The pet industry is abuzz about the recent announcement of PetSmart’s acquisition of Chewy.
How is this going to impact independent pet retailers?
Chewy has been a formidable opponent in online retail - often selling products at prices the big box stores are unable to come close to competing with.
Another major component of Chewy’s success is outstanding customer service.
Anywhere one looks, happy customers are sharing stories of how well the company treats them and how well the company knows them.
People are speculating on the purchase outside of the animal industry as well.
The $3.35 billion acquisition is being touted as the biggest e-commerce purchase in history by publishers like Tech Crunch.
Recode is pointing out the deal is larger than Walmart’s acquisition of Jet.com, which was done for many of the same reasons - expanding Walmart’s e-commerce abilities and positively impacting their customer service.
Even e-commerce focused eMarketer is writing about the deal.
This deal is a big deal!
A Pet Business article touches on independent retailers concerns regarding how this acquisition can impact their bottom line.
While some fear the deal can make PetSmart an even stronger competitor, others believe it can actually take away some of Chewy’s clout.
Why?
Some pet food brands have chosen to sell their products through Chewy rather than big box stores like PetSmart through loyalty to independent retailers and they may pull their products.
In fact, Tuffy has already announced they will stop selling through Chewy because of the acquisition.
Also, Chewy has been operating with a very low profit margin and therefore very little profit.
There is a belief that PetSmart will want to raise that margin and generate more profit and that can’t be done without increasing the prices of online products.
The impact on the independent retailer remains to be seen, but what is clear is many people are watching to see just what happens.
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