Pet Food
Pet food is a category that is beginning to mirror human diets where owners are paying close attention to ingredients and the overall dietary substance. On the other side there are 90m+ who need to buy food for their pets and not everyone is particularly interested in optimizing their pets diet.

When ignoring the idiosyncratic differences in inventory & factoring in small time stores there are >80,000 locations where you can buy pet food. There are ~90m families in the United States with a pet & $CHWY has ~20m customers with 73% of revenue coming from Autoship. On the high end this points to ~16% of US pet owners subscribing to Chewy's Autoship.

Counterintuitively I think pet food is one of the better use cases for ecommerce. At first I was worried shipping costs would drag down Chewy but that's because I was assuming they must operate in a world of fast 2 day shipping. The need for pet food is extremely predictable, if your dog needs a new 40lb bag of food on October 12th, why can't Chewy have the food leave the warehouse 3 weeks prior to arrival? I am assuming it is possible to negotiate lower rates with UPS/FedEx due to the lack of urgency for these deliveries. Basically whenever one of these companies has some slack they can slowly move the food along it's desired route while also ensuring it is delivered on the date needed.

In theory it's possible to decide your pet's diet the very first day you adopt them & have the food automatically delivered over the course of it's life. There is nothing proprietary about Chewy's Autoship, it's just that they've gained the most traction. There is no reason to discount the possibility of Walmart or your favorite grocery store pursuing consumers to sign up for Autoship as it would allow them to free up valuable shelf space in stores. (Not to mention the looming threat from Amazon)

I'm still not sure what the takeaway here is. On one hand pet food appears to be a bit of a commodity as it can be bought in so many different locations. On the other hand we know the tides are shifting where the food choices are becoming more nuanced. With an increased desire for owners to choose the 'right food' I think this is where the Chewy funnel becomes valuable. Steering 20m consumers in a particular direction can translate to some serious buying power when they purchase wholesale.

I'm sure @paulcerro has some thoughts but I think it's clear that many consumers prefer to order their petfood online, as there is no shortage of brick & mortar locations where pet food is sold.

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Nathan Worden's avatar
Our dog is a super picky eater, and we recently started buying her Freshpet because she wasn't eating at all. I want to think that a picky dog is an exception and not a norm— but perhaps there is weight to what you're saying about how pet diets are improving.
Pat Connolly's avatar
@nathanworden yeah I haven’t seen any data around it but a lot of Americans have a lackadaisical approach to their own health so I do find it difficult to believe that premium pet food ever becomes ‘the norm’

But who knows people are unpredictable
Nathan Worden's avatar
@pat_connolly I know what my dog is hoping for 🥲

Lester Leong's avatar
@nathanworden fwiw, my trick is mixing kibble that is good for her and wet food that she likes
Nathan Worden's avatar
@prometheus Ah the old "sneak the broccoli" maneuver, I like it 🥦