The deterministic revolution of Pet Home: From the first to the first.

On Wednesday afternoon, during her downtime at work, Xiao Zhang opened the Pet Home mini-program and booked a grooming package for her Teddy, Duoduo, for Saturday. Xiao Zhang usually books the one-star grooming stylists at Pet Home, who are very popular and must be booked in advance.

Recently, users of Pet Home have had a similar feeling. In the past, they could book a grooming stylist one day in advance, but now they have to book three days in advance, and there's no guarantee they'll get a slot. Since April 1st, after Pet Home launched its membership system, this high demand has become even more obvious.

This is a microcosm of tens of thousands of Pet Home users. Starting from April 1st this year, Pet Home stopped the prepaid card system and switched all its stores to a paid membership system. In the first two weeks, the number of new paid members exceeded 20,000. The numbers are simple, but behind them is a "certainty revolution" that the pet industry is going through - abandoning the traditional "prepaid card" model and reconstructing the trust relationship.

This company, which has been established for ten years, entered the pet industry as "the first fully directly-operated chain store." Now, Pet Home is becoming "the first" again - "the first paid membership-based grooming brand," eliminating the risk of prepaid fees and reconstructing the value of services.

What gives Pet Home the confidence to go from "the first" to "the first" again?

01

The Definitive Moat of the Heavy Asset Model

When Xiao Zhang first took her Teddy into a random pet store near her home, she experienced the anxiety familiar to all pet owners: the price list only had a vague "small dog bath starting from 98 yuan," but when it came to the actual charge, the clerk said that the Teddy needed a haircut and additional fees would be added; in the so-called "professional grooming" service room, behind a partition, an intern casually rinsed the dog with an unknown bath lotion; even worse, to get the dog washed, she had to prepay, often thousands of yuan, which made Xiao Zhang think of the stories of "running away with customers' money" mentioned by her friends.

Such stories have been repeated in the past. There have long been four major uncertainties in the entire pet service industry:

Price Opacity - Pricing is roughly based on weight, and additional fees are often added during the actual service;

Service Blind Box - The qualifications of grooming stylists are unclear, and the service quality varies;

Process Black Box - There are no standards for service duration and steps, and users have no way of knowing what to expect;

Funding Risk - The prepaid model poses a risk of the business running away with customers' money.

In the past, many practitioners made money not from providing services but from the profit generated by the information gap caused by these uncertainties.

In the view of Li Qiang, the founder of Pet Home, in the face of the industry's pain points, the industry must be reshaped with a systematic and certain approach to create a new type of pet service consumption channel worthy of users' trust. So from the very beginning, he chose to operate directly-owned chain stores offline instead of uncontrollable franchised stores.

But that wasn't enough. To build a trusted consumption channel, Li Qiang kept thinking about how to better address users' lack of trust in the pet grooming industry. In 2015, at the beginning of his entrepreneurship, Li Qiang decided that the online system construction should come first! He spent several months building a SaaS system before opening the first store.

This choice was extremely rare at that time. The pet grooming industry was mainly composed of family-owned stores, relying on manual management, with low efficiency and a low degree of service standardization. By building a SaaS system, Pet Home was able to standardize the service process, keep real-time track of user data, and improve the operational efficiency of its stores.

This data-driven model not only helped Pet Home establish a management advantage in the early stage but also laid the foundation for its subsequent large-scale expansion - data can provide effective decision-making support for solving industry problems. Only by laying a solid foundation can the building be continuously expanded.

Pet Home first addressed the issue of price certainty. Many pet grooming services still charge based on the size or even the weight of the pet, but this doesn't provide a good experience for users - after all, the grooming time and difficulty are determined by the breed, size, and function, not just the weight.

Pet Home decided to price and estimate the time based on "dog breed + service item + grooming stylist level." Currently, Pet Home has 105 dog breeds, more than 30 service items, and 5 levels of grooming stylists, resulting in tens of thousands of combination methods. This transparent pricing based on real costs and the ability to actively choose service staff make customers feel the fairness of "paying for value."

More detailed classification can continuously improve the accuracy of booking time. From the uncertainty of how long it will take in traditional stores to precise 10-minute booking slots, users can feel the certainty in terms of time. The system analyzes historical service data to establish a dynamic duration database for 105 dog breeds, predicting the duration and connection of various services to facilitate subsequent bookings.

To make this complex booking system work, Pet Home refined it through 100,000 orders at the beginning of its establishment.

The certainty of the process is also very important. To this day, Pet Home's grooming process, which has at least 20 steps, is still a template "copied" by industry peers. In 2019, when Pet Home had 30 stores, Li Qiang found that to expand further, he had to solve the problem of the uneven quality of grooming staff. The bigger barrier was stability. So in 2019, Pet Home built a grooming stylist training system and standardized the service process to ensure that the services provided by more than 200 stores were stable.

Certainty and standards enable Pet Home to identify problems. Through data analysis, Pet Home can promptly analyze stores with abnormal operating data to determine whether it's a management issue, a staffing issue, or a location issue. Pet Home has also closed stores in poor locations in the past and reopened in new locations to continuously optimize store operations.

Li Qiang is also very firm. The heavy asset model makes it impossible for all latecomers and followers to copy.

Over the past decade, starting from the first line of code of the SaaS system, Pet Home has gradually expanded to nearly 200 directly-owned stores in three first-tier cities: Beijing, Shanghai, and Shenzhen, serving more than 10 million pet visits in total. The light asset model may enable rapid expansion, but only the heavy asset model can precipitate real value.

When the market enters a new round of transformation, the capabilities precipitated by these heavy investments are being transformed into strategic resilience to resist uncertainties.

02

The Definitive Logic Behind the Membership System

On the basis of certainty, a good business model will naturally emerge.

While traditional pet stores still use prepaid discounts to bind customers, Pet Home chose a different path - establishing a membership relationship through an annual fee, although this requires more precise business design.

From the business paths of membership system pioneers Sam's Club and Costco, we can clearly see the chemical reaction between high-frequency and essential scenarios and the membership system: in 2023, the membership fee revenue of Sam's Club in China accounted for 67% of its profit, and Costco's global membership renewal rate was as high as 92.9%.

Like Costco, Pet Home seizes the natural high-frequency nature of pet grooming, except that the former deals with retail products and the latter serves users - dogs are bathed 2 - 3 times a month on average, and cats are bathed every 2 - 3 months. The repurchase rate of Pet Home's old users in the following month has exceeded 50% in the past decade - this is naturally suitable for the membership system. Data shows that Pet Home users visit the store an average of 22 times a year, which is even higher than the frequency of Sam's Club's core users, who visit a dozen times a year.

The membership fee creates profit, and high-frequency consumption maintains user stickiness. This is also the underlying logic for Pet Home to bet on the paid membership system. Pet Home also continuously announces the content and value of its membership system in various forms. The biggest change is that it has abandoned the previous "prepaid card" model, which often required a deposit of one or two thousand yuan, like other pet stores, and replaced it with a paid membership system with a lower threshold, better benefits, and higher quality.

Specifically, Pet Home's membership is divided into three levels: Gold, Platinum, and Black Gold, with annual fees of 199, 299, and 599 yuan respectively. The main differences in the benefits of different memberships lie in the number of grooming vouchers, the number of deworming services, grooming discounts, and the number of days for booking. All members can enjoy imported Beteis pet bath lotion and can upgrade to star-rated grooming stylists.

Source: Pet Home mini-program

It may seem that Pet Home is "losing money" - providing services that exceed the value of the membership fee. However, the essence of switching from the prepaid system to the paid membership system has increased the company's service gross profit by more than 15% without changing the pricing. In the past, the prepaid model eroded the company's gross profit, as the company had to spend more manpower and time on the "free" services, which didn't create economic value. The membership system, through refined and transparent services, is directly transformed into user trust and corporate revenue.

On the other hand, Li Qiang told us that Pet Home is willing to "take a loss" to launch an annual membership system with a lower threshold, better benefits, and higher quality. It wants to tell users that if users trust Pet Home, Pet Home will give greater returns. In a market environment where "running away with customers' money" occurs frequently, consumers need a kind of "certain" trust.

Pet Home uses a dynamic pricing algorithm and health data assets to benefit users, transforming the membership fee into a "certainty contract." While other players are still selling services, Pet Home has started selling "certainty."

The membership system is a win-win situation, but why now? In the past, China's retail industry was still in the stage of channel expansion, and it wasn't cost-effective for enterprises to deeply cultivate users. On the other hand, the membership system needs to be based on a certain foundation of trust between the enterprise and consumers.

Li Qiang said that there are three steps in brand building: safety - trust - reputation. The trust potential demonstrated by Pet Home in its membership system transformation is actually the transformation of the sense of safety built over the past decade through the standardized management of nearly 200 directly-owned stores and the verification of nearly 10 million pet grooming visits.

The confidence in the paid membership system comes from the continuous investment in basic work such as data accumulation over the past decade. While other brands pursue light asset expansion, Pet Home has focused on the "heavy" aspect over the past decade, building several barriers of "certainty."

03

The Definitive Evolution Towards the Future

The membership system is not the end but a brand new beginning. After the underlying construction of the direct operation network and the membership system is completed, Pet Home wants to explore more imaginative data value.

After the Spring Festival, on the one hand, Pet Home was preparing for the launch of the membership system. On the other hand, it cooperated with Tencent Cloud, integrated the DeepSeek large model, and incorporated its own corporate knowledge base to launch an upgrade of the AI health butler in the pet industry.

In this way, each pet and user can get personalized grooming suggestions: on the one hand, the system can record dozens of physiological indicators of each pet in real-time and generate quarterly grooming reports; on the other hand, based on the records of nearly 10 million pet grooming visits in the past 10 years, Pet Home has accumulated a large number of grooming suggestions, which can help users break the information gap.

Users communicating with the AI assistant (Source: Pet Home mini-program)

A deeper layout is on the ecological side. In the future, Pet Home may expand into different directions in the industry to provide users with more comprehensive services.

For the pet industry, ecological layout is not simply an extension of business. New touchpoints will strengthen the "certainty" of the industry's thickness. Pet Home is transforming the 10 million grooming records accumulated over the past decade into new industry infrastructure.

Pet Home's decade-long evolution may reveal the essential law of the service industry: In the new consumption era dominated by emotional value, "certainty" has evolved from a business concept to industrial infrastructure. The wild growth period of the pet economy is coming to an end, and the era of refined operation is taking its place.

The significance of this certainty revolution far exceeds business itself - pet grooming has evolved from an anxiety-filled consumption behavior to an expectable and trustworthy lifestyle. And as more and more enterprises start to follow Pet Home's footsteps, the entire industry will move from the quagmire of price wars to value competition.

The end of the industry's progress is far from over, but Pet Home has at least proven one thing - when the entire industry is moving forward by inertia, there are always those who choose to strengthen their internal strength first and then reconstruct the rules.