Florida-based online pet retailer Chewy reported “solid” second quarter 2023 financial results on Wednesday (Aug. 30), driven by strong performance in non-discretionary consumables and healthcare categories and the popularity of its Autoship pet supplies delivery service.
Commenting on the results in a call with investors, Chewy CEO Sumit Singh pointed to Q2 net sales of $2.78 billion — a 14% year-over-year increase — and fiscal Q2 profit of $18.9 million as proof that customers recognize the “power” of its brand and “overall promise of competitive prices, convenience and unparalleled customer service.”
He also noted shifts in consumer behavior, with pet owners prioritizing consumables and health products over traditional hard goods.
“In the past, it used to be $80 on consumables and health, and $20 on hard goods. That $20 has essentially shifted out of hard goods, and most of it is now being spent on consumables and health,” he said on the call, adding that these changes in consumer behavior has presented a significant opportunity for Chewy to further establish itself as a leader in the online pet retail space.
In terms of growth opportunities in the billion-dollar pet industry, Singh said the ongoing shift from offline to online shopping for pet products will continue in the long term and emphasized the importance of addressing customer experience friction and improving sign-up, discovery and checkout processes to enable the firm cash in while creating a seamless and enjoyable shopping experience for pet owners.
Looking ahead, Chewy sees potential for growth in the pet health insurance market. Against that backdrop, he said there’s an opportunity for Chewy to grow in the competitive market and drive incremental revenue with attractive insurance plans.
Still on insurance, the eCommerce pet firm added two new providers, Trupanion and Lemonade, to its platform in Q2, resulting in increased sign-up rates and revenue. However, Singh acknowledged that the vertical will require education and awareness for it to fully bear financial fruit.
Finally, Chewy is gearing up for its highly anticipated expansion into Canada later this year, with plans to establish itself as a local brand tailored to the specific needs of Canadian customers.
As Singh said: “[We don’t intend] to show up in Canada as an American brand. We are going to try and understand the customer, their needs, their wants, their desires, their behaviors, and then model the offering in a way that appeals to them in the best possible manner.”