CHEWY

Ryan Cohen was 25 and running a small online jewelry business from his apartment when he got a dog named Tylee. He went to buy dog food online and found the experience terrible.

Amazon was generic. Pet stores had bad websites.

There was no online pet retailer that combined great selection with exceptional service. He and Michael Day co-founded Chewy in 2011 in Dania Beach, Florida.

Cohen was obsessed with customer experience — he studied how Zappos built loyalty through service and applied the same playbook to pet supplies. Chewy launched with aggressive marketing and a relentless focus on customer service.

They sent handwritten holiday cards. They called customers to check on their pets.

When a customer's pet died and they tried to return unopened food, Chewy refunded the money, told them to donate the food, and sent flowers with a condolence note. By 2017, Chewy was doing $2 billion in annual revenue.

PetSmart acquired it for $3.35 billion.

Chewy is an e-commerce retailer selling pet food, treats, toys, pharmacy products, and pet health services. Revenue comes from product sales (primarily through the website and app), with the Autoship subscription program being the key driver — customers subscribe to recurring deliveries of pet food and supplies.

Autoship generates approximately 75% of revenue and creates high retention. Chewy also operates Chewy Pharmacy (pet prescriptions), Chewy Health (telehealth for pets), and Practice Hub (veterinary practice management software).

Chewy's core platform offers 100,000+ products across pet food, treats, toys, beds, and accessories. Autoship is the subscription delivery program covering all recurring needs.

Chewy Pharmacy fills pet prescriptions. Chewy Health offers telehealth consultations with veterinarians.

Practice Hub provides software for veterinary practices. Their logistics network includes automated fulfillment centers optimized for pet products.

Chewy grew through aggressive customer acquisition (TV ads, digital marketing, word of mouth from delighted customers) combined with extraordinary retention through Autoship and legendary customer service. The "customer obsession" stories — paintings, flowers, handwritten cards — generated massive organic media coverage and social media sharing.

Expanding into pet pharmacy and pet health services broadened the addressable market and increased customer lifetime value.

Amazon is the permanent threat. Chewy competes with the most dominant e-commerce company in history on pet supplies.

Profitability has been a struggle — the company reported its first full-year profit in 2023 after years of losses. Pet food margins are thin, and free shipping on heavy bags of dog food is expensive.

Customer acquisition costs are high in a competitive market. The post-COVID normalization of e-commerce growth has also slowed Chewy's revenue path.

Volition Capital was an early investor. T.

Rowe Price, BlackRock, Greenspring Associates, and Lone Pine Capital invested in later rounds. PetSmart acquired Chewy for $3.35 billion in 2017.

Chewy later went public as a separate entity in 2019, raising $1 billion in its IPO at an $8.7 billion valuation. Ryan Cohen left Chewy's board in 2020 and went on to buy a major stake in GameStop.