“From hot products to multiple categories, then to category compression, and now on the road to full categories, what happened during this period?” When the reporter met Ma Wenfei in early November, he threw this curiosity at him. Sitting in his office at the former site of Shanghai No. 3 Flour Mill, Ma Wenfei replied that he was ready now.

This is an extremely simple office. There are no paintings or decorations. There is only a table and a sofa. Besides the computer, there is only a stereo on the table. As Double Eleven is approaching, there is no element related to the Double Eleven promotion in the entire office area. “We only use a non-intrusive, non-flattering, non-noisy communication method with consumers, and work is slower and there is no slogan style. things, that’s our limitation.”

Ma Wenfei is the founder of Danke Pet Products (Shanghai) Co., Ltd. The company's brand name is pidan, which is also the name of the pet cat that accompanied him through the low period of his life. As a drama actor, he was influenced by pidan and devoted himself to the new business of pet products.

Since its establishment in 2015, the startup company pidan has attracted many well-known investment companies such as Qifu Capital, Qingliu Capital, Kunzhong Capital, Xingwang Capital, Chengdu Capital, Qingshan Capital, and Jinding Capital. According to Jinding Capital, According to the data, pidan has the highest revenue among Chinese pet product brands established after 2015.

But pidan’s development has not been smooth sailing.

The hit product that made pidan an instant hit in the market was an igloo cat litter box. After making its debut in the market, pidan expanded its categories to include cat supplies and dog products, and even considered making rabbits, hamsters and other products, but the results were minimal and even caused the pressure of high inventory. In 2020, Ma Wenfei cut off two-thirds of the categories at that time and focused on all categories of cat supplies, mainly the cat litter category. pidan cat litter quickly achieved the first place in the category.

However, starting in 2021, pidan has expanded from cat litter and cat supplies to cat food categories. It has decided to be a company with all cat products, and has embarked on the path of diversified development for the second time. How will this time be different from the last time? What kind of experience and thoughts does Ma Wenfei have on expanding from hit products to full categories?

From hot product to high inventory

pidan’s first hot product came by accident.

At the beginning, what Ma Wenfei wanted to do was to create social software to solve human loneliness. It was not a pet company. When he was preparing to start a business, he wanted to find a good-looking and easy-to-use cat litter for his cat. He bought a dozen cat litter boxes on the market, but none met his needs, so he came up with the idea of ​​designing his own cat litter box.

The production process of the Snow House cat litter box is the same as that of most design works. It mainly goes through the steps of first draft, proofing and mass production. However, this cat litter box goes from design conception to product launch. But it took 9 months. Ma Wenfei recalled that the biggest difficulty at the time came from mass production. "We had limited sales when we started the business, and there were not many suppliers willing to take orders for cooperation." He called it the first step of starting a business.

With the mentality of giving it a try, he applied for some international awards and won the 2016 Red Dot Design Award. The endorsement of the award made the communication between suppliers and channel providers much smoother.

In August of that year, Ma Wenfei received angel round investment from Qifu Capital. In 2017, pidan began to expand its categories. It developed a new product within two or three months and launched 16 SKUs such as cat litter, cat bowls, and cat toys, with monthly revenue of approximately 5 million yuan.

Soon in September 2017, pidan completed its Series A financing, with investors including Kunzhong Capital and Qingliu Capital. After the A round, pidan continued to expand its categories and launched dog products in addition to cat products.

In 2018, pidan has cooperated with more than 2,000 domestic pet stores and entered overseas markets. In July 2018, pidan received 60 million yuan in Series B financing led by Chengcheng Capital, followed by Qingliu Capital and Kunzhong Capital.

pidan has expanded from one cat litter box to up to 80 SKUs, and the company’s revenue has also increased from 30 million yuan in 2017 to 150 million yuan in 2019. It seems that the category expansion strategy has brought about revenue Revenue increased, but Ma Wenfei knew that this also brought high inventory pressure. Some new products stayed in the warehouse, and some people in the company had nothing to do.

He decided to stop. From the end of 2019 to the end of 2020, pidan did not release a new product.

"I have done everything I can and cannot do"

Just suspended new products It is not enough, the current situation of high inventory must be reversed.

Ma Wenfei thought of a way. He divided the existing products into several grades according to the inventory circulation time: 15 days, 35 days, and 60 days. If a minimum order quantity cannot be sold within 60 days, Categories will be cut off. Categories are updated dynamically. A product may still meet the requirements now, but it will be cut off if it exceeds 60 days. Two-thirds of the product was axed. The deeper meaning of this decision is that pet companies make money not by profit margins, but by cash flow efficiency.

What should you do after cleaning up the categories? Ma Wenfei divides things into three types: things that should not be done, things that can be done but not done, and things that must be done. “Our mistake before was that we did things that we could do but not do. At that time, many of our thoughts were in case, for example, what if we did it? If it sells well, what if it goes away if we don’t become a hot spot? These are all anxiety and expression impulses caused by the environment, and they are meaningless.”

So, after cutting off things not to be done and things that can be done or not, and concentrating resources, pidan developed the industry's first mixed sand and created a new category. This category also led pidan out of the A trough.

The sales of single mixed sand products have increased from 50,000 packs a month to 1.5 million packs a month. When Pidan’s mixed sand sales exploded, competitors also followed suit. But Ma Wenfei believes that cat litter is a product that truly competes in operating efficiency. “Cat litter is a product with very thin gross profit, because its logistics and express delivery costs are very high. Low gross profit must be transferred quickly. We can probably sell 10 The sales scale is about 30 million yuan."

Such adjustments are reflected in pidan’s operating results. When pidan achieved sales of 120 million in 2019, it had more than 80 employees, more than 10 million in inventory, 300 SKUs and a loss of 10 million. In 2021, pidan has only 51 employees, 10 million inventory, 120 SKUs and 10 million net profit.

After the company's situation stabilized, Pidan also wanted to seek the next round of development. At that time, Ma Wenfei's decision was to let the company focus on the development of all cat categories and not involve other areas that it was unfamiliar with and was not good at.

Cat food is indispensable for all categories of cats. In 2020, pidan started raising chickens, trying to participate in every link of production from the raw material end, while integrating the past Most of the funds are also used to build the supply chain. Ma Wenfei believes that the company is ready to cover all categories of cats.

The fresh chicken freeze-dried cat food product launched by pidan has sold 100,000 packs since its launch, becoming another hot product after cat litter.

In terms of category development strategy, Ma Wenfei still requires turnover rate for every product to prevent the same mistakes from happening again.

|Dialogue|

Economic Observer: Why do we need to expand categories in the first place?

Ma Wenfei: We want to find products that provide real value to users, but we don’t know which product is the best. We can’t just rely on imagination, we have to constantly produce products and put them on the market to see the reaction. , then collect information, iterate on the information, and then think about it.

Economic Observer: After the expansion from 70 million yuan to 150 million yuan, it should be fruitful in terms of company operations. Why do we still need to cut categories?

Ma Wenfei: Because when I sold for 150 million, I understood a truth. It is not that you make money when the scale is large. We made a loss when we made 150 million in revenue. At that time, we were doing all categories and efficiency. It was very low. Most of the goods were sitting in the warehouse. The cash flow was very slow. Many people had nothing to do. I realized that this could not be the case. Pet companies make money not by profit margins, but by cash flow efficiency.

Economic Observer: How to improve cash flow efficiency?

Ma Wenfei: There are two main factors. One is that there are few people. Everyone has rights and obligations in what they do. Our company has a total of 50 people and a revenue of 500 million yuan a year. The efficiency of people It is very high, everyone is responsible for one thing, and we are a company with very efficient communication. Another factor is the high turnover of products. I divide the products into several grades. If a category with a minimum order quantity cannot be sold within 60 days, I will cut it off and only do what is necessary. For example, in terms of channels, we only do Taobao, JD.com, Douyin and offline distribution. Douyin has also been launched recently. There may be some channels that can also bring sales, but we think it is too inefficient and we will not do it.

Economic Observer: Why do we need to expand categories again? What are the differences between expanding the category this time and the initial approach?

Ma Wenfei: At that time, in addition to cats and dogs, we even considered products for rabbits, hamsters and other products. Now, our entire category is only for cats. There were 80 SKUs at the time. Now cat snacks are There are many types, but I have cut down the supplies from 90 at the time to about 15 now.

Economic Observer: What is the current category strategy?

Ma Wenfei: Cat litter is at the bottom, serving 80% to 90% of consumers, food can serve 4% to 50% of people, and cat supplies can serve about 10% to 15% of people. , we still use turnover rate to require each product.

Economic Observer: What kind of company does pidan want to become?

Ma Wenfei: The first stage is to build a single brand, and then after the combined sales in China, Japan and the United States reach a scale of 1-1.2 billion, after that, we will see what the next step is. Walk.

Economic Observer: There is a paradox in pet products. The user is the cat, but the buyer is the owner. This is a bit like a mother and baby brand, but children can still interact with each other, but cats have difficulty communicating. How to accomplish this balance?

Ma Wenfei: First of all, cats are mammals, and there are many studies on cat biobehavior around the world. Secondly, as the number of consumers served by pidan increases, we will obtain information directly from consumer feedback, then add this information to the product development process, and draw practical conclusions through the accumulation of more feedback. We follow the principle of putting cats first when designing products. We hope that users will buy our products because our products are truly valuable, even if it is emotional value. We least want consumers to buy our products because they are cheap or cost-effective. Cheap products are not the purpose of our business.

[Company Profile]

Company name: Danke Pet Products (Shanghai) Co., Ltd.

Brand name: pidan

Establishment time : November 2015

Important investors: Qifu Capital, Qingliu Capital, Tsingshan Capital, Jinding Capital

Financing status: B++ round

Hot product : Mixed cat litter

Annual revenue: 500 million yuan

[Investor said]

Zhang Ye, founder of Tsingshan Capital

The pet economy is an expression of people's sense of intimacy and need. The separation of product users and decision-makers means higher brand dependence and importance. The advantage of pidan lies in founder Ma Wenfei's profound industry insights, personalized aesthetics and the team's mature design system. In the early days, he started with pet products and successfully conveyed the brand concept through content and products, laying a solid brand foundation. Later, it will gradually achieve full category coverage and exert continuous product strength. At the same time, pidan has also demonstrated excellent comprehensive capabilities in product research and development iteration, supply chain construction, channel construction and warehouse management.