PetSmart has announced that it will acquire online pet retailer Chewy. The acquisition is a milestone for the pet product brand, which will now have possession of a leading force in e-commerce.
Though it is still subject to regulatory approvals, the deal is expected to close in the second quarter of 2017.
“PetSmart strives to be the trusted partner to pet parents and pets in every moment of their lives,” said Michael Massey, president and CEO of PetSmart. “We are focused on improving our customers’ experience in-store and online as we continue to execute against our long-term strategic initiatives. 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.”
Chewy was founded in 2011 by Ryan Cohen and Michael Day. Since its inception, the brand has continued to grow its online presence using a subscription-based model. Cohen will continue to serve as Chewy’s CEO upon acquisition, operating the company largely as an independent subsidiary.
PetSmart’s physical footprint now includes 1,500 stores and 55,000 sales associates.
So why the acquisition? There are likely a number of reasons, according to Jared Blank, senior vice president, data analysis and insights at Bluecore. Blank likened it to Amazon buying Diapers.com—in other words, a way to take a growing competitor out of the market while at the same time gaining back some of the online pricing power. Also, PetSmart may have seen some digital expertise in Chewy’s team that they lacked in-house, especially in the areas of customer service and managing rapid growth. Finally, he believes the acquisition may have also been to help out Chewy, which may have been unable to sustain its capital-intensive growth plans without additional investment.
“Either way, PetSmart will certainly benefit from removing a major competitor and from leveraging Chewy's rabid customer base to reduce their own online acquisition source,” Blank said. “It'll be interesting to see whether they're able to create an omnichannel pet food experience, integrating Chewy's inventory and customer service experience with the PetSmart retail footprint.”