I would leave everything on one website just because it doesn't sound like, 1) you have enough product to justify two websites, or 2) there's a need to have two websites. Pupppies and puppy clothes sort of go together... it's not like you're sellling puppies and gold jewelry.

I think the boutique and the pups should be integrated together through out the website because people will see both at the same time which means you have more opportunity to sell.

You could purchase both domain names and then just pick one as the main name and have the secondardy name redirected to the primary so you could give out both and people would get to the same place.

Regarding the type of boutiqe store to sell - it seems like selling stuff for puppies in general would be great. You could even add food - there are lots of people who I'm sure would be happy to do a drop ship type program with you where they pay you a percentage if you sell their goods (or give you a discount). You could find people who make dog food at http://craftersbuzz.com - I've seen gourmet and all natural products listed.

Good luck!!
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