THE GROWTH OF A MILLION-DOLLER BUSINESS

Two young entrepreneurs, Andreas König and Alexander Pecka, started a dropshipping business in 2017 which has grown to generate eight-figure annual revenues.

With their dog supplies online store named “Doggykingdom,” they have set up a successful e-commerce company with over 400,000 customers in the USA and are preparing their expansion to Europe. And that’s not all. Currently they are developing a stationary sales network for their products, and at the same time they have launched an e-commerce consulting company to share their know-how with others.

And this is why gaining knowledge in this sector makes sense more than ever:

The dropshipping market has exploded in recent years, with analytics firm Grand View Research estimating that on a global level it was valued at $149.4 billion in 2020. This figure is expected to grow to an astonishing $557.9 billion by 2025, which would represent a compound annual growth rate CAGR of 30,15%. Also the global e-commerce market, which size was valued at $10.36 trillion in 2020 has exploded over the last years. The revenue is expected to grow to $27.15 trillion by 2027, representing a growth rate of 14.7%. This growth has been accelerated by the coronavirus pandemic, as companies of all sizes have been forced to switch to online models. This shift away from brick-and-mortar stores doesn’t seem to be slowing down anytime soon, meaning that now is the time for businesses to start focusing on their online presence if they want to stay relevant and competitive.

Austrian entrepreneurs Andreas König and Alexander Pecka, as early adopters, were fully committed to e-commerce before 2020. Andreas König has started his first businesses in the digital area in 2004 at the age of 14 trying to sell his self-produced songs online, but the commercialization potentials and possibilities were limited back in time, so the young entrepreneur failed. That didn’t stop him from trying again. Even after failing several times, he seemed to be changing his strategy, but not the goal. And the goal was “to be financially strong and independent”, says the 33-year-old. “It took me a total of eight years to find what suits me and what really works.”

His business partner Alexander Pecka took a different road, but ended up focusing on e-commerce as well. After completing his basic military service, he decided to become a police officer. When Pecka got himself transferred to the immigration police, he suddenly had more free time and started to deal with dropshipping. “I had a very regulated plan and more time resources to build something on the side,” he says.

Alexander Pecka

In 2017, the two future founders met each other through mutual acquaintances and immediately realized that they share the same values and principles when it comes to entrepreneurship. Consequently, they founded the online business for personalized dog supplies named Doggykingdom. Over the past few years have they built it up into an e-commerce business with eight-figure sales. Their market: the USA. Because, as König explains: “The market is bigger and consumer behavior is more advanced.”

Doggykingdom is an online store that sells personalized products for dogs and their owners and operates on a dropshipping model acting as a middleman between manufacturers and customers, and not keeping any inventory itself.

“Dropshipping has a few advantages over other methods”, König explains. “You need less start-up capital - only a few thousand euros. This is due to the fact that with dropshipping, you don’t have to buy the goods before hand nor set up and manage phys ical infrastructure, such as ware houses and logistics hubs.”

On the other hand, there are also risks associated with the drop shipping model that entrepreneurs should be aware of, as the founders explain. “For example, you can be sued if a product you sell is defective. Since you are the one who officially puts the products on the market, you are also the one responsible if something goes wrong,” says Pecka. In addition, there is the dependency on the product manufacturer, since in the end you only act as an intermediary. “Let’s say we have received and paid for a lot of orders and the manufacturer delivers defective goods or even empty packages.”

Their major breakthrough the two founders had after finding a retail er who was ready to produce their main product for 50% less money. “This margin allowed us to really scale the brand,” says Pecka. The company has gone from around $50,000 a month in sales to daily sales of $30,000 to $40,000. “Our best months have brought in over a million dollars in sales,” says König.

Still it took a lot of trial and error for Doggykingdom to find the right product category that would bring in sales, the founders say. They tried out multiple different options before they finally hit the jackpot. “Uninterrupted optimization and market observation are the key”, says Pecka.

Andreas König

The personalization of their products through possibility of ordering pet supplies with the name of the pet on it enables competitive advantages over e-commerce giants like Amazon, for example. “Amazon can’t personalize every product they offer. It’s just not possible in terms of volume,” explains Pecka.

Nevertheless, the corona crisis and the high inflation rate posed a challenge for their business. The outbreak of the pandemic has put pressure on global supply chains, including Doggykingdom’s suppliers. And falling purchasing power led to more conservative consumer behavior. That said, not everyone wants to spend money on new personalized accessories for their pets right now but those who do are still looking for high-quality products at a fair price.

Having all this figured out, today they are willing to share their experiences and know how at The König & Pecka Institute for E-Commerce, where they consult firms and help setting up businesses and running successful e-commerce operations. The institute provides advice on topics such as how to set up an online shop, how to find a product niche, how to place ads correctly, and what software tools are needed. They have helped numerous businesses get started with e-commerce, and they continue to provide support and ad vice to help them run their business es successfully.

But in order to become the customer of the Institute for E-Commerce, it’s needed to fill out an application on their website. The purpose of this is to make sure that the cooperation makes sense for both sides. Some conditions that have to be met are that there is some seed capital, or that the founders are willing to in vest the time. “Because time is our scarcest—and most often squan dered—resource, and we don’t want to waste it“, König concludes.