PetSmart is buying Dania Beach, FL-based pet product e-tailer Chewy, one of the largest privately owned e-commerce companies in the U.S.
While terms of the deal were not disclosed, Recode reported that PetSmart paid $3.35 billion for the six-year-old company. Chewy stocks more than 18,000 SKUs and provides free one- or two-day shipping for orders of more than $49. According to Forbes, Chewy earned $900 million in 2016 and has 3 million customers. The deal is expected to close in August.
"We are focused on improving our customers' experience in-store and online as we continue to execute against our long-term strategic initiatives," PetSmart president and chief executive officer Michael Massey said in a media release. "Chewy’s high-touch customer e-commerce service model and culture centered around a love of pets is the ideal complement to PetSmart’s store footprint and diverse offerings. Together, PetSmart and Chewy will provide the most convenient customer experience to a wider base of pet parents across every channel.”
Market research firm 1010data reported that Chewy was the top online seller of pet food in 2016, accounting for 40.5% of category sales. By contrast, PetSmart was responsible for only 2.2% of sales, slightly edged out by channel rival Petco, which had a 3.1% share. Another 1010data report found that online sales of pet care products grew 67% year over year in 2016, with the expansion driven by Chewy and Drs. Foster & Smith, which is owned by Petco.
Chewy co-founder and ceo Ryan Cohen will operate Chewy as an independent subsidiary. PetSmart took a similar approach when it acquired Pet360 in 2014. The retailer will continue to sell products directly through petsmart.com, which added an auto-replenishment service in January to catch up with Petco. PetSmart also offers delivery through Google Express, while Petco has opted for a partnership with Instacart.