E-Commerce

Why Chewy isn't worried about Amazon poaching its customers

Key Points
  • Chewy CEO Sumit Singh tells CNBC he is not worried about the threat Amazon represents to the online pet products retailer.
  • "We're engaged with you through the highs and lows of pet parenting," Singh says.
  • Shares of Chewy trade slightly negative in extended hours after the company reports third-quarter earnings.
VIDEO2:0502:05
Why Chewy isn't worried about Amazon poaching customers

Chewy CEO Sumit Singh told CNBC on Monday that he is not worried about the threat Amazon represents to the online pet retailer.

"We're engaged with you through the highs and lows of pet parenting," Singh said on "Closing Bell." "Nobody else is doing that."

Singh, whose comments Monday came shortly after Chewy reported better-than-expected revenue numbers, said he believed Chewy's wide-ranging offerings are why it is in a position to withstand any pressure from e-commerce behemoth Amazon.

For example, Chewy has customer service representatives who offer guidance on what type of supplements a chocolate lab nearing seven years old should be taking, Singh said. And that customer service is offered 24/7.

"We get numerous calls every day for customers asking us, 'I just brought home a puppy. What should I feed it?'" Singh said. He said the "emotive nature" of pet ownership makes these interactions a way in which Chewy strengthens its customer relationships.

Chewy, since it was bought by PetSmart in 2017, also has expanded its private-label business and launched an online pet pharmacy.

Singh said Chewy has created a "one-stop pet shop" online.

"That's a phenomenal value proposition," he said.

Shares of Chewy closed down 3% at $24.18 on Monday and fell a little more than 1% in extended trading after its earnings report. Its stock had initially popped more than 2% after hours.

Chewy's revenue for the third quarter of the 2019 fiscal year grew 40% year over year, up to $1.23 billion. Analysts had been expecting $1.2 billion. Chewy's adjusted EBITDA fell short of estimates at $30.2 million, compared with the $33.5 million EBITDA analysts had forecast.

Chewy went public in June, finishing its first day of trading at $34.99 per share, 59% above its IPO price.

Questions about Chewy's ability to maintain its market share are not new. In June, a report from Wedbush Securities said Amazon was Chewy's most significant competitor as the Dania Beach, Florida-based company attempts to continue its growth.

Yet Singh remains confident that Chewy will not lose its customers to competitors. He noted the company's net sales per customer were up 11% year over year.

"When we bring customers on and we give them the service that we do, they stick with us for long periods of time," Singh said.

VIDEO5:4905:49
Full interview with Chewy CEO on Q3 2020 earnings
Related Tags