Online pet supply sales are disrupting the industry

Jun 27, 2023

Pet supply retailers are rushing to expand their ecommerce offerings as online-only newcomers like Chewy Inc. disrupt the industry amid a post-pandemic boom.

Chewy’s revenue has jumped by about two-thirds over the past three years, while sales at the largest publicly traded brick-and-mortar pet company, Petco Health and Wellness Co., are up just 14% since it began trading in early 2021. The pet divisions of food companies including General Mills Inc. and JM Smucker Co. have also lagged.

Chewy ranks No. 13 and Petco ranks No. 92 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American ecommerce retailers. Online pet supply retailers are in the Top 1000 Specialty category.

The trend still has room to play out as about three-quarters of purchases are still done in physical stores. Online pet supply sales in the U.S. may double to almost $60 billion by 2030, according to Bloomberg Intelligence. The global pet market is set to grow to almost $500 billion by 2030 from $320 billion.

Chewy’s competitors are now either trying to ride or work around that ecommerce wave. Petco recently expanded its partnership with Doordash Inc. after in-store sales grew just 2% last quarter. Digital growth was 9%, a pace analysts expect will continue. Pet unit sales at General Mills rose 7.3% in the fiscal fourth quarter, about half the pace in the previous quarter. JM Smucker sold part of its pet food division for $1.2 billion in April.

Chewy’s autoship, or subscription, offering has driven its growth. It now has about a third of the pet ecommerce market. Carriers deliver its distinctive blue boxes are en masse across New York City daily, while couriers post photographs online of their trucks stacked full of them.

Chewy reports second-quarter earnings on Aug. 30 after the market closes.

Americans bought companion animals in droves during the pandemic, driving a 30% gain in pet spending over the past three years, according to a report by KPMG LLP. Nestle SA’s Pet Care segment is now its largest contributor to organic growth, bringing in around $5 billion a quarter, or about a fifth of the company’s total revenue.

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