Chewy has sold pet products online for 11 years, and now it sees pet health care as the future of the industry. The ecommerce pet company launched its pharmacy in 2018 and added a compounding pharmacy, which can mix custom medications needed for patients, in 2020. Chewy has since launched its “Connect with a Vet” telehealth service and pet insurance. It also owns and publishes PetMD, averaging over 5 million unique visits per month, according to analysis from SimilarWeb.

Chewy ranks No. 13 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest online retailers by web sales.

Customers requested health care from Chewy

Chewy primarily focuses on food and supplies in the $130 billion pet industry, but about one-third of that market is health spending, president of Chewy Health Mita Malhotra said. In 2022, Chewy had 20.4 million active customers, the retailer  said.

Before the pharmacy launch, Chewy heard feedback from customers that they wanted to buy medical supplies from the company. 

“We buy everything else from you … why don’t you carry medical? Why don’t you sell pharmaceuticals?” customers asked Chewy, per Malhotra. 

Chewy first ventured into health care as a pharmacy because it made sense with the existing ecommerce platform, Malhotra told Digital Commerce 360. The biggest opportunity was in medications for “chronic conditions and preventative care,” she said. They make up about 70% of medications Chewy sells.

Consumers showed a preference for buying those products, with examples like insulin and prescription food, as subscriptions. The strategy was a massive success, and autoship orders made up 73% of sales in the most recent fiscal quarter, accounting for $1.98 billion of revenue.

However, fewer than 5% of Chewy customers buy all their pet health care products from the ecommerce retailer, CNBC reported. The retailer hopes to make health care 30% of its business in the near future.

Building trust

Consumers’ willingness to pay for their pets’ health care has been profitable for Chewy, but it first had to convince them it was a trustworthy provider.

“Trust is rooted in how you really take care of customers. Are you listening to them? Are you taking care of them?” Malhotra said.

For Chewy, that’s an outgrowth of the retailer’s customer service, which has made headlines for how it treats pet owners in difficult times. Some customers told Entrepreneur in 2022 about receiving flowers, sympathy cards, and even portraits when their pets died.

Customer service representatives have leeway to have these interactions with customers, Malhotra said. Currently only about 20% of Chewy customers are buying pharmaceuticals, but she believes the number will grow thanks to the emphasis on customer service. Chewy declined to share specific statistics around its pharmaceutical sales. 

Pet health is resilient

The pet category is “resilient,” even in times of economic downturns, Malhotra said, and that’s even more true of pet health care. She cited a 2021 Metlife study of 2,000 dog and cat owners, which found that 58% said they worried more about their pets’ health than their own. 52% of respondents also said they spend more money on their pets’ health care each year than on their own. 

Malhotra said this trend is clear in Chewy’s sales.

“Food, pharmacy, wellness regiments: People are not pulling back on spending,” she said. Those categories are “durable,” while consumers might pull back on more discretionary items like toys if they have less to spend.

Better medical care and nutrition are also helping pets live longer. This leads to further spending on pet health care, and increasingly expensive care as they age, according to a report from Bloomberg Intelligence.

“We’re seeing a profound increase in consumer spending on pets and expect to see this continue through 2030,” co-author of the Bloomberg report Diana Rosero-Pena said. “Consumers are willing to pay more for items for their pets, with the pet food market having the potential to grow more than 50% from current levels by the end of the decade.”

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