The Handshake That Mattered More
Most people assume that the high point of Ryan Cohen's professional career came on April 18, 2017, when the owners of PetSmart paid $3.35 billion for Chewy.com, the pet retailer he had cofounded six years earlier. Cohen has said as much himself, in the pages of Harvard Business Review, before pivoting to the real story — which was not that deal at all, but an earlier one, a handshake with an investor that finally validated the audacious premise at Chewy's core: that you could build a multi-billion-dollar e-commerce business selling bags of kibble. The premise sounds, in retrospect, either self-evident or insane depending on which year you're asking the question. In 2011, when Cohen and his cofounder Michael Day launched Chewy from a small office in Dania Beach, Florida, the very mention of online pet retail conjured one ghost and one ghost only — Pets.com, the sock-puppet mascot of dot-com excess, which had burned through $300 million in capital and collapsed in spectacular fashion in November 2000. Eleven years later, the scar tissue remained: venture capitalists reflexively declined pitches in the category. "Pet e-commerce" was not an investable thesis. It was a punchline.
And yet. By the time PetSmart acquired Chewy in 2017, in what was then the largest e-commerce acquisition in history, the company was generating over $2 billion in annual revenue and growing at triple-digit rates. By 2021, Chewy had debuted on the Fortune 500 at No. 403, with fiscal year net sales of $7.15 billion and 19.2 million active customers. By fiscal year 2024, the company had crossed $11 billion in revenue, turned sustainably profitable, and was expanding into veterinary clinics, pet insurance, and pharmacy services — morphing from an online pet-food retailer into something closer to a vertically integrated pet-health platform with a $16 billion market cap.
The distance between Pets.com's sock puppet and Chewy's hand-painted pet portraits — sent to grieving customers whose animals had died — is not merely the distance between a bad business and a good one. It is the distance between two fundamentally different theories of what e-commerce is for. One company treated the internet as a distribution shortcut. The other treated it as the substrate for an emotional relationship that happens to transact in dog food.
By the Numbers
Chewy at a Glance
$11.9BFY2025 net sales (ending Feb 2025)
20M+Active customers
~80%Autoship as a percentage of net sales
17Fulfillment centers across the U.S.
$16BApproximate market cap (mid-2025)
$3.35BPetSmart acquisition price (2017)
$1.1BAnnual pet pharmacy revenue
11Chewy Vet Care clinics open (2025)
The Ghost of the Sock Puppet
To understand why Chewy succeeded where its most famous predecessor did not, you have to understand the specific nature of the Pets.com failure — which was not, as commonly believed, that selling pet supplies online was a bad idea. The idea was fine. The problem was timing, unit economics, and an absence of the infrastructure that would eventually make the business work.
Pets.com launched in 1998, raised $82.5 million in an IPO in February 2000, and shut down nine months later. The company famously spent more on shipping each order than it earned in revenue from it. It was burning capital on Super Bowl ads while its warehousing and logistics were rudimentary. The U.S. internet penetration rate was roughly 43%. There was no Amazon Prime to condition consumers to expect two-day delivery. The venture capital model of the era demanded explosive user growth without any underlying operational discipline.
By 2011, the landscape had shifted in ways that were obvious in retrospect and invisible at the time to anyone who wasn't looking. Amazon had spent a decade building the infrastructure expectations — Prime, free shipping, one-click checkout — that normalized online purchasing of everyday consumables. Broadband penetration had crossed 70%. Smartphones were proliferating. The "subscription economy" was emerging as a concept, with Dollar Shave Club about to prove that recurring e-commerce could generate fanatical loyalty.
Ryan Cohen saw the gap. A college dropout from Montreal who had previously built and sold a small online jewelry business, Cohen was not a technologist or a Silicon Valley networker. He was a customer-obsessed operator with a particular fixation: the pet category's unique characteristics. Pet food is heavy, recurring, predictable, and emotionally loaded. A forty-pound bag of dog food is annoying to carry from a store but trivial for a logistics network to ship. Pet parents — the term itself was gaining currency — buy the same product on roughly the same cycle, making them ideal subscription customers. And the emotional bond between owner and animal created switching costs that transcended price.
Most people assume that the high point of my professional career came on April 18, 2017, when the owners of PetSmart paid $3.35 billion for Chewy.com. No doubt, that day was incredible. But believe it or not, another handshake — another deal — mattered even more to me.
Cohen and Day began with a simple strategy: sell pet food online with maniacal customer service and aggressive pricing, fund the growth with outside capital, and reach the scale where the unit economics would flip. The strategy required patience, capital, and — this was the hard part — convincing investors that the Pets.com stigma was a feature, not a bug. The stigma had scared away competitors and left the category underpenetrated online at precisely the moment when the logistics infrastructure existed to make it work.
The Fundraise That Nearly Wasn't
Chewy's early fundraising was an exercise in serial rejection. Cohen later recounted pitching over a hundred venture capital firms and being turned away by nearly all of them. The pitch was simple enough — "Amazon for pets" with a service layer — but the category triggered post-traumatic stress among VCs who had lived through the dot-com crash or inherited the institutional memory of those who had. Pet e-commerce was a category so stigmatized that even its potential merits could not overcome the association.
The breakthrough came with Volition Capital, a growth equity firm in Boston, which led Chewy's Series A round. Larry Cheng, a Volition partner, saw what the larger firms had missed: that the structural conditions enabling pet e-commerce had changed completely since 2000, and that Cohen's obsession with customer experience — not merely customer acquisition — created a fundamentally different business architecture than Pets.com's spray-and-pray model.
From that initial financing, Chewy raised approximately $350 million in venture capital across multiple rounds before the PetSmart acquisition, with investors including T. Rowe Price, BlackRock, and Greenspring Associates joining later rounds. The capital enabled something that Cohen understood from the beginning would be necessary: getting big fast. This was not a niche e-commerce play. Pet food is a consumable staple — the category demanded national logistics, aggressive pricing, and the kind of operational scale that turns thin margins into a moat.
The "get big fast" imperative was not unique.
Jeff Bezos had articulated the same logic for Amazon in the late 1990s, and Brad Stone's
The Everything Store captures the strategic architecture that Cohen studied closely. But Cohen's version had a twist: he paired the scale imperative with a level of personalized customer care that looked, from the outside, like it couldn't possibly be economically rational. Hand-written holiday cards. Personalized pet portraits. Flowers sent to customers when their pets died. A customer service team that answered every call, 24/7, with real humans. This wasn't theater. It was the operating system.
The Logistics Bet
In late 2013, Cohen faced the decision that would define Chewy's operational trajectory. The company had been using a third-party logistics provider (3PL) for all of its e-commerce fulfillment. The 3PL was adequate at Chewy's current scale — but Cohen was projecting growth rates that would overwhelm any third-party operation. He wanted to bring fulfillment in-house.
The board resisted. Bringing logistics in-house was expensive, operationally complex, and risked destabilizing the existing 3PL relationship — which, if disrupted prematurely, could have killed the company during a period of torrid growth. Cohen and his cofounders had no experience managing logistics. The risk was existential. As Harvard Business School's Jeffrey Rayport later documented in a case study, the board members worried that any misstep "could destabilize the existing 3PL relationship and endanger the viability of the fast-growing business."
Cohen overruled them. Chewy began building its own fulfillment network — a decision that required massive capital expenditure and operational learning but gave the company direct control over the customer experience from warehouse to doorstep. The bet paid off. By 2019, Chewy operated seven fulfillment centers; by 2025, the number had grown to 17, capable of delivering to 80% of the U.S. population overnight and nearly 100% within two days.
The logistics decision was, in retrospect, Chewy's most consequential strategic choice — more important than any marketing campaign, product launch, or financing round. It transformed the company from a marketplace overlay into an integrated e-commerce operation that owned its cost structure, controlled its service levels, and could iterate on speed, accuracy, and packaging in ways that a 3PL-dependent competitor never could. It was also the decision that made Chewy attractive to PetSmart, which needed a digital backbone and could see that Chewy had built one from scratch.
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The Fulfillment Buildout
Chewy's logistics expansion timeline
2011Chewy founded in Dania Beach, Florida; ships via third-party logistics.
2014First proprietary fulfillment center opens after Cohen overrules the board.
2017Seven fulfillment centers operational at time of PetSmart acquisition.
2019IPO filing discloses continued fulfillment buildout; network covers most of the continental U.S.
202517 fulfillment centers; overnight delivery to 80% of U.S. population.
The Acquirer's Paradox
On April 18, 2017, BC Partners — the private equity firm that owned PetSmart — closed its acquisition of Chewy for $3.35 billion. It was, at the time, the largest e-commerce acquisition ever, surpassing Walmart's $3.3 billion purchase of Jet.com the previous year. The deal looked like a lifeline for PetSmart, which was struggling with foot traffic declines and the creeping threat of Amazon's entry into pet retail. For Chewy, it provided the capital and infrastructure to continue scaling — PetSmart's 1,600+ stores could serve as distribution nodes, its supply chain relationships were deep, and its balance sheet could absorb Chewy's continued losses.
But the acquisition also created a paradox. Chewy was now owned by the very kind of incumbent it had been disrupting. The cultural tension was immediate: PetSmart was a traditional retailer optimizing for store-level metrics, while Chewy was a high-growth e-commerce operation optimizing for customer lifetime value and market share. The two companies operated on different time horizons, with different definitions of success.
Cohen departed within months of the deal, cashing out his stake and eventually turning his attention to GameStop, where he would become CEO in September 2023 and embark on a different kind of disruption entirely. His departure left a leadership vacuum that PetSmart filled with an unconventional choice: Sumit Singh, who had been at Chewy for less than a year, was elevated to CEO in March 2018.
The Operator from Amazon
Sumit Singh grew up in middle-class India with what he has described as a foundation of "high respect for education and humility and curiosity and resilience." He earned a master's in operations and logistics from the University of Texas at Austin and an MBA from the University of Chicago Booth School of Business — two programs that, between them, produced an executive who thinks in supply chains and speaks in customer metrics. Before Chewy, Singh held senior leadership roles at Amazon and Dell, companies he has called "pioneers in their own fields." At Amazon, he helped grow the Fresh grocery business — "a very difficult business to crack," he has said — which taught him how to manage perishable consumables and run a "tough" P&L.
The Amazon background mattered. Singh brought operational rigor, a data-driven approach to customer segmentation, and an intimate understanding of how high-growth e-commerce companies transition from growth-at-all-costs to sustainable profitability. He also absorbed something less quantifiable from Amazon's culture: the belief that the CEO should remain in direct contact with individual customers. Jeff Bezos was famous for his "question-mark emails" — forwarding customer complaints to executives with nothing but a "?" that demanded an explanation. Singh adopted a similar practice, personally answering customer emails and insisting that the company's leadership remain immersed in the granular texture of the customer experience.
I compare Chewy to the best hospitality resorts in the way that you are served, in the way that you are treated, and the way that you're respected when you walk through the hospitality resorts. We are delivering the scale and convenience of e-commerce but with the best personalized service you should expect at the best local neighborhood pet store.
Singh's tenure as CEO can be divided into three phases. First, the professionalization of Chewy's operations (2018–2019), during which he rewrote the company's mission statement, built out the executive team, and prepared for the IPO. Second, the pandemic surge (2020–2021), during which Chewy rode the greatest tailwind in pet industry history. Third, the maturation phase (2022–present), in which Singh has steered the company toward sustained profitability and expansion into healthcare — the strategic bet that will determine whether Chewy becomes a durable franchise or a glorified kibble delivery service.
The IPO and the Pandemic Windfall
Chewy went public on the New York Stock Exchange on June 14, 2019, under the ticker CHWY, pricing at $22 per share and raising approximately $1.02 billion. PetSmart sold 40.9 million of the 46.5 million shares offered; Chewy itself sold only 5.6 million, netting roughly $117 million. The structure was telling: this was primarily a liquidity event for PetSmart and its private equity owners, not a growth capital raise for Chewy. The stock closed its first day of trading at $34.99 — a 59% pop — valuing the company at roughly $14 billion.
Then the pandemic hit.
The ASPCA estimates that more than 23 million American households adopted a pet during the pandemic — nearly one in five nationwide. The broader pet market, already growing at 4–5% annually, accelerated dramatically. Chewy was perhaps the single greatest beneficiary. Between fiscal year 2019 (ending February 2, 2020) and fiscal year 2021 (ending January 30, 2022), Chewy's net sales roughly doubled, from $4.85 billion to $8.89 billion. Active customers surged from 13.5 million to over 20 million. The stock hit a pandemic high of approximately $118 in February 2021.
The pandemic was both gift and curse. It compressed years of customer acquisition into months, validated the online pet retail model for millions of holdouts, and made Chewy's autoship subscription — which accounted for roughly 68% of net sales — look like a recurring revenue engine of extraordinary stickiness. But it also pulled forward demand, set unsustainable expectations with investors, and created a cohort of customers whose retention rates would need to be earned, not assumed.
When the pandemic euphoria faded and the stock retreated — dropping to the mid-$70s by mid-2021 and eventually falling below $20 in late 2022 — the question shifted from "How fast can Chewy grow?" to "Can Chewy make money?" The company had reported net losses of more than $250 million in both 2018 and 2019, driven by the astronomical costs of marketing and fulfillment infrastructure buildout. Even at $8.9 billion in revenue, profitability remained elusive. The challenge was structural: pet food is a low-margin consumable, shipping heavy boxes is expensive, and Chewy had priced aggressively to gain share.
The Autoship Machine
Chewy's autoship program is, structurally, the most important feature of the business — more important than the brand, the customer service, or even the fulfillment network. Autoship allows customers to subscribe to recurring deliveries of pet products at a slight discount, typically 5%, with flexible scheduling. By fiscal year 2021, autoship accounted for 68.2% of total net sales and was growing faster than the overall business. By 2024, the percentage had climbed to approximately 80%.
The economic logic is clean. Autoship converts discretionary shoppers into recurring revenue streams. It raises customer lifetime value by increasing purchase frequency and reducing churn. It makes demand predictable, which improves inventory management and capacity planning across 17 fulfillment centers. And it creates a switching cost: once a customer has configured their autoship — selecting brands, quantities, and delivery intervals for food, treats, litter, and medications — the friction of replicating that configuration on Amazon or at a pet store is just high enough to keep them.
The comparison to Amazon Subscribe & Save is instructive. Amazon offers a similar feature for commodity goods, but without the vertical specialization or emotional resonance. Chewy's autoship is embedded in a broader customer relationship that includes 24/7 human customer service, personalized product recommendations, and the kind of gestures — the handwritten cards, the pet portraits, the condolence flowers — that make the transactional feel intimate. Amazon is ruthlessly efficient. Chewy is ruthlessly affectionate. The distinction sounds soft, but it produces hard results: Chewy's net sales per active customer have grown consistently, reaching $565 by fiscal year 2024, and customer retention metrics remain strong even as the pandemic cohort matures.
Early on, we had a bit of a mission to 'get big fast' and 'to get fit fast.' That is an important operating mission statement. In e-commerce, you see this a lot where companies only focus on growth, thinking that will automatically lead to profitability. But it's not a customer-led mission statement.
The Humanization Thesis
The structural thesis underlying Chewy's entire business is a single cultural observation: Americans have reclassified their pets from property to family members. Sumit Singh calls this "the humanization of pets," and he articulates it with the precision of someone who has built a $12 billion company on top of it.
"Twenty or 30 years ago, the pet was out on the porch," Singh told Fortune. "Today, they're on the couch, they're in your bed. And today, you refer to them as family."
The data supports the narrative. A July 2023 Pew Research Center survey found that nearly all U.S. pet owners consider their pets part of their family. Seventy percent of Americans identify as pet owners, up from 66% in 2020. The 2021 Spoiled Pet Survey reported that 83% of pet owners throw birthday parties for their pets, 62% have dedicated social media accounts for their animals, and — in perhaps the most revealing statistic — 63% would choose their pet over their significant other.
This cultural shift has economic consequences. When a pet is property, you optimize on price. When a pet is family, you optimize on care. The willingness to spend increases across every category: premium food, supplements, prescription medications, preventive healthcare, grooming, insurance, and veterinary services. The U.S. pet industry reached approximately $147 billion in 2023 and is projected to hit $173 billion by 2027. Veterinary care and pharmaceuticals alone accounted for nearly $40 billion in 2024, making it the second-largest category after food and treats.
Chewy has positioned itself as the primary beneficiary of this secular trend — not by selling more stuff, but by redefining the scope of what a pet e-commerce company can be. The expansion into pharmacy (launched in 2018), telehealth (Connect With a Vet, launched in 2020), pet insurance (CarePlus, launched in 2022), and now physical veterinary clinics (Chewy Vet Care, first opened in 2024) follows the logic of the humanization thesis to its conclusion. If pet parents will spend on their animals the way parents spend on their children, then the addressable market is not "pet food" — it is the entire lifecycle of pet ownership, from adoption to end-of-life care.
From Kibble to Clinics
The most consequential strategic pivot in Chewy's recent history is its expansion into veterinary healthcare — a market that is structurally enormous, fragmented, and ripe for the kind of consolidation and digitization that Chewy has already demonstrated in pet retail.
The move began with Chewy Pharmacy, which launched in 2018 and grew rapidly to become the largest online pet pharmacy in the United States by 2024, generating approximately $1.1 billion in annual sales and capturing roughly 7% market share. Licensed pharmacists review every prescription. The pharmacy is deeply integrated with the autoship platform, enabling recurring delivery of medications alongside food and supplies. Bank of America Research estimates that only about a quarter of Chewy's 20 million+ active customers currently use pharmacy services — implying that if penetration rises to 40%, the company could unlock an additional $750 million in annual pharmacy revenue.
Connect With a Vet, Chewy's veterinary telehealth platform, launched during the pandemic and has become the most scaled telehealth service in the pet industry. But it faces a significant regulatory obstacle: the veterinary client patient relationship (VCPR) requirement, which in most states forbids veterinarians from diagnosing conditions or prescribing medication without first performing an in-person physical exam. This limits Connect With a Vet to triage and general guidance, preventing it from becoming a full-service telehealth platform. Singh has acknowledged the constraint publicly, calling it the primary reason the service "doesn't form a meaningful portion of our business" despite its scale. A growing movement to relax VCPR regulations — partly funded through the Veterinary Virtual Care Association, which counts Chewy as a primary sponsor — could eventually unlock the telehealth opportunity, though the timeline remains uncertain.
The boldest move is Chewy Vet Care (CVC), a branded chain of physical veterinary clinics launched in 2024. The first 11 clinics, offering routine and urgent care, have averaged 4.8 out of 5 stars across more than 1,000 Google reviews. Customers praise modern facilities, transparent pricing, and seamless integration with Chewy's online ecosystem — a review simply states, "Always loved the company and now them having a vet is a win-win for Chewy." Bank of America estimates that if Chewy dedicates approximately 15% of its capital expenditure to clinic expansion, CVC could generate $335 million in revenue by 2030, with 20% EBITDA margins, adding 4% to current Wall Street EBITDA estimates.
The healthcare expansion represents a fundamental transformation of Chewy's business model. A pet food e-commerce company has gross margins in the low-to-mid 20s and competes largely on price, convenience, and brand affinity. A pet healthcare company — integrating pharmacy, telehealth, insurance, and clinical services — operates on structurally higher margins and creates data-driven switching costs that make the customer relationship nearly unbreakable. The pharmacy knows what your dog takes. The vet clinic knows your dog's medical history. The insurance plan is bundled with the autoship. Every additional service deepens the moat.
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Chewy's Healthcare Ecosystem
The expanding suite of pet health services
2018Chewy Pharmacy launches; becomes largest online pet pharmacy by 2024.
2020Connect With a Vet telehealth platform launches during pandemic.
2022CarePlus pet insurance plans introduced.
2024First Chewy Vet Care physical clinics open.
202511 CVC locations operational; 4.8/5 star average ratings; BofA projects $335M revenue potential by 2030.
The Emotional Moat
When a customer's pet dies, Chewy sends flowers and a handwritten condolence card. Sometimes, the company sends a hand-painted portrait of the animal. These gestures — which have gone viral on social media countless times, generating the kind of earned media that no advertising budget can replicate — are often cited as evidence of Chewy's exceptional customer service culture. And they are that. But they are also something more calculated: they are the operational expression of a moat strategy built on emotional switching costs.
Consider the economics. A bouquet of flowers costs Chewy perhaps $40–$60. A hand-painted pet portrait costs somewhat more. The total cost of these "surprise and delight" programs is trivial relative to Chewy's multi-billion dollar revenue base. But the return — in customer loyalty, word-of-mouth referral, social media virality, and lifetime value — is asymmetric. A customer who receives a condolence card after their dog dies is not price-comparing on Amazon the next time they need cat food. They are a Chewy customer for life.
Singh has been explicit about this calculus: "That moment is a very special moment because most companies will not invest X number of dollars to be able to pick up flowers to send to customers and be there in that moment for them." The phrasing is revealing. He frames it as an investment — not a cost, not a charitable gesture — with a specific return profile rooted in customer lifetime value.
The 24/7 customer service team — real humans, not chatbots, available around the clock — reinforces the same architecture. Chewy has been explicit that AI will assist its customer service agents but not replace them. The bet is that in a category defined by emotional attachment, the marginal cost of a human interaction is more than offset by the retention premium it generates. It is, in Singh's framing, the business model of a high-end hospitality resort applied to the economics of e-commerce.
We are sympathetic, empathetic. That moment is a very special moment because most companies will not invest X number of dollars to be able to pick up flowers to send to customers and be there in that moment for them.
The Competitive Geometry
Chewy's competitive landscape is defined by one overwhelming presence and a collection of smaller, more fragmented challengers. The overwhelming presence is, of course, Amazon.
Amazon sells pet food. Amazon sells pet medications. Amazon has Subscribe & Save. Amazon has one-day delivery to most of the country. Amazon has 200 million Prime members in the U.S. alone. On every functional dimension — price, speed, assortment breadth, logistics infrastructure — Amazon is at least competitive with Chewy and often superior. And yet Chewy has not only survived Amazon's entry into pet retail but has grown its market share, its active customer count, and its revenue per customer throughout a period of escalating Amazon competition.
The explanation lies in specialization and emotional resonance. Amazon is a general marketplace; Chewy is a pet company. The difference manifests in product curation (Chewy's assortment is approximately three times what it was at founding, with proprietary brands like Tiny Tiger, Tylee's, and the broader Chewy Brands portfolio), in the depth of the autoship configuration, in the integration of pharmacy and healthcare services, and — above all — in the customer service experience. Amazon's customer service is efficient. Chewy's customer service is personal. In a category where the customer is making decisions about a family member, "personal" wins.
Singh has framed this competition with notable confidence: "I believe we control our destiny much more than anybody else can do anything to us," he told Fortune in 2024. The statement borders on hubris, but it reflects a strategic assessment: Amazon's scale advantages are real, but they are generic. Chewy's advantages are category-specific, emotionally reinforced, and deepening with every healthcare touchpoint added to the platform.
PetSmart and Petco, the two largest brick-and-mortar pet retailers, represent the other axis of competition. PetSmart, Chewy's former parent company, completed the separation in 2022, and the two now operate as fully independent entities. Both PetSmart and Petco have invested heavily in their own e-commerce and fulfillment capabilities — but neither has matched Chewy's online growth rates or customer engagement metrics. The brick-and-mortar retailers retain advantages in impulse purchasing, same-day pickup, and veterinary services (Banfield, housed in PetSmart stores, remains the largest veterinary chain in the U.S.), but the structural shift toward online pet purchasing continues to favor Chewy.
The Portrait
Somewhere in Chewy's Dania Beach headquarters, or perhaps in one of its fulfillment centers, an artist is painting a portrait of someone's golden retriever. The portrait will be shipped to a customer who did not request it, who may not even know it's coming, who will open the package expecting thirty pounds of grain-free kibble and find instead a small canvas rendering of their dog — ears up, tongue out, caught in some essential expression of canine joy.
The portrait is not scalable in the way a software feature is scalable. It requires a human hand, real paint, actual canvas. Chewy has reportedly employed hundreds of artists at various points for this program, though the terms and treatment of those artists have drawn criticism — a tension that mirrors the broader question of whether Chewy's emotional labor model can remain economically viable as the company grows. The artists themselves have objected to compensation and contract terms, a reminder that the "surprise and delight" experienced by the customer is produced by workers whose own experience may be considerably less delightful.
But the portrait endures as the defining image of Chewy's business philosophy — the physical artifact of a company that understood, before most of e-commerce, that the hardest moat to replicate is an emotional one. Amazon can match Chewy on price. Amazon can match Chewy on speed. Amazon cannot send you a painting of your dog and make you cry.
The portrait costs $15 to produce. The customer lifetime value it protects is measured in thousands.
