Strategy Development

Strategy Development

Part I – Company’s Strategy

Like most for-profit businesses, Chewy’s goals center around growth; specifically increasing their market share, revenues, and profitability. Chewy’s mission statement hints heavily to this. “To be the most trusted and convenient online destination for pet parents (and partners), everywhere.” (Chewy, Our Mission, 2020). This is where the business idea (ChewyVet) fits in. By launching a veterinary arm, Chewy taps into new sources, and expands its reach to pet parents and partners; growing to be a household name. But how does the company’s strategy align with the idea of ChewyVet?

In 2019, Chewy outlined their strategy in a SEC filling while going public. This was a multi-strategic approach incorporating, existing customer and customer acquisition growth, leveraging of technological and operational efficiencies, private brand growth, pet healthcare expansion, and platform expansion opportunities through different services (UNITED STATES SECURITIES AND EXCHANGE COMMISSION, & Chewy, Inc., 2019 p. 7). This strategy supports the idea and its continued growth. Additionally, ChewyVet can be seen a strategic initiative to meet overall goals.

Chewy’s CEO explained what sets Chewy apart from its competitors “We are there 24/7 to answer any of your questions. We are the pet experts. And I would say the second thing is really embedded in the Chewy culture: We are 100 percent customer obsessed. We want them to feel as though they would never dream of shopping anywhere else. And we take it a step further and add these human elements to it — the handwritten holiday cards, the pet portraits, it is all of these things that show our customers that we’re human, we get it, we really care about them and we really care about their pets.” (Dahlberg, 2018)

This customer centric service culture and Chewy’s trained and dedicated staff is essential to support ChewyVet. Also, leveraging the existing brand recognition and multi-tier subscription with one-time pricing, ChewyVet can expand the current customer base; tapping into more market share while appealing to customers at all price points. Chewy provides valuable infrastructure that will help the efficiency of ChewyVet, specifically existing customer relationship management systems that are crucial in vet and patient operations. Chewy’s strong logistics and operational approach will offer a network that serves users nationwide. To accomplish this, the company has facilities that are strategically placed to service the contiguous U.S.

Part II – Demand Forecast and Technical Rationale

According to Anderson (2019), Chewy’s active customer base is 12 million users, growing 43% in sales since the previous year. In their report to investors, Chewy (2020) stated they secured $4.85 billion in net sales, out of a $95 billion pet industry (APPA, 2020). Expanding into vet services will help Chewy tap into even more growth which they can expectto see accelerated early on before tapering off. as ChewyVet will first be adopted by a majority of existing Chewy customers, then to new customers -as the industry continues its projected high demand growth to $99 billion by the end of 2020 (APPA, 2020).

The demand forecast incorporates both survey and statistical methods. Using the survey method, Chewy can reach out to customers to gauge their interest and potential participation. This will help forecast the short period, 0-1 month. Since this is uncharted territory for Chewy, it’s important to get this qualitative temperature check since no historical data is available.

Mainly statistical methods will be used from 2-6 months, based on months 0-1 forecast. The trend line plots out high demand due to growth trends.The above statistical method uses simple linear regression. The main reason for this is that mathematical calculations produce higher accuracy; they are less prone to human error, bias and assumptions.