The Rhinelander Daily News - Online news and information for the Rhinelander, Wisconsin region

According to Dr. Marty Smith, co-founder of $250 million pet product powerhouse Doctors Foster and Smith, the secret to business success isn’t really a secret.

“You take care of employees and you take care of customers and the business will take care of itself,” Smith said.

But in a society saturated with business self-realization manuals and intricately articulated management ideologies, Smith’s simple approach doesn’t seem like an adequate explanation for the massive success of the business he created with two other veterinarians 25 years ago this July.

In 1983 Smith, along with friends and fellow veterinarians Dr. Race Foster and Dr. Rory Foster, ventured into the catalog business while continuing to operate a number of animal clinics in the Northwoods region. The initial idea for the business was to market discounted vaccines and medications to kennel owners and other high-volume pet caretaker businesses via a printed catalog.

“We started printing 17,000 copies of a 16-page catalog and just mailed them out. Then we were off and running,” said Smith. “Since that time, we’ve just naturally branched out to the general pet trade. I won’t tell you it’s been brilliant business decision after brilliant decision that got us here. But after 25 years I guess I can say we haven’t done too poorly.”

Today, Doctors Foster and Smith markets over 20,000 pet products via the Internet and a range of print catalogs and reaps some $230 million in sales annually as a reward. While the Internet has provided the business with a perfect vehicle for sales and marketing, Smith believes the core of the business, created long before its 1998 Web debut, has been the basis for its long-term success.

“Most of the Internet businesses that have succeeded had strong business platforms before they ever went on-line,” said Smith.

The core business model of Doctors Foster and Smith, as articulated by Smith, relies on the idea that customer, client, and employee loyalty are the bedrock of success. Of these linchpins, customer loyalty in a changing marketplace over the course of three decades, must be considered the Doctors Foster and Smith’s greatest success.

Notwithstanding Smith’s aww-shucks modesty about his business, the operation he and Race Foster oversee just west of Rhinelander has been built gradually to a massive scale so that the business can continue to control its variables.

Almost everything – including product development, marketing, warehousing, software engineering, building construction and maintenance – is done ‘in-house.’ According to Smith that level control over the products the business ships to customers is the key to customer loyalty, because at Doctors Foster and Smith ninety-five percent of products ship within 24 hours.

“We have always tried to be extremely competitive with our pricing. We have always stressed that we were veterinarians and we have always broken our backs to provide customer service,” said Smith.

Another factor in the business’ ability to build customer loyalty is the legacy of its late co-founder, Dr. Rory Foster. Rory was diagnosed with Lou Gehrig’s disease just after the catalog business began. Physically incapacitated by the disease, Rory wrote veterinary advice, first in newsletter form and later for the catalog, so that customers would have a better idea how to administer the medicines they were purchasing.

The inclusion of veterinary advice and information is a crucial part of the business today. Doctors Foster and Smith catalogs still include up to 15 percent information, a higher rate than other retail catalogs, and the information site PetEducation.Com attracts over one million unique visitors per month.

But no business can be successful during a rapid expansion without a large core of reliable employees. Smith says running one of the world’s largest pet product businesses out of Rhinelander is an advantage.

“People have a good work ethic here. It’s easy to run a business in the Midwest because of the work ethic. There are really no disadvantages to running our business from here,” said Smith. “There’s a lot of satisfaction of seeing employees come on board with us as hourly employees and then become crucial parts of the business over the years.”

In 2001 Doctors Foster and Smith purchase Pet Warehouse, an Ohio-based competitor with a strong base in catalogs dealing with exotic fish, birds, and reptiles. In addition to consolidating market share, the takeover added one more improbable twist to the business’ success story. Today, Doctors Foster and Smith breeds coral in the Northwoods.

“We’re trying to get to where we’re not having to take anything out of the ocean anymore,” said Smith.

So how do you go from running a local veterinary clinic to owning a $250 million business? According to Dr. Smith, you keep it simple.

Tell us what you think...

Comments »

Bob Cratchit wrote on Jul 25, 2008 6:50 PM:

" If so much credit for Foster Smith's success is due to the good work ethic of the Midwest, why are they so strict and stingy with employees? Employees are allowed neither sick time nor time off for holidays (even unpaid); if they refuse to work sick or injured, a strike is recorded, after a number of which the employee may be dismissed without regard to circumstances. Employees are treated like robots who can't break for water, bathroom or to stretch the legs unless supervisors determine it's convenient for them, using a little flag system. Overtime is mandatory, every week.
Foster Smith have gained their wealth on the backs of their employees, treating even long-term, reliable staff like unruly prisoners and providing virtually no benefits.
Apparently, Foster Smith don't feel the need to demonstrate reciprocity for good ethics they enjoy in their labor pool. "

The comments above are from readers. In no way do they represent the views of the Rhinelander Daily News.