Malaysian pet food retailer Petico made headlines when it acquired the assets of failed pet food retailer, Perromart, in August 2023. Perromart was one of the top pet e-tailers that carried a wide range of pet supplies, from food to accessories, before becoming insolvent in May 2023.
The acquisition, which was made at an undisclosed sum, did not include Perromart’s liabilities, although Petico offered vouchers to Perromart’s customers who were affected by delivery fulfilment issues as a gesture of goodwill.
Petico, which was founded in January 2019, is a prominent online-first company that sells high-quality products catered to pets. At the time, while the pet market in Malaysia was slowly evolving from commercial brands to high-quality products, no one store focused on selling just high-quality products in the country, shares Daniel Choy, co-founder of Petico. Petico’s three other founders are Ashwin Kumar, Ben Fong and Esther Loo. Choy himself hails from the family that owns the largest pet food manufacturer in Malaysia, Pet World.
At present, Petico operates online and offline as most of the Malaysian market — 80% — is still operating offline, says Choy. That said, he acknowledges that the company got lucky during Covid-19 when everyone went online due to the movement restrictions.
Overall, Petico has been doing well, with the business seeing double-digit revenue growth in the last three years. Thanks to the growth, Petico was able to open 12 stores in Kuala Lumpur — all of which are still wholly owned by the company — in two years.
“We always had a vision to build this omnichannel ecosystem for Southeast Asia. We never thought of coming to Singapore so fast, [but] it happened when the opportunity came to us,” says Choy.
See also: The not-so-secret pet economy
Entering Singapore
The acquisition came about when Choy spoke to Martin Tang. Tang is the co-founder and partner at Genesis Ventures, the venture debt fund that had lent money to Perromart.
Further talks occurred after Petico realised that the acquisition of Perromart only included its assets, which included Perromart’s trademark, its website, inventory and existing customer base. The assets did not include the vet clinic, which was sold separately.
See also: It’s a vet’s life
“When we looked at the database...for the last nine years, we cannot deny that Perromart did a good job, right? Its brand equity is very good,” says Choy.
Despite the less-than-ideal reviews that plagued Perromart in its last days, Choy was confident that he would be able to restore its good name thanks to Perromart’s brand recognition. “Even if you cannot recover 100% of [Perromart’s] customers, if you can recover 50%, we are quite happy with it. At least there’s a base to start with.
“That’s how we decided to enter this market,” he adds.
In Petico’s statement in August 2023, Choy noted that the strategic acquisition will allow the brand to fast-track its expansion plans in Southeast Asia.
“We will also expand our offering of high-quality, nutritious pet food to Singapore pet owners, including some exciting new brands we are bringing to Southeast Asia,” he said at the time.
“Singapore is an important landmark within Southeast Asia, so you have to have a base here. If you have a Singapore base, people may look at you differently,” he added.
Of the 16 employees who were still at Perromart at the time of the acquisition, Choy retained six of them. “To run the business, I need about 15 people. I took the good ones and brought the rest of my people in.”
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Integrating the businesses
When we spoke in August, Choy shared that the company has been busy integrating both businesses. The integration includes taking over Perromart’s systems and merging them with Petico’s in Kuala Lumpur, as well as retraining Perromart’s staff.
After the acquisition, Choy has been hitting the ground running and ensuring that his high standards remain the same. For instance, Petico’s same-day delivery services in Kuala Lumpur will be replicated in Singapore.
“We tried to fine-tune a few things. First, we went to trace the shipping routes; we realised if we do this efficiently, we could lower the threshold for shipping costs for our customers. So we try to make it as efficient as possible by having our own delivery systems. That’s why we should have the lowest threshold for free shipping [in Singapore] at $39,” says Choy.
He adds that customer experience and regaining their confidence are key as well. “Nothing can beat customer experience… I can add value not just through pricing. Of course, I’m not the most expensive but I shouldn’t be the cheapest,” he notes. “It’s the same as Petico in Malaysia. It is not the most expensive or the cheapest but we offer next-day shipping and good customer service.”
Having ready stock at hand is another move that Choy introduced in a bid to provide a seamless customer experience. Instead of the traditional method of conducting back-to-back ordering where a business has to reach out to its supplier the minute it receives an order, Choy is keen to avoid the supply disruptions that happened during Covid-19.
For pet owners doing last-minute shopping, Choy has introduced express shipping from Mondays to Fridays where customers get to receive their items within the same day for an added fee. This service has proven popular for Perromart’s customers so far, he reveals.
Expansion plans
Beyond Singapore and Malaysia, Choy hopes to bring his brands to Vietnam, Indonesia and the Philippines, although this is not likely to happen until two years later.
Why these three markets, you ask? They have big populations that continue to grow quickly, says Choy. “The market is very new, so there are a lot of growth opportunities.”
That said, Singapore and Malaysia remain important as they are one of the top three mature pet markets in Southeast Asia — which include Thailand, the biggest market at two times Malaysia’s size.
Outside of Southeast Asia, Choy is eyeing the Middle East. While he cannot confirm any plans at present, he notes that there is a rising trend in the ownership of cats and dogs, from eagles, which were seen as a status symbol among the wealthy.
As for Singapore, Choy is not ruling out the possibility of opening a physical store to give his customers an omnichannel experience, similar to his business in Kuala Lumpur, where there is an online and physical presence. There are also two newly opened vet clinics in the city.
“When we say omnichannel ecosystem, we are referring to our four pillars. The first is the company’s products. The second pillar refers to the services Petico provides, while the third focuses on health and vet services. The fourth and final pillar is about community building,” says Choy.
“Eventually we envision for us to have a super app with everything — including community building and purchase and medical histories – within the platform,” he adds.
