In recent years, pets have truly become part of the family, and Chewy has smartly capitalized on this shift. The company, identified by the ticker symbol CHWY, has emerged as a frontrunner in selling pet food and related products.
Over the last five years, Chewy has more than doubled its revenue, amassing an impressive $11.9 billion in sales during its most recent fiscal year. Catering to pet owners is no small feat, but Chewy has nailed it, thanks in large part to its Autoship program, which has fostered both recurring revenue and remarkable customer loyalty.
### Making Frequent Purchases Work in Their Favor
Pet essentials, like food, medications, and kitty litter, need regular replenishment. Chewy has streamlined this process for its customers by enabling them to schedule these purchases through its Autoship program. This service ensures that customers receive their pet supplies on a regular schedule, freeing them from the hassle of store visits or carrying heavy bags home.
Autoship stands out as a crucial component of Chewy’s business model. In fiscal 2024, which concluded on February 2, sales to Autoship customers constituted $9.4 billion, accounting for 79.2% of the company’s total revenue.
Interestingly, sales from Autoship users have been climbing faster than the company’s overall revenue, jumping from about 70% in fiscal 2021 to nearly 80% today. The Autopilot-like nature of the program means Chewy has fostered relationships that are likely its most valuable. For the company, Autoship brings predictability, heightened customer loyalty, and greater customer spending.
Chewy’s CEO, Sumit Singh, highlighted during the latest earnings call that the Autoship program accounted for 80.6% of Q4’s net sales, providing both unparalleled service to customers and creating stable, subscription-like revenue streams for the company.
While there’s a ceiling to how much participation Autoship can gain, at its current levels, the program lends Chewy the flexibility to navigate cost increases smoothly and bolster its profits.
### Chewy’s Autopilot Revenue Stream
If you’re considering Chewy as an investment opportunity, don’t just skim over the headline figures in their earnings reports. A deeper dive into elements like the Autoship program reveals the strength of Chewy’s market leadership.
Few other retailers can claim such a vast group of loyal, repeat customers, making Chewy’s business not just robust but almost on autopilot.
