By Christiana Sciaudone
Investing.com -- Dogs are unique. Their diets and toys should be, as well.
That idea led to BarkBox, which makes customized packages of toys, snacks and more designed for your dog alone and sends them to you on a monthly subscription basis. The Original Bark Co (NYSE:BARK), as its parent company is known, went public via a SPAC reverse-merger earlier this month. The company is betting that we love our pups so much we're willing to eschew generic toys, treats and food in favor of carefully curated goods.
Bark has been a major beneficiary as pet adoptions have soared thanks to our year-plus of being forced to stay at home to prevent the spread of Covid-19. The company saw sales jump 79% in its most recent quarter, and new subscriptions increased 51% from a year earlier. Net revenue is forecast to nearly double from fiscal 2021 to 2023. It expects to see a rate of growth around 40% for the next couple of years.
"There aren't any options in terms of brands that are creating products for your dog as an individual -- individual dogs have different needs," said Matt Meeker, founder of Bark, in a telephone interview earlier this month. "We found a huge market with customers that are being served by companies that are 100 years old."
Bark's not alone in tapping into the deep love we feel for our pooches. Online pet retailer Chewy (NYSE:CHWY) saw shares rally more than 200% since going public in June 2019, reaching a record in February, as sales soared amid that frenzy of pet adoptions combined with the encouragement to hunker down at home.
It's all thanks to Hugo
"It all started with my great dane, Hugo," Meeker said. The 130-pound canine was living with his human in Brooklyn but wasn't very well served by New York City pet stores that typically didn't carry things for a dog of his size. Bingo, a business opportunity was born.
"It turns out there are tens of millions of people who have dogs that they are obsessed with and want to make happy," Meeker said.
Bark was founded in 2012. The pandemic helped accelerate results, adding many more new customers who brought home the love of a good dog to cope with the stress of a global health crisis.
"It came at a good time for us where some of our newer products were ready for the market," Meeker said. Coincidentally, Bark had started building up redundancy through its supply chain around the start of the pandemic, which helped them keep pace with demand -- though they also had to cap growth for a bit, Meeker said.
"The challenge in growing quickly with that level of personalization, it's a massive challenge that we've taken on fairly well so far but it's getting bigger and bigger by the day," Meeker said. Enter Chief Executive Officer Manish Joneja, who joined the company in September after four years in global producing, technology and operations at Amazon (NASDAQ:AMZN) and five years at eBay (NASDAQ:EBAY) in global expansion.
Providing a good logistics experience is key in ecommerce. Between inflation and high demand for products of all kinds, Bark is seeing the cost of its products increase, but largely the higher expenses have been related to freight. Thus far, those costs have been absorbed without a price increase to customers, while maintaining margins intact, Joneja said.
Ok, so how is Bark different than Chewy?
Chewy also offers subscription boxes, and you can always get pet products from Amazon or pop over to your local PetSmart.
But Joneja stresses that Bark designs and develops unique, proprietary products and then delivers a personalized experience to dogs and their humans. He cites the technology and data collection that enable personalization at a scale that makes the company different from the rest.
"We build deep customer relationships," Joneja said in an email. "We leverage these relationships and the power of analytics to achieve personalization and cross selling at scale on our strong platform."
Think about it this way. Has your dog Buster gained a little weight? A nutritionist will work with you to initially help with weight loss, then adjust the food you buy from Bark to maintain that healthier weight. Does your dog Bella have chicken allergies? No problem. The treats Bark sends will be poultry-free.
Granted, the lifting of restrictions in the U.S. is changing behavior. People are leaving their houses more often, and maybe spending less time ordering subscription boxes for Fido and more time on subscription boxes of swimwear and books to take to that beach vacation we all so desperately need. Note that Chewy shares are down more than 30% since hitting that February record, coinciding with the spread of vaccines and retreat of Covid-19 in the U.S.
Still, there are an estimated 63 million dog homes in the U.S., and Bark currently serves just 1.8 million of those households. While growth that has accelerated is expected to continue to do so, Bark vows not to bite off more than it can chew, the executives said.
Meeker notes that in nearly 10 years, the company raised only $57 million before going public this month.
And while special purpose acquisition vehicles have garnered a bad reputation of late among investors, "We run a very tight, fast-growing business with real revenue," Meeker said. "We have a real business here, we're forecasting over $500 million in revenue."