4 Käppa case study: how merchant financing supported the company’s next growth step

Pet supplies retail is a business where customer trust, the right product range, and strong stock availability go hand in hand. To offer customers both high-quality products and expert advice, merchants need to keep investing in their assortment, online store, inventory, and customer experience. This is the story of how 4 Käppa Kaubandus OÜ, a company based on Saaremaa in Estonia, uses merchant financing, to grow its business smartly and at its own pace.

4 Käppa – more than a pet store

4 Käppa is a pet supplies store in Kuressaare, Saaremaa. The company operates both a physical store in the Auriga shopping centre and an online store at 4kappa.ee. Its product range includes food and supplies for dogs, cats, rodents, birds, and fish – from dry and wet food to toys, beds, grooming products, and special dietary foods.

According to 4 Käppa owner Elo Paur, their product selection is anything but random. The store focuses on quality brands whose ingredients they understand and whose products they are confident recommending:

“We don’t want to be just a place where people pick up a product. For our customers, our role is to be one step before the veterinarian – helping them make more informed decisions about their pet’s nutrition and wellbeing before an issue requires a vet visit.“

“Our role for the customer is to be one step before the veterinarian – to help them make more informed decisions about their pet’s nutrition and wellbeing before an issue requires a vet visit. We invest in our knowledge so that every customer leaves our store feeling that they made the right choice for their pet.”

The idea for the store grew out of personal experience. When a kitten joined Elo’s family, it sparked a desire to create a store where pet owners could find not only products, but also reliable advice. The company started with an online store in 2015 and opened its physical store in Kuressaare in 2016.

“As a child, I dreamed of becoming a veterinarian. Today, I’m doing something quite close to that,” Paur says.

Operating on Saaremaa gives 4 Käppa another important advantage: close customer relationships. Many customers are known by name, as are their pets and their pets’ needs. This is a kind of value that is difficult for large retail chains to offer.

The physical store and online store complement each other

The 4 Käppa store in Kuressaare is the heart of the business. It is where advice is given, customer relationships are built, and a large share of sales takes place. The online store, meanwhile, serves two purposes: it reaches customers across Estonia and gives existing customers a convenient way to order familiar products to their homes.

“A customer in the physical store is usually looking for advice and human contact. They ask for recommendations, compare options on the spot, and often buy something extra, such as a treat or a toy,” Paur explains. “An online store customer is more focused – they come for a specific product they already know and trust.”

Heavier products, such as 12-kilogram bags of dog food, also make up a larger share of online orders, as home delivery is significantly more convenient for customers.

MakeCommerce is 4 Käppa’s partner both in the physical store and online. In-store, 4 Käppa uses MakeCommerce payment terminals, while in the online store it offers bank payments – a payment method that Baltic consumers expect and trust.

Having both online payments and in-store card payments handled by one partner means fewer systems to manage and one trusted point of contact whenever questions or issues need to be resolved.

Having both online payments and in-store card payments handled through one partner means fewer systems to manage and one reliable point of contact whenever questions or issues need to be resolved.

A growing product range requires strong cash flow

From a cash flow perspective, pet supplies retail is a demanding business. Suppliers often need to be paid in advance or within short payment terms, while products may sell from stock over several months. The more a company wants to grow its store and product range, the more capital is tied up in inventory.

For 4 Käppa, seasonality also plays a role. In summer, Saaremaa’s tourism season brings in both local customers whose pets from the mainland come to the island for holidays, as well as tourists travelling with their animals. Autumn and winter are more stable, supported mainly by regular customers.

“Economically, it is often more beneficial to order larger quantities – this can secure a better unit price and make delivery costs more reasonable. At the same time, it means money is tied up in stock,” Paur explains.

The need for additional financing arose from a specific situation: the company wanted to increase the stock levels of one particular brand, keep cash flow under control during months when larger supplier payments coincided, and make necessary investments in developing the online store.

“A traditional bank loan would have been slow and rigid for us. MakeCommerce merchant financing offered a more flexible solution that adapts to the store’s actual turnover,” says Paur.

„A traditional bank loan would have been slow and rigid for us. MakeCommerce merchant financing offered a more flexible solution that adapts to the store’s actual turnover.“

A financing solution built around real sales

MakeCommerce financing in cooperation with SoftLoans appealed to Elo Paur because of its flexibility. The financing decision is based on the company’s actual sales history, rather than only on collateral or forecasts. For a smaller business that may not have large assets to offer as security, this is an important advantage.

Before choosing this solution, the company had also discussed options with its home bank, but the bank did not offer a solution that suited the rhythm of retail well enough. “What appealed to me was that repayment is linked to actual sales revenue. This means that in more demanding months, I don’t have to repay the same amount as during the peak season,” Paur says.

According to her, the application process was faster and simpler than she had expected. The decision came quickly, and the funds reached the company’s account within a short time.

“The SoftLoans and MakeCommerce team was helpful and the process was fast. That matters when choosing a partner – when you have a problem, it’s good to know who to call,” Paur adds.

Financing was used for inventory, cash flow, and online store development

4 Käppa used the financing in three main areas.

First, the company increased its stock levels. It ordered a larger batch of dry food from a specific brand for which it was applying to become the official Estonian representative. A larger initial order helped demonstrate serious commitment to the producer and opened the door to official cooperation.

Second, the financing was used to smooth cash flow. It helped cover periods when larger supplier payments fell into the same month, without disrupting day-to-day operations.

Third, 4 Käppa invested in the development of its online store – a channel that is becoming increasingly important for the company. The financing also helped the business make use of a European Union digitalisation grant, as the required co-financing would otherwise have been difficult and the development work would have been delayed.

“The biggest impact was not only in the numbers, but in the freedom to make decisions,” says Paur. “When you have funds available that you can use strategically, you don’t have to ask with every supplier offer: do I have the money right now? Instead, you can ask: is this the right product at the right time?”

According to her, the financing reduced operational stress and created more room to focus on meaningful business decisions.

“The biggest impact was not only in the numbers, but in the freedom to make decisions. When you have funds available that you can use strategically, you don’t have to ask with every supplier offer: do I have the money right now? Instead, you can ask: is this the right product at the right time?”

Merchant financing as a practical tool

Merchant financing does not have to be a solution for a difficult situation. Used in the right way, it is a practical tool that helps a company seize growth opportunities when the timing is right.

Paur advises merchants to approach financing realistically and thoughtfully.

“It is not a magic solution, but a tool. It works well when you have a clear plan for where the money will go and when that money has a purpose: to create measurable revenue, such as a better purchase price, higher stock availability, or a campaign that drives sales,” she says.

In her view, financing should be considered as part of a broader business plan: what opportunity it helps capture, how it supports cash flow, and what long-term impact it can bring.

For 4 Käppa, merchant financing made it possible to grow the business in a way that matched their actual sales rhythm and needs – strengthening inventory, developing the online store, and making better decisions at the right time. 

MakeCommerce merchant financing helps turn opportunities into growth.

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