Will Amazon’s Pet Day take a bite out of Chewy?
Amazon.com is holding its first Amazon Pet Day in celebration of National Pet Month, focusing on a rare category where the company is facing an equally formidable online player in Chewy.
“This 24-hour event will feature incredible deals and savings that are sure to make any pup sit,” Amazon said in a press release. “Whether you are looking for pet care, tasty treats, or pet-friendly electronics, our deals offer savings on items perfect for any and every type of pet and pet owner.”
Amazon became more serious about the pet category in 2018 with the launch of its private label dog brand, Wag.
During the pandemic, a surge in adoptions drove up pet spending with the major online players, Amazon and Chewy, seeing the biggest benefit.
Packaged Facts estimates 30 percent of pet product sales were done online in 2020, up from 24 percent in 2019 and eight percent in 2015. Amazon accounted for 46 percent of the pet category’s online market share in 2020 and Chewy, 35 percent, with each expanding pet product sales by over 40 percent.
While brick and mortar still accounts for the majority of the category’s sales and supports in-store pickup and same-day delivery, Amazon and Chewy have first-mover advantages.
Chewy has regularly cited the benefits of its service-oriented model as it faces questions about its ability to compete against the lower prices Amazon’s scale can deliver. A report last year from Cardify found Chewy had a net promoter score (NPS) of 45.7 compared to 1.6 for Petco and 7.5 for PetSmart.
On Chewy’s fourth-quarter call, Sumit Singh, CEO, said Chewy’s active customer base has grown 54 percent over the pandemic and that he believes pet families are just starting a “long and rewarding relationship with Chewy.”
Amazon’s Pet Day event, nonetheless, arrives as Chewy’s shares have fallen about 40 percent in response to news of the quarter’s loss, which came in steeper than Wall Street estimates as supply chain challenges caused out-of-stocks to run twice as high as forecast. Other factors reportedly concerning investors include inflation and families abandoning their recently-adopted pets as they head back to work offices.
- Preview some of the best deals for the first-ever Amazon Pet Day – Amazon
- State of the Industry Report: How Will Independent Pet Specialty Retailers Fare? – Pet Product News
- Fresh off its IPO, Chewy might be the next company to get crushed by Amazon – Business Insider
- Amazon Pet Day launches amid pet food e-commerce boom – Pet Food Industry
- Chewy Maintains Its Pandemic Advantage Over Competitors – Cardify
- Chewy, Inc. (CHWY) Q4 2021 Earnings Call Transcript – The Motley Fool
DISCUSSION QUESTIONS: Does Amazon have a bigger opportunity in the pet category post-pandemic? Can Amazon compete against Chewy, or will its share have to come from other players?