Assessment of Key Industry Changes
In my Marketing Strategy class, I focused on the business idea of ChewyVet, an online vet solution for pets and pet parents. This was an expansion of Chewy.com’s current business, an online pet supply retailer with an online pharmacy division. My idea was to expand Chewy’s pharmacy arm to offer veterinary solutions, including online vet care. In this module’s discussion post I reflected on my personal experience at work as it relates to operations management.
Impact of Change
Economic trends and technology are two factors within the online retail industry that impact change. The retail space has seen wide success as more people have been staying in, shopping online as a result of the coronavirus pandemic. Dispute this trend, Chewy has still not been able to turn a profit, and as millions of Americans lost jobs during the pandemic, the road to recovery is a long one. (Ogg, 2020) Discretional spending is down and spending on necessities further cement the need for change. This factor not only impacts the profitability of the company, but also its future existence.
Technology is another factor that impacts change, thus far it has been moving so fast, with so many enhancements that it’s hard to keep up. Continuous technology enhancements leave companies with no other choice but to rely on technology companies for up-to-date solutions, leaving room for over reliance. According to Chewy’s S-1 filling, they rely heavily on third parties for software. Chewy, like most companies, uses third party technology to manage company finances, customer relationship management services, supply chain and data. (Chewy, n.d.) If these third party software were to go out of business or go down suddenly, the impact would ripple across these crucial functions of the business, greatly impacting the operations of the company.
Key Obstacles and Opportunities
According to Min (2019), Americans are spending more on pets each year and taking to the web to fuel spending habits. In 2018, Americans spent $72.6 billion on their pets, triple the amount spent two decades ago. And 12 million US households bought items for their pets online, with some now predicting a 23% increase in pet product sales online by 2023. (American Animal Hospital Association, 2020). For Chewy, this is an opportunity to expand their market share and become a leader and staple in pet households across America. In doing so, Chewy will need to fill the need from start to finish, or from diagnosis to treatment; thereby cutting out the need for veterinary offices.
Another opportunity is more recently that has catapulted Chewy to the front of the race. According to Egan (2020), recent rise in pet adoptions and pet sales is now projecting that 92 million US households will have at least one pet by the end of 2023. Even if there were to be another recession, pet care will be an essential as proven in the Great Recession, where pet essentials rose as spending declined across the board.
The main obstacles that stands in Chewy’s way is VCPR (Veterinarian-Client-Patient Relationship) regulation and over reliance on third parties. The ideal launch or business model of ChewyVet relies on technology to interact with pets and pet parents. The issue with his is that telemedicine in the vet space can only be practiced if the relationship was established by non-electronic means (AVMA, 2020). This would cause Chewy to rely on a large network of vet and vet technicians to cover the service area just establish VCPR in order to offer long term veterinary services. This introduces high cost and more reliance on third party’s to manage operations.
Enabling factors are both internal and external. Internally, the company has not been able to turn a profit and will need to look at other areas to expand and grow. Externally, more people are going online for their needs – this is especially true in the socially distanced pandemic society – which opens new opportunities for Chewy to fill a need and take advantage of the online opportunity. Another external factor is the growing number of pet owners and the industries expected year over year growth.
When looking at inhibiting factors, there will be a ton of red tape Chewy will have to jump through to bring a seamless solution to the online public. A solution where VCPR is complied with and meets a level of convenience for the end consumer. Additionally, a significant amount of capital will be needed to commence operations, both human, resource, and financing are areas that will require organizational change and increases/enhancements.
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