's on shelves.
[Voiceover]: So it's kind of like you're not talking weekly turnarounds of stock. Turn. Yeah. Okay, cool. I see that you've started shipping to WA recently. I could imagine that that would be a logistical and a profit nightmare potentially, if you get it.
Mike Halligan: Yeah, yeah. We stayed away from there for a while because. And we only opened up there once we opened our own warehouse there. So got now Melbourne warehouse, Sydney, Brisbane and WA and we're just about to open Adelaide and then hopefully later in the year Tasmania. So yeah, it is a size of good that is really, you know, really ugly on a shipping basis between states. So you really want to. Some states we subsidized from the beginning so we charged shipping but it was like heavily subsidized shipping. Knowing that we were about we wanted to open up a warehouse there soon. It'd be easy to open up a warehouse when you had a customer base so you were happy to really breaking even on customers for six months. So that when you open that state it was kind of like profitable. All the costs that come with opening a new warehouse or a new 3PL weren't too brutal for the, you know, for you to build a market from scratch. So because we especially because we've got a lot of media, we basically wanted to capture as much of that and WA is the only place in Australia where we apart from nt where we're like, it's just too expensive for us to subsidize. We're not even going to bother trying. But luckily we had, you know, two and a half years of saved email addresses for people that contacted us saying, hey, I'm ready.
[Voiceover]: Yeah, I once got caught out by shipping bulky goods to Norfolk Island.
Mike Halligan: Yeah, yeah. But yeah, it's you really, you can really get stuck.
[Voiceover]: What's that? You've had all summer to read Shopify's Future of E Commerce report and you haven't yet. And what's that? You missed the webinar with Shopify Plus's head of marketing Robin Marchin and product marketing lead Anthony Kentress. Well, don't worry, we've got you covered. The webinar and the report is available on demand now. So you can access both at any time that you want. Head over to Shopify+Live Foc Apac. That's ShopifyPlus Live Foc Apac. To get Shopify's Future of E Commerce report and webinar today or you know, before next summer at least we'll put the link in the show notes for you as well. Are you planning on moving international at all anytime soon?
Mike Halligan: I think so, yeah. Australia, there's so many dogs. Like it really is the perfect market for a company like us. Yeah. And our spending habits, relationship with dogs, amount of dogs per capita. We have more dogs in Australia per capita than any other country. And they're bigger dogs too. I mean a business like ours, I've been splitting my time between Amsterdam and Melbourne. And Amsterdam on paper like amount of dogs. Yeah. Great dogs everywhere. The size of those things are little handbag dogs so they don't need much. So a business like ours will do much better in Australia with a lot more bigger dogs running around backyards and less apartment, you know, smaller apartment dogs.
[Voiceover]: Absolutely. Why Amsterdam?
Mike Halligan: My partner had a really good career opportunity over there. So yeah, she, she's an amazing copywriter and we were built as a remote business from pre Covid from get go Anyway. So whether it was Melbourne and sort of towards Albury where my business partner lives and whether where a lot of the pet food industry is based or whether it was Amsterdam and Albury, as long as make the time zone work and get back for plenty of face to face at a time with the team, doesn't really matter. We're sort of like an asynchronous kind of working company anyway.
[Voiceover]: Yeah.
Mike Halligan: Great.
[Voiceover]: And does your partner do the creative and the copy?
Mike Halligan: No, that's all me.
[Voiceover]: That's all you.
Mike Halligan: Wow. We do have a head of content now, Izzy. She's great as well. So she really contributes to that. Yeah, most of the super cheeky stuff especially early days is definitely all me.
[Voiceover]: Yeah.
Mike Halligan: Great.
[Voiceover]: Because you've got an interesting background because you're also a developer, right? In the early days.
Mike Halligan: Yes. Yeah. I was sort of designer first and then too cheap to pay a developer. So learn how to code basically and then yeah over the years especially trying to earn a buck at different times like developing. If you know how to develop, there's always money to be made. Always, you know, always someone who needs a website done and there's different levels and there's always new things to learn. So sort of probably ended up coding for about 15 odd years. So yeah, these days I do all of our. Most of our dev. All the hard stuff. I've got someone who does the really hard kind of like really hard software integrations between different APIs or you know because we do have a lot of custom stuff in our website. So there is a bunch that's beyond my pay grade but I'll do easy stuff.
[Voiceover]: I could imagine even going through there. There's no. I haven't seen a checkout flow or an experience flow from landing on a product page through to checkout like yours. What technologies do you take off the shelf? You mentioned metric before. Is there any other technologies that you thrive on and then build on top of?
Mike Halligan: Good question. I mean yeah, WooCommerce on WordPress. So it's a WordPress site. WooCommerce and WooCommerce subscription as the core software for anyone on that. There's a great program, a bit of software by another Australian developer called Automate Woo end up getting bought by the people who own WordPress. But automate woo make a really good, a really incredibly well developed platform for a lot of add ons. We do our referral program through there. It's like a workflows sort of program. So a business like ours that we talked about subscription model and like. So we have a bunch of products that you can only get once you're on subscription and essentially we just add them into the box so we don't ship them to you as a one off item. They just like included in your next order. There's a lot of like upsell process, a lot of automation that happens. Like I'LL click here. I want a new scoop in my next box. So I put a new scoop in and we automatically remove that for the next box. So a lot of logic and flexibility kind of stuff. Automate Woo Compower. Yeah we build on that a fair bit. So we're doing a custom referral program at the moment that'll be built upon a lot of the software that that enables. So I mean look, the whole lifetime of scratch we've probably spent under four grand in the website. So things like choosing your stack. Well, I mean woodcommet, we've got an advantage in that I do a certain amount of grunt work code. But yeah, we've also chosen platforms that are well built, well documented, easy to build on and stable too. So there really isn't that much. There's a few like we stamped for reviews and say yotpo. YOTPO is just like God that's expensive stamp stamps are good cheaper alternative and does I think arguably the same thing. That's about it. Yeah.
[Voiceover]: And I can imagine too because there's probably a lot of people listening who are Shopify users and very familiar with the Shopify world and going why are you on WordPress or WooCommerce? But I can imagine though that that that what you've done with it, that is now an asset for your business that is also a competitive moat for you that people can't copy easily.
Mike Halligan: Yeah, yeah, for sure. I mean I look, I'm biased but as biased as it comes being that I also designed and built it. But I think our customer experience and the ease of particularly with subscription, I mean subscription is one of those things that business owners love the idea of. But consumers generally get frustrated as hell by particularly how inflexible it is and with dog food because you might go away, you might, you know, your puppy might grow, then the feeding requirements might change. You might just introduce something else into their diet. They might how to scare at the dog park and you know, been out of your care for a bit or been on another temporary diet because they ate something on the ground when you're going for a walk. Like there's all these variables that can get thrown up and I mean Shopify subscriptions, I know that they're just releasing some really big upgrades to it but like even recharge and all those things, they're quite awful for any, anything that requires any flexibility. And so we build ours from the get go to say as a subscription only business. The flexibility and the lack of friction is it's going to be like the make or break factor between doubling your retention or not, essentially. So we say look custom from the start. It is a massive asset to the business. It's also something we iterate, you know, a huge amount. I mean, I spent two hours developing upsell, changing the way we do upsell confirmations in our account page afterwards and making it as easy as possible to instead of now buy one, choose one bag of treats per box. You can just choose two. And all these different like 1 percenters that really add up over time. You just can't do 1 percenters on Shopify. Particularly with subscription.
[Voiceover]: That is the hard part. Especially with subscription. It's if you want to go in there and you want to sell one product every month, you get billed the same amount every month, then probably that's a fine starting point. But exactly like you said, once you start putting a few creative elements around gets really tricky. And subscription is so much harder than people think it is.
Mike Halligan: Yeah, it really is.
[Voiceover]: You also run online offline or. Or you start. Did you start it or you run.
Mike Halligan: Yeah, started it. So years ago, Scott Kilmart and Jordy, who now Jordy Ice is now at Shopify. The three of us had an e commerce agency called Online Store Guys and we were probably much more into talking with businesses and essentially being jealous of what they were building than we were at actually selling custom dev and design and strategy and everything like that. So ultimately the business, we did it for three or four years, had a good run, had some good fun and then moved on. But at that time, one of the things we did was online offline, this kind of e commerce event series. And yeah, it looks really nice and polished but we were so unreliable with it. It's like I think there's probably like 10 episodes. We probably did it 10 times over four years. It was like a quality over quantity kind of thing. Not that we deliberately set out to be that way. We just got lazy and see where the odds. There's like five. There's like five episodes in.
[Voiceover]: We're just quality. There's not, not a lot of quality on my side.
Mike Halligan: Well, yours is great and you've got actual listeners and no one would actually. Ours is so infrequent. No one apart from, you know, everyone that we called 19 times in the week of the thing would actually show up because it was just like. We never did it often enough but we spoke to some. We spoke to some amazing people and anyone's interested online offline. Co there's the videos that we've done up There, there's you, you know, Andy from Bellroy. There's Simon from who Gives a Crap? And Danny, another one of the founders. There's Kate from Adore Beauty. There's. Yeah. Rob Ward from Quadlock. Yeah. Got amazingly lucky. Tim Doyle from netpilot and Koala and stuff like that. So we've got some amazing people who've shared just incredible things and a really this is your life plus some tips kind of environment, which is good fun. But yeah, when I did the switch to Amsterdam, moving the time. Yeah. Scott Kilmartin's taken over the batten of that one. Yeah.
[Voiceover]: It's a great resource and encourage everyone to go check it out. There's some great interviews and it's really polished. Really good stuff. I having a look at the Kate Morris. So Adore Beauty's Kate Morris interview. It was back in 2015 and the tagline under that video is how she built a $10 million business.
Mike Halligan: Yeah. Add a few zeros to it now.
[Voiceover]: Add a few zeros to it now. I think so. They're obviously public now and I think they're close to about $100 million in terms of annual revenue.
Mike Halligan: Yeah. So awesome.
[Voiceover]: Does it kind of blow your mind, having been at the forefront of it in Australia, how far E Commerce has come in that short amount of time?
Mike Halligan: Yeah, actually, I felt like it was pretty obvious when you sort of see the caliber of people who are interested in doing it. And I think we are particularly good in Australia. I think we're good at making small brands. There's enough people who would just, you know, love getting into the nuts and bolts of an industry and see, this is, you know, American guys aren't coming here. The American businesses don't worry about coming here and doing stuff so we can get inspired from them. But we've got a pretty open slate to give stuff a crack. And we're really good at building brands and being pretty empathetic to a customer and understanding customer problems. So I always felt like E Commerce in Australia would do really well and would probably bat above. I think what surprised me is just how bad or. Yeah, how bad bricks and mortar retailers in Australia and how, you know, in that same sense of, like, look at how far Kate and the industry have gone since then and her company. But if you compare what's happened between the bricks and mortar retail industry five years ago to now, it's like it's gone backwards, if anything, when it really needs to go forwards for a whole host of reasons.
[Voiceover]: And it's fascinating that some of the most, the best physical retail is coming from online startups.
Mike Halligan: Yeah, for sure. Yeah. Cool.
[Voiceover]: We've got to finish up. I've got a bunch more questions I'd love to talk to you about, but I'll probably. I'll end with the most important one is that we're coming up to Valentine's Day. We're about a week out when we're recording this. I saw something last year where you ran a Valentine's Day meetup for lonely dogs and their owners. Is that happening again?
Mike Halligan: I don't think with COVID it'll be happening this year, unfortunately. Although we might, you know, it is good fun so we might actually give it a crack. You know, they're not that hard to put together, but yeah, I think we have. I mean we would deal with the most fun and loving animals there is and so, you know, it'd be so boring. It's such a waste to spend our lives behind a screen looking at ads manager and spreadsheets. So we have a bit of fun and. And really challenge ourselves to make the most of working with dogs and, and also like what that does. Like the conversations that opens with people. Everyone loves chatting about their dog and it's just a great way to have a laugh and have a beer and meet some people.
[Voiceover]: So good. I love it. What's next for yourself on scratch, Mike?
Mike Halligan: It's a very good question. Yeah, very good question. First. Yeah, it's lots of the unsexy things. You know, at the moment we're about to submit our certification for B Corp status which super pumped about. It's been a while coming. It's just a long, long, arduous process or probably introduce a few more. A few more things kind of. We're at that stage now, two and a half years in where people a subscription can really start getting boring. So we're probably going to focus more on that kind of like real longevity. Keep trying to raise the bar on customer experience both on the way in, but also as you go along. Because I mean ideally this is a 10, 15 year relationship with customers all being well and good long lifespan with their dogs. And when you get so many puppies signing up, so going to have a lot of fun there. And we're also playing around with different marketing channels and we've started starting doing some testing with outdoor advertising and those kind of things. So trying to bring the best of dogs and the fun marketing you can have to the different new channels. I think that'll be our main thing.
[Voiceover]: Sounds like fun.
Mike Halligan: Yeah. It is.
[Voiceover]: All right, what's the best place for people to check out Scrunch and get in touch with you? Scratchpetfood.com Scrunching my mind because today we published the checkout with Danielle Lewis from scrunch.
Mike Halligan: So sorry. Scratchpetfood.com or on if you want to if you want to just oggle photos of ridiculously cute dogs and puppies at World of Scratch on Instagram.
[Voiceover]: Awesome Mike. Thank you very much. I hope quarantine treats you well and
Mike Halligan: you get out of there quick start.
[Voiceover]: What I love about Mike is that he's been in e commerce for a long time and he is on top of all of the trends. However, he's not coasting on the latest fads. He has a vision for Scratch and he's not afraid of doing things a little bit differently, even if they are harder. In order to deliver the unique customer experience that he has had in mind right from the very beginning. He knows the things that he won't compromise on. Quality of product, personalized service, custom web experiences. These aren't easy and there are shortcuts he could take, but these are the 1 percenters that are differentiating Scratch today. It's a useful decision making tool to have in your head as you continue to grow. What are the elements of your customer experience that you will not negotiate on? Not even 1% to finish up, I have three resources for you. Firstly, if you're a first time listener of Add to Cart and you want to stay up to date with new episodes, head over to addtocart.com and you can sign up for our weekly newsletter. We'll let you know every time a new episode drops as well as giving you my three takeaways from each episode and a link to the transcripts so you can know that this is an episode that you want to dive straight into to. Secondly, if you want a weekly roundup of the best e commerce case studies tools and research, sign up to the High Five Friday newsletter which is delivered to inboxes at 8am every Friday morning. I read all the e commerce news and send you the bits that I think you can take action from. Sign up at 12high12h I g h.com au forward/high5 and the last thing if you are looking to explore your next e commerce opportunity, head over to eSweet talent.com we are a dedicated e commerce talent agency connecting the best e commerce talent with the fastest growing brands. Check it out. Sign up to the email and get in touch with me if you want to discuss your next move. Until next time. Thanks for listening and keep those customers adding to car.
