PetSmart is one of the biggest pet store chains in America. After existing for thirty years, the privately owned company has around 1,500 locations and sells everything from pet food to actual, real-live pets. They have more stores than Petco, their direct competitor, and just as much of a following.
Chewy.com is relatively new to the pet store scene. Founded in 2011, the online pet store startup ships nationwide but doesn’t have any retail stores. Unlike the profitable PetSmart, Chewy.com is far from profitable, yet they make enough money to keep operating, advertising, and growing.
In recent years, PetSmart and other physical pet store chains noticed more customers using Chewy.com and other online storefronts. These new sites offered better buying experiences, more products, and faster shipping without having to leave home. PetSmart tried to compete with a revamped website of their own, but still faced online competition with Chewy.
To fight back against the young, new competition, PetSmart did something any company in its position would do: they bought Chewy.com.
PetSmart will soon own Chewy.
The company confirmed that they will acquire Chewy for an undisclosed sum. While some reports put the price of the acquisition as $3.35 billion, others deny the company will pay such a large sum. If PetSmart did pay that much for Chewy, it would likely be the biggest e-commerce acquisition in history. Though the deal isn’t immediate, it would likely go through later this year.
PetSmart desperately needs a good online store.
In addition to selling products, PetSmart also lets customers buy in-store services on their website They even offer expedited shipping, just like Chewy. Their website, however, is nowhere near as good and robust as Chewy.com, a site known for its excellent customer service and timely deliveries. By purchasing Chewy, PetSmart can finally have a more impactful online presence, see more sales online, and worry less about competition. They’ll also look towards the future as people spend less time in stores and buy more products through apps, websites, and subscription services.
Should you invest in PetSmart?
You can’t. PetSmart, like Chewy, is a privately owned company. BC Partners, a private equity company, bought the chain for $8.7 billion in 2014. That’s not to say that they won’t go public in the future, which could help them expand physical and online offerings in North America and elsewhere. In the meantime, the acquisition will likely help the company’s revenues grow and potentially make them more profitable down the line.