Online marketplaces such as Shopee, Qoo10, and Lazada have been gaining traction locally in part due to the variety, convenience, and competitive pricing offered by their platforms.
By providing a one-stop solution for all things needed by Singaporeans, they effectively become the go-to superstore where we can price-check and purchase products with a few taps.
While these guys dominate the local scene, it’s a different story when we look at the US. Over there, Amazon dominates almost 50% of the E-commerce market. Other companies such as Ebay, and Walmart vie for the remaining lots.
For some of these companies, instead of trying to gain sweeping market share, they have been focusing on specialized segments, where they can offer better value, and complementing services.
Chewy Inc, is one such enterprise which concentrates on pet consumables, products, and services. Launched in 2011, they are the largest pet-focused, online retailer in the United States, offering a huge variety of products.
The Online Pet Hyper-mart
The company serves its customers through its retail website, www.chewy.com, and it’s highly rated mobile apps.
Most of their products come from third-party suppliers. They also carry some of their own proprietary brands. These include pet food, accessories, necessities, and supplies for various breeds of pets.
Chewy does not have physical stores; instead it’s online website serves as it’s storefront, while deliveries are carried out through it’s 14 fulfillment centers located throughout the US.
These centers allow Chewy to ship to over 80% of the U.S. population overnight and almost 100% in two days.
It’s website also has a pharmacy segment, where customers can purchase pet health products such as medicines for their pets.
Apart from it’s standard offerings, Chewy also provides other services which add to it’s value proposition. These include;
- Pet Telehealth, a tele-triage service which lets customers connect with a licensed veterinarian to receive advice, and discuss concerns they might have regarding their pet’s health and wellness.
- Compounding Medications which can provide customized, prescription medications for pets. Such meds sometimes cannot be fulfilled by commercially available alternatives.
- Practice Hub, an e-commerce solution for veterinarians to create and manage prescriptions for customers. And earn revenue in the process.
- Pet Insurance, in conjunction with Trupanion, a medical insurance provider for cats and dogs. To begin offerings in 2022.
These services enhance the stickiness of the platform, and allow Chewy to increase the average wallet share spent per customer.
Chewy’s Net sales has grown from US$7,146m in 2020, to US$8,890m in 2021. Majority of this comes from Consumables, with hard goods coming in second place.
Gross profit margins stepped up from 25.5% to the current 26.7%.
For expenditures, we see that a majority of revenue is spent on Selling, General, and Administrative. The company employs a total of 21,300 full and part time employees to conduct it’s business.
The company sits on US$603m of cash reserves at the moment. Should be enough for the next couple years.
Liabilities seem quite manageable, with most of them coming from it’s leases, and is spread out over multiple years.
Growing With Our Furry Friends
Apart from growing sales, Chewy also registers consistent growth in it’s Autoship subscription program. This is like a recurring delivery program for customers who do not want to constantly have to reorder products.
Autoship as a percentage of total sales stands at 70.2% as of 2021, up from 69.4% in 2019. Means that almost three quarters of it’s customers conduct recurring purchases from Chewy.
Other metrics such as Number of Active Customers, and Net Sales Per Customer, are all rising as well.
With a strong customer fan-base, and a scalable business model, Chewy Inc does seem like a promising counter that we’ll be keeping our eyes on.