Chewy Invests in Pet Health Through Vet Clinics, Insurance Offering
In a keynote session during the final day of the NRF Big Show in New York City last week, Sumit Singh, CEO of pet brand Chewy, outlined the company's vision for the future, including the growing importance of pet healthcare to the business. Singh was interviewed by Phil Wahba, senior writer at Fortune. Here are some of the highlights from their conversation.
On the Opening of Veterinary Clinics
Chewy made its first foray into physical retail (or at least services) with the opening of four vet clinics under the brand name “Chewy Vet Care.” The locations will offer services including routine appointments, urgent care and surgery.
"Animal health is the next frontier," Singh told the audience, while also lamenting the challenges of pet care in this country. He noted that current service levels/wait times for appointments at vet offices sometimes run weeks, and that the existing system isn't convenient for emergency and weekend appointments.
What Singh sees as an opportunity for Chewy is the increasing "humanization of pet care" combined with the lack of affordability and accessibility for pet healthcare.
"Demand is going to outgrow the number of available vets," said Singh. "[The industry] Need a forward-looking tech player such as Chewy to design a solution for service and tech integration to bridge these gaps. That’s exactly what we’re doing."
To that end, Chewy has partnered with hundreds of veterinarians and customers to design an in-practice and post-visit experience at its clinics.
Yet the physical clinics are only one component of Chewy's investment in animal health. The retailer has its Connect With a Vet telehealth service. The service enables Chewy customers to get timely advice from its licensed veterinary team and leave with a personalized consult report.
"We have the availability of tech to cover immediate demand," noted Singh. "Roughly 33 [percent] to 40 percent of vet visits don’t include a medicine component. We offer a triage option via telehealth. Also, after-hours operations.
"We believe that when you use tech to allow for removal of pain points and friction in the healthcare process, pet owners gain convenience. That’s our goal for telemedicine."
Pet Insurance as a Growth Category
Currently, pet insurance accounts for roughly 3 percent of Americans' spending on their pets. According to Singh, this is an underpenetrated category in the U.S. A prime reason for that is pet insurance is a considered, potentially expensive purchase ($60-$100 per month, on top of the cost of food and medication for a pet).
With 21 million customers on the Chewy pet health platform, Singh believes the retailer can make pet insurance a more valued purchase for pet parents. Chewy has partnered with multiple pet insurance providers within its CarePlus program to give its customers options when it comes to their wellness and insurance purchases.
"We believe pet insurance will eventually lower total cost of pet ownership," Singh said.
Chewy's most recent fiscal year marked the first time the company retailer reported an annual profit. While sales have been on an upward trajectory for years, becoming profitable took time for the previously online-only retailer. Singh believes the company is now positioned to remain profitable going forward.
"Operating discipline has to be built into the routine of the organization," Singh told the audience. "While economies of scale is a real thing, the mantra of get big fast, get fit fast has to be implemented."
For Chewy, the culture and mentality of building fitness into the operation is paramount. Singh cited building the quality of the business itself, including adding pet health into the profile of the business. And then controlling costs.
"Frugality is very real," Singh said. "We want to approach every decision if the company’s money is our own money. That helps us to make sound decisions."
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