Global Report

Why FouFou Dog's cautious approach to new markets paid off

Revenues grew 800% in five years

FouFou Dog founder Cheryl Ng has expanded from T-shirts and booties to impulse buys like the Fou-stick “paw balm.” (Philip Cheung)

FouFou Dog founder Cheryl Ng has expanded from T-shirts and booties to impulse buys like the Fou-stick “paw balm.” (Philip Cheung)

It’s the sort of rapid gearshift that few companies ever experience, much less master: over the course of about five years, FouFou Dog (FFD), a Markham, Ont.-based dog apparel firm, has seen its revenue grow by more than 800%—a steep growth trajectory matched by the company’s shift from providing very specialized boutique goods, like jewelry and booties for small dogs, and to a far wider range of products suitable for mass merchandisers and large offshore customers.

In the past two years, for example, FFD, which ranks No. 87 on the PROFIT 500 and had 2013 revenues of $3.5 million, has launched pet-themed baby gear, such as blankets, and a line of consumables, such as an anti-chapping balm that can be applied to a dog’s paws. FFD has forged relationships with large pet-products distributors, as well as chains such as Wal-Mart. The shift in FFD’s product line has been accompanied by a more intensive focus on international markets, especially Europe, Asia and Latin America.

But as the distance between FFD and its customers grows ever longer, the company has had to change the way it manages exports, says Linda Franco, FFD’s Montreal-based vice-president in charge of developing markets outside North America.

Case in point: pet owners in some countries don’t dress up their dogs, so FFD’s core product line—clothing—is unlikely to gain traction. Those revelations, Franco says, prompted FFD to begin looking at adjacent product lines, such as children’s blankets and food-based consumables.

Founder Cheryl Ng has long believed in building markets incrementally, placing modest quantities with international distributors as a means of testing consumer acceptance without risking a lot of capital on large production runs.

The perennial problem, Franco observes, is that it can be tricky to find contract manufacturers prepared to produce relatively small quantities. “Anytime you’re venturing into a new product range, it is difficult for large companies to take you seriously,” says Franco. To circumvent that dilemma, she adds, “It is important to have an established core business that allows you to top up large orders with smaller quantities until the export market is able to bring in larger quantities.”

Franco, in fact, joined FFD last year specifically to help the company make connections with suppliers that are prepared to accept the firm’s growth strategy. She’d worked previously for Hagen, one of the world’s largest pet-product distributors. “Fou Fou Dog is a former supplier to me,” she says. “I know the company quite well.”

The company’s strategy to build a strong international presence, Franco explains, is to dial back the high price-point seasonal products (such as winter coats) in favour of apparel and other pet-themed goods that can be sold in multiple markets, as well as trend-driven items, including eco-friendly products such as all-natural pet-food flavour enhancers. “We’re trying to see the next greatest thing.”

That process of exploration, Franco adds, has involved a lot of travelling, as she and other FFD executives visit important trade shows in target markets as a way of picking up local intelligence on new products, competitors and positioning.

And because FFD now is nosing its way into children’s and food-based goods, Franco has pushed her team to be much more attentive to the higher levels of regulation that exist in both those categories.

“It is vital to consider [national regulations] as you are developing your product,” says Franco, “as you may consider alternative materials, specifications or ingredients that may be more cost-effective or more accepted in the export markets that you are targeting. It is better to be proactive rather than reactive after the fact.”