Chewy benefitted from the COVID panic in two ways:
A surge in online shopping overall
A booming pet business across America
As we spent more time at home, we spent more time on our pets… and Chewy was there to make it easy.
Online ordering and fast delivery of pet food, supplies, and toys made going to the grocery store or pet store to drag 30lb bags through the aisles seem like a silly relic of the past.
This confluence of events sent Chewy (CHWY) stock soaring in 2020, but to heights that were unsustainable even by bull market standards.
As you can see, when purchase intent mentions from LikeFolio (green line) began to revert back to normal, it wasn’t long before the stock followed suit:
Now that Chewy’s stock has dropped dramatically, we’re left to wonder – is it really over for this eCommerce player?
Short answer: No.
Long answer: No way!
Because Chewy has some of the most fanatical and loyal customers in the business with an 82% LikeFolio Consumer Happiness rating… and they’re just getting started when it comes to monetizing them.
First of all, Chewy’s autoship program has turned pet owners into pet supply SUBSCRIBERS. This means every new customer that walks in Chewy’s virtual door has the potential to become a monthly customer, for life.
And the autoship business is good… real good:
This 67% increase in the number of consumers talking about autoship from Chewy tells me that the company is converting customers to subscribers at a fantastic rate – and that will have revenue (and profit) impacts well into the future.
Additionally, Chewy is just getting started expanding its offerings.
A new partnership with Trupanion will allow Chewy to steer its loyal customer base into pet insurance purchases, and the expansion of its Chewy Health program will add veterinary match-making and products to its lineup.
In other words… Chewy’s got a growing and devoted audience that is showing no signs of slowing down their spending with the company.
I discussed this with the gang at TD Ameritrade Network yesterday if you’d like to learn more.