In a deal set to be the largest e-commerce transaction in history PetSmart has acquired online pet supply company Chewey.com for a reported US $3.5 billion.
America’s largest online pet retailer Chewey.com is being purchased by it’s bricks and mortar based competitor PetSmart in a deal speculated to be the largest acquisition in e-commerce history.
Funded in 2011 by Ryan Cohen and Michael “Blake” Day, Chewey.com was established to fill a gap in the online Pet supply market. A gap discovered by Cohen as he shopped for his Teacup Poodle Tylee. Pooling their funds together, Chewey.com began operating with three employees selling 2,500 products and brought in US $26 million in revenues in its first year.
Chewy.com has been projected to increase revenue to nearly US $2 billion in 2017, which is nearly a 7,600% growth spurt in the short six years it has been operating.
Since inception, Chewy.com has built its following of 3.8 million loyal customers on its dedication to customer service. As a result of this Chewey has quickly grown a commanding online market share for pet food and gear. Delivering the “wow factor” has been a central focus for the Dania Beach-based pet supply company. According to Cohen, this acquisition will assist Chewey.com to create an even larger “wow”.
“Since we started Chewy, we have been dedicated to understanding and satisfying the evolving needs of our customers to deliver the highest quality pet products and customer service,” said Cohen. “Combining our strong e-commerce expertise with PetSmart’s best-in-class infrastructure, footprint and breadth of offerings including services will help us wow our customers even more.”
By 2015, Chewey.com was leasing 70,000 square feet of office space and had grown to over 320 employees, including web developers, accountants and a team of pet loving customer service representatives. Among the staff, there is also a team of artists who are tasked with creating art, painting dogs and cats based on pictures sent in by Chewey loving customers.
It was arguably this customer centric business model that has developed Chewey.com into the company it is today and drawn attention from competing companies such as new parent company PetSmart.
“Chewy’s high-touch customer e-commerce service model and culture centred around a love of pets is the ideal complement to PetSmart’s store footprint and diverse offerings,” said Michael Massey, PetSmart’s president and CEO.
The acquisition will see Chewy operate as an independent subsidiary of PetSmart that will remain under Cohen’s leadership and stay focused on its current business strategy. PetSmart on the other hand will continue to execute its strategic initiatives across the combined company.
Chewey.com now carries over 30,000 products and offers US $4.95 flat rate shipping for orders under $49 and free shipping for orders over US $49. Along with its extensive product range and low handling fees, the company also currently sends flowers, cards, candy and even personalised pet portraits to 700 randomly selected customers per week.
It’s a unique offering from a rapidly expanding, although not yet profitable company, which has used these personalised touches to foster a special relationship with its customers.
Whether or not Chewey will be able to retain the personalised customer service it has become renowned for after this merger has been cause for concern for some of Chewey’s customers. Many of who have taken to social media to express their dissatisfaction, claiming that the reasons they loved Chewey in the first place was due to the fact that it was not part of a major corporation. The history of company mergers has seen the creativity and unique point of difference, that made the smaller company appealing in the first place, be killed off by the bureaucracy of the larger company.
Although as it currently stands the two businesses are set to complement each other. “Together, PetSmart and Chewy will provide the most convenient customers experience to a wider base of pet parents across every channel” said PetSmart’s Michael Massey.
What happens next to Chewey.com, with it’s customer-centric business model and its pet-friendly, rumpus-room headquarters complete with nerf-gun war battle breaks, will be closely watched by the large community of pet supply consumers that fuelled the company’s growth.