PetSmart has made just made a big move towards dominating the pet supply space by acquiring Miami based Chewy.com.
Chewy, an online pet supply company, became operational in 2011 and has been in business for half a decade. It has achieved remarkable revenue growth. Last year alone, its revenue was valued at close to $900 million. Chewy was projected to increase revenues to nearly $2 billion this year — nearly a 7,600 percent growth in six years. It was previously one of the competitors of PetSmart and there were speculations that this year it would be considered for an IPO. But following the acquisition by PetSmart, it is evident the issue of IPO is now water under the bridge.
Neither PetSmart nor Chewy revealed information regarding the terms and conditions that steered the deal. The deal is estimated at a figure amounting to $3.35 billion according to Recoded. This would make it the biggest e-commerce acquisition of all time. This amount is slightly more compared to that of Wal-mart which stood at $3.3billion when it acquired Jet.com in August 2016.
The move by PetSmart to acquire Chewy is perceived as an effort to reinforce its dominance in the pet products and services niche. By adopting online selling strategies, the company will be better equipped to deal with competition from rival companies. PetSmart articulated that the motivation to acquire Chewy was triggered by the desire to avail pet products and services to wider clientele base. This transformation is expected to enable PetSmart to reach its target audience in North America through online sales as well as physical stores.
Although Chewy is now part of PetSmart, its CEO Ryan Cohen will still be involved in its management. Chewy will operate as an independent subsidiary of PetSmart run by Cohen.