Growing a Thriving E-Commerce Business Selling Cat Treats
Hello! Who are you and what is Cat Sushi?
My name is Spyq and I am a co-creator of Cat Sushi.
Cat Sushi is a flaky, tuna based treat that cats love. It is our flagship product that eventually led to us forming our current company Presidio Natural Pet Company, where we design and manufacture ultra-premium, natural, and healthy food products for pets.
We focus to create products in the pet space that best serve the customer - your pet - and believe that high quality and healthy pet products can help cultivate relationships between customers and stores.
How did you come up with the idea for Cat Sushi?
In 2014, I quit my job in Silicon Valley to start a pet supplies store with my longtime friend John and business partner Barry. About a year after opening Wolf & Lion Pet Supplies, the idea for Cat Sushi came about.
Barry, who's been in the pet industry for many years, knew about this human food that cats loved called bonito flakes, which are small, flaky pieces of tuna that you can buy at the supermarket.
Barry would buy a giant bag, repackage it into smaller Ziploc bags, and slap a sticker on it that said Emma's Fish Flakes. We would place the bags by the register at our store and sell them for $5 each - making a nice little profit on each bag.
Cats are generally picky when it comes to treats, but not with Emma's Fish Flakes. It was our #1 selling cat treat. We were in amazement at how well it sold despite how amateur the packaging looked.
We thought to ourselves - we know the customer, and we know retail, who better than us to make this product?
It was our go-to recommendation for cats and we often just gave it away to our customers because it cost us nothing - and our customers kept coming back to buy more.
As retailers, we see a lot of products, but we couldn't find anything like this from our distributors. So we couldn't help but notice this opportunity. We thought to ourselves - we know the customer, and we know retail, who better than us to make this product?
So, we put together a quick business plan and set aside some money that we were willing to risk. One of our loyal customers actually came up with the name. We still give them free cat food.
How did you make the product?
We already had a product, so we needed to figure out how to brand it. We thought a lot about what we were really making. It's fish, it's gourmet, it's healthy, and it's special. We also wanted it to feel boutique and hip.
Packaging is what sells, so coming up with beautiful packaging was our #1 goal. We came up with the idea to package it in a metal tin. We went online and bought empty tins and started playing around with what the product might look like.
We designed a sticker to go on the tin, that would have our design on it. One of our customers was a designer, and she helped design the logo for a really generous rate. We wanted the design to be beautiful, and we went through at least a dozen revisions. We got a lot of feedback on it from other pet stores, family, and friends.
We strove for perfection and looked to our own retail expertise - would we be excited to sell this in our store? Would we showcase this product and put it on our prime shelf space?
When we locked the final design, we felt it was one of the best looking packages that we had seen in the industry. It was striking. We had something that we thought was special - it set itself apart from other cat treats.
Packaging is what sells, so coming up with beautiful packaging was our #1 goal.
Once we finalized the design, we started making it immediately.
You made the product yourself?
We did. We were packaging it right in the back of our store. We would buy the bonito flakes in bulk, pack it in the tins, mint the sticker on it, and finally seal it up with shrink wrap. We had a little operation back there, and working long hours after work and whenever we had downtime. The whole store would smell like fish.
The tins were selling really well in the store, way better than the original Ziploc bags, and we were excited.
But we quickly realized we had a problem - the product would start to go stale after two weeks. It was fine for our store, but other stores won't buy something with that kind of shelf life. So we researched what how to solve this and even hired a food scientist to help.
The solution was to package it in bags rather than tins. So we had to go back to drawing board and redesign all of our packaging. Luckily the tins had made us enough money to pay for the redesign.
But another problem presented itself. Printing designs on bags is really expensive, and you need to order a gigantic quantity to be cost effective. We had to figure out how to print bags at a microscale. After a lot of luck (and googling) we found a relatively new technology in digital printing that had reasonable pricing. It was still pretty expensive per bag, but we were willing to pay up as packaging was so important to us.
We ordered a few thousand bags, started packing them in the back of our store, and in March 2016 we had Cat Sushi in distribution in a few stores in the Bay Area.
How did you guys set yourself apart from other products?
Most products aren't birthed inside of a retail store, but rather in some corporate office. However, we saw this as an advantage. At our store we help customers and work the register almost all day. We know our customers at a very personal level. We know what sells and what doesn't. We get direct feedback from the customer every day.
The industry has a lot of bias against cat treats. A lot of people would tell us that there was no money in cat treats, and that you can only make money on dog treats. They thought we were crazy to put all of this effort into making a cat treat.
But, we really just enjoyed the process of making Cat Sushi. We were retailers by day, but in the product lab by night. Retail becomes tiring - you have to do a lot of little things right. But with Cat Sushi, we had one little thing to focus on and make perfect. We really enjoyed that change of pace.
You need to get two things right in making a pet treat: (1) the design, and (2) the product.
It's really hard to get someone to buy the first time, but a great design & packaging will help with that. Then it's really hard to get someone to buy the second time, but a great product will help with that.
How did you find other stores to sell the product?
While in the beginning stages of Cat Sushi, we asked for a lot of feedback from other stores and pet experts. These people were excited to get it in their stores and sell it. It was their baby too.
With our connections we were able to get Cat Sushi in about 10 stores right away. Then, about two months later we made a deal to get Cat Sushi in a 60 store retail chain in the Bay Area.
This exploded our sales and we had more demand than we could handle. We were pumping out product as fast as we could from the back of our store. It was a nice problem to have, but it was really stressful. We built rudimentary packaging equipment that could increase our speed by 20-30%, but it came to a point where the back of our store wasn't going to cut it.
By May 2016, we had to stop taking new customers. We had to figure out how to scale. So we went on a hunt for a manufacturer.
How did you find a manufacturer?
Bonito flakes come from Japan, so we had no idea how to find a manufacturer. We started by calling random companies and emailing around. But nobody wanted to work with us because our bonito flakes contain a fish allergen - which manufacturers don't want touching their machines.
We even reached out to manufacturers directly in Japan with no luck. We thought about buying or leasing our own equipment, but it wasn't realistic. We were having no luck in our search. So we put our heads down, and kept making the product in the store.
And then the luckiest thing happened.
An owner of a pet distribution company from Hawaii walked into our store and we started chatting with him - mostly small talk. We learn that he is Japanese and he's in the business of importing goods from all around the world. We told him the story of Cat Sushi and our struggle to find a manufacturer. He said he might be able to us.
The next day we receive an email where he gave us a personal introduction to a Japanese manufacturer. It felt like an act of God.
So we had found our manufacturer, but then we had a whole new set of problems: importing.
We had to order in bulk, and the minimum order was a 40ft container - 10x the bags we've sold since inception. It was nervewracking to make such a huge order - if you screw up one thing, you have 20,000 useless bags of product.
We were also afraid of the product getting turned back to Japan due to import laws. We had to make sure our product, packaging, and messaging was completely legit. We had to learn about import licenses and how the FDA works.
It took a while, but we tackled all those issues, and placed the order.
So how long did it take to get the product and start selling it?
It took a total of 4 months to actually get the product in hand. You would be surprised by the amount of things that need to happen to get something like this imported.
Then we had to figure out where to store the bags. Luckily we were also in the process of starting Presidio Natural Pet Company - now the parent company of Cat Sushi - and one of our new business partners had a warehouse in Los Angeles.
Presidio is a story for another day, but basically, at this same time we were also in the process of merging with another pet product company, which gave us access to more distribution channels, and ultimately allowed us to sell the entire container of Cat Sushi relatively quickly. Had we not made this merger, it might have been a lot harder to sell the product, but luckily we didn't have that issue.
What are you working on now, and what are your plans for the future?
Although we are still running our retail store in San Francisco, we spend most of our time on Presidio, developing new products the same way we made Cat Sushi. And now with our experience building Cat Sushi, things that used to seem impossible are now formalities. I don't have to think about importing rules or infrastructure anymore. Now, we can just focus on making more great products.
We were recently approached by some large retailers to sell Cat Sushi. We never would have thought that in a year and a half that we would be asked to sell into a national retailer.
Revenue is vanity - it comes and goes, but a brand with value has staying power.
If we sold into these retailers, we could do 10x the business. But our policy as of now is to turn that down. We have to protect our brand. We don't want to lose our identity. Our target customer is someone who shops in an independent, local pet store, not someone who gets their pet food from the supermarket.
Selling into mass retailers is tempting, but we need to grow our company thoughtfully. We could skyrocket our revenue in two years, but it would be shortsighted. We don't want to fall into that trap. Revenue is vanity - it comes and goes, but a brand with value has staying power.
Over the next couple months we are focused on improving operational efficiency and the nuts and bolts of our distribution. We need to invoice and ship on time, and ensure our inventory levels are good. We are focused on product quality control at scale and ensuring we have a trusted brand.
We are also working on building out our sales team, and currently have two full-time sales reps.
Any advice for other entrepreneurs?
You need to be passionate about what you're doing, and from that other things will come. You're gonna have to put up with a lot of things you don't enjoy. At the time, making Cat Sushi wasn't the best use of our time, but we really enjoyed it, which allowed us to work those long hours. And we had an amazing competitive advantage, our retail store. That kept us motivated every day.
Think about who your competition is. The pet industry doesn't attract hordes of entrepreneurs.
Think about who your competition is. The pet industry doesn't attract hordes of entrepreneurs. We're not the world's best operators, but we don't have to be. There are much more competitive industries out there, where we might have not had the same success. You shouldn't forget how important it is to pick your spot.
Give things time, and don't expect to be successful immediately - most things takes 10x longer than you want, and other things happen 10x faster than you expected. Success comes with time, and a lot of luck. You have to be OK with failing and striking out.
Start something when you don't have dependence, like kids or a significant other. That won't always be the case. There's no better time than now, because you can't screw up that badly in your 20's. You can live at home, and you can fail quickly without much shame.
Where can we learn more?
- Website: cat-sushi.com
- Follow them on Instagram: @catsushitreats
- Like on Facebook: Cat Sushi
Cat Sushi has provided an update on their business!
Over 2 years ago, we followed up with Cat Sushi to see how they've been doing since we published this article.
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