Dog food startup takes deliveries into its own hands after losing $150,000 in Aus Post crisis

Aussie dog food startup Scratch has launched its own delivery service, after shipping delays at Australia Post contributed to $150,000 in lost revenue.

Melbourne-based co-founders Doug Spiegelhauer and Mike Halligan decided to bring deliveries in-house when the business struggled to meet delivery targets over the past two months.

Scratch was using Australia Post to send its pet products to customers in Victoria but lockdowns and work stoppages led to lengthy shipping delays.

“We still have 300 orders with Australia Post that are four weeks old, that haven’t been scanned, and 700 orders over 14 days old,” Spiegelhauer tells SmartCompany.

Spiegelhauer says even the slightest delays lead to wastage and lost revenue because the products are highly perishable. 

To ensure the business doesn’t disappoint customers, the co-founders left their offices to dispatch deliveries themselves, hiring vans and turning their warehouses into processing facilities.

Halligan even set up an online system that integrates orders with Google Maps, allowing his team to hit the road and deliver products quickly.

“We’ve set up a couple of storage locations around Melbourne to store smaller batches of food and we hired a couple of our customers to do deliveries from those locations,” Spiegelhauer says.

Australia Post halted pickups, collections and business lodgements for retailers in greater Melbourne at the start of October for five days due to record parcel volumes.

Since services resumed, Australia Post has bolstered its operations, adding six additional pop-up sites to process parcels and hiring about 1000 additional team members.

Michelle Skehan, general manager of corporate affairs at Australia Post, said she understands people want their parcels to arrive as quickly as possible and staff are doing “all they can to meet the huge demand”.

When collections were suspended, Scratch changed its standard parcels to express, on the advice that paying for express delivery would allow businesses to avoid the five-day work stoppage.

“That was what was suggested by Australia Post. But what we’ve really seen is that if an express order gets its first scan then it moves quickly,” Spiegelhauer says.

“If it doesn’t, it stays backed up waiting with all the other stuff, and that’s where the money really gets wasted.”

These setbacks in part caused Scratch to lose about $150,000 over the last two months, as products went to waste and the business had to resend orders.

However, Scratch’s new in-house delivery service now allows the startup to complete most orders within four days, and in some cases within the hour.

“This morning, I just delivered in Tullamarine, and they had only placed their order an hour ago,” Spiegelhauer says.

“We’re really trying to look after customers for the long term.”