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If you haven\u2019t heard of Chewy<\/a>, you aren\u2019t alone. But\u00a0PetSmart<\/a>, the retail\u00a0giant with more than 1,500 stores across the U.S.,\u00a0has clearly been tracking the low-flying, five-year-old pet supplies company. According to Recode<\/a>, it just\u00a0agreed to purchase its\u00a0young rival\u00a0for a stunning $3.35 billion, just slightly more than Walmart\u00a0paid for Jet.com last year.<\/p>\n This editor only heard of\u00a0Chewy for the first time last fall, when talking with one of its earlier investors, Larry Cheng of the Boston-based growth equity fund Volition Capital; Cheng had written the company one of its first checks<\/a>, $15 million for its Series A round in 2013, and the company had been quietly growing like a weed, he\u2019d told me.<\/p>\n That began to change, by design, late last year, when Bloomberg wrote a long profile<\/a> about the Dania, Fla., company and the $236 million it had subsequently raised from investors, including BlackRock and New Horizon, the venture arm of mutual fund T. Rowe Price.<\/p>\n Its chairman, billionaire e-commerce veteran Mark Vadon, said that it was on his advice that the team had kept a low profile.\u00a0He\u00a0said he\u2019d told CEO Ryan Cohen and CTO Michael to \u201clay low\u00a0. . . to\u00a0better to avoid competition.\u201d<\/p>\n It was something of a feat. By the time Bloomberg published its story, the company had more than 3,000 employees and more than $880 million in annual revenue, though as of late last year, at least, it remained unprofitable.<\/p>\n Its apparent key to success: personalization, from writing customers hand-written thank you and holiday cards to dedicating roughly one-sixth of its employees to customer service so pet owners\u2019 questions could be answered quickly.<\/p>\n Free shipping on orders over $49 also seemingly helped.<\/p>\n In fact, according to Bloomberg, at the time its article was published, it was talking with Goldman Sachs about preparing an IPO this year.<\/p>\n No doubt Walmart and Amazon were\u00a0following its moves, too. A January profile in Forbes<\/a>\u00a0reported that\u00a0Chewy controls\u00a043 percent\u00a0of the online sales of pet food and litter in the U.S., just behind Amazon\u2019s 48 percent.<\/p>\n Apparently, that kind of traction was too enticing for PetSmart to resist, and it\u2019s no wonder. \u00a0The company\u00a0was taken private for $8.7 billion<\/a> in 2014 by\u00a0the\u00a0private equity firm BC Partners, and it\u2019s been shifting more of its business online every since in an overhaul designed to fuel its\u00a0future growth. Indeed, in a statement today, company CEO Michael Massey said of the deal,\u00a0\u201cChewy\u2019s high-touch customer e-commerce service model and culture centered around a love of pets is the ideal complement to PetSmart\u2019s store footprint and diverse offerings.\u201d<\/p>\n The acquisition is expected to close by the end of PetSmart\u2019s second fiscal quarter of 2017.<\/p>\n Cohen, who\u00a0dropped out of college to become an entrepreneur, will continue to lead Chewy as an independent subsidiary of PetSmart.<\/p>\n","protected":false},"excerpt":{"rendered":"![\"\"](\"https:\/\/tctechcrunch2011.files.wordpress.com\/2016\/12\/waggle_4_dog_party_hat.jpg?w=680\")
If you haven’t heard of Chewy, you aren’t alone. But\u00a0PetSmart, the retail\u00a0giant with more than 1,500 stores across the U.S.,\u00a0has clearly been tracking the low-flying, five-year-old pet supplies company. According to Recode, it just\u00a0agreed to purchase its\u00a0young rival\u00a0for a stunning $3.35 billion, just slightly more than Walmart\u00a0paid for Jet.com last year. This editor only… Read More<\/a><\/p>\n\n<\/img><\/a>
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