Chewy operates an online retail and distribution service for pet owners, providing a convenient and flexible platform through which customers can purchase pet food and pet-related products.
Chewy was founded in 2010 by Ryan Cohen (“Cohen”) and Michael Day (“Day”), initially operating under the name Mr. Chewy, with an initial seed capital of $50,000. According to reports, Day had initially intended to open a no-kill animal shelter, but ultimately decided that starting a business would allow him to better serve shelters that are already in operation. The Company continues to assist animal shelters by donating a portion of each purchase to a select number of animal shelters.
Chewy’s initial growth was relatively slow, with the Company recording an estimated annual revenue of around $25 million in 2012, recording a loss for the first half of the year. The Company, however, soon began to gain traction, with traffic to the Chewy website increasing by 500% between 2012 and 2014. An increase in sales has enabled the Company to grow, expanding its distribution network from a regional operation to a national operation, and opening a 70,000 square foot headquarters in Dania Beach, Florida. Chewy received an investment from private equity firm Volition capital in 2014, the size of which has not been disclosed, allowing to expand further.
Chewy has established itself as a competitor in the growing online pet retail market, going toe-to-toe with more established players such as Pet Smart. The Company has expanded its product portfolio, now stocking more than 30,000 different items, spanning food, toys, treats, and other equipment for dogs, cats, reptiles, fish, and small animals. Chewy has grown its workforce, making a number of experienced hires, including executive from high-profile retailers such as Amazon and Whole Foods Market.
Business model of Chewy
Chewy provides a range of products from various pet brands. The Company’s products and services are targeted specifically at pet owners. This includes owners of dogs, cats, birds, fish, and reptiles, as well as small pets such as rabbits, gerbils, and hamsters. The Company exclusively serves customers within the contiguous US, and does not ship to PO boxes or international addresses.
Chewy provides value to its customers in the following ways:
- Its broad range of products, with the Company stocking a wide range of products from numerous brands, including toys, food, treats, and equipment for a variety of pets, such as dogs, cats, fish, reptiles, and rabbits;
- Its efficient delivery service, with the Company providing free one to two-day shipping for orders over $45, as well as an autoshipping service, whereby customers can schedule orders to be shipped automatically;
- Its accessibility and flexibility, with the Company operating an easy-to-use online platform through which customers are able to browse products, schedule deliveries, and manage payment settings, as well as providing 24-hour customer support services over the phone and online;
- Its simple returns process, with the Company offering 365-day hassle-free returns where customers are not satisfied with their products; and
- Its industry expertise and knowledge, with the Company employing a number of customer service staff that are able to assist customers with queries and enquiries about specific products and brands.
Chewy operates a website at www.chewy.com, through which it provides information on its various products and services. The Company also operates an online sales portal through its website, which allows customers to browse products make purchases and schedule deliveries. Chewy also makes sales through a dedicated telephone sales team, which has access to the Company’s full catalogue of products. Chewy does not operate any physical sales infrastructure, with all sales routed through its digital and telephone sales channels.
Chewy delivers its products to customers in the US through a third-party package delivery service provider. The Company previously had a distribution relationship with UPS, but more recently engaged FedEx to be the Company’s principal distribution provider.
Chewy operates primarily on a self-service basis through its online sales portal. This channel allows customers to browse products, compose orders, schedule deliveries, and manage account and payment details without interacting directly with members of the Company’s sales and support personnel. The Company also provides a fully automated shipping service, under which customers are able to arrange recurring orders that do not require repeat ordering once set up.
Chewy operates a telephone sales and support team that provides a more personal service to customers, answering questions regarding specific products, brands, and pets. Additionally, the Company operates online support channels, including a live chat service, and email support, through which customers can receive tailored assistance. Chewy is also able to interact directly with its customers, and keep them updated with company developments, through its social media accounts, including with Facebook, Twitter, YouTube, Instagram, and Pinterest.
Chewy is a retailer of pet products and pet food. This includes products for dogs, cats, reptiles, fish, birds, rabbits, hamsters, gerbils, and guinea pigs.
The Company’s product portfolio comprises food and treats, such as dry food, wet food, freeze dried food, and prescription food for dogs and cats; supplies, including bowls and feeders, flea and tick products, health and wellness products, toys, grooming equipment, leashes and collars, and beds; and litter and accessories for cats.
It also offers water care, filters and media, cleaning and maintenance, and health and wellness products for tropical freshwater, goldfish, marine fish, and bottom feeders. Chewy primarily operates as an online retailer, offering autoshipping services and scheduled deliveries through a third-party carrier.
Chewy works in conjunction with a range of companies and organisations to sell and distribute products to its customers in an efficient and reliable manner. These partners include:
- Supplier and Vendor Partners, comprising suppliers of products and supplies that the Company resells through its online and telephone sales channels, as well as providers of technologies, services, and equipment that are utilised across the enterprise;
- Distribution and Delivery Partners, comprising third-party distribution and delivery service providers that assist in the Company’s shipping service;
- Rescue and Shelter Partners, comprising a range of non-profit and charitable organisations that are involved in the rescue and care of animals, with which the Company collaborates on various projects; and
- Strategic and Alliance Partners, comprising a range of companies with which the Company collaborates on joint projects and mutually beneficial operations.
Chewy’s non-profit partners include Pets for Patriots, Second Chance Rescue, Thank Dog Rescue, National Mill Dog Rescue, and All About Animals Rescue. The Company has also established an exclusive retail partnership with Pet Fusion to sell its products online, and has an integration partnership with Strands Retail.
Chewy’s key resources are its portfolio of products and its supply chain, its online sales platform, its distribution and logistics infrastructure – including its distribution centres and warehouses, its IT and communications infrastructure, its partnerships, and its personnel. Chewy owns and leases a number of properties across the US, including its offices, as well as its network of distribution centres and warehouses.
Chewy incurs costs in relation to the procurement of supplies and equipment, the management of its supply chain, the development and operation of its online sales platform, the maintenance of its IT and communications infrastructure, the operation of its logistics and distribution infrastructure, the management of its partnerships, and the retention of its personnel.
The Company’s largest costs relate to the acquisition of goods and supplies, as well as the payment of salaries and benefits to its workforce of more than 1,200 employees. It also incurs significant occupancy costs relating to its network of offices, distribution centres, and warehouses.
Chewy generates revenue through the sale of pet food and pet-related products, including food, toys, supplies, training equipment, treats, and health products. The Company makes the majority of its sales through its online platform, with the remainder coming through its telephone sales teams.
Chewy is not a publicly-listed company, and as such is not required to publish its financial results on its website. Recent reports, however, suggest that the Company generates annual revenue in excess of $200 million.