BUS 400 Final Project - Chewy Fresh Food Delivery Service PDF

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Final Project for BUS 400. Chewy's Fresh Food Delivery Service....

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BUS 400 Final Project Submission Chewy’s Fresh Delivery Service Sylvia Siu 8/7/2021

Value Proposition: Chewy Inc., is an e-commerce retailer which specializes in pet food and other pet-related products. Being a fairly new company, launching their business in 2011, Chewy is already amongst the leaders in e-commerce pet-products, along side with Amazon and Walmart. Chewy offers a wide range of brand-name varieties of the best pet supplies: ranging from pet food, toys and treats, to litter boxes, aquariums, and pet supplements, all at affordable prices. Chewy’s mission is to be the “most trusted and convenient online destination for pet parents everywhere!”

Competitive Advantage: By offering the new week-to-week subscription that delivers all-natural healthy pet food straight to the consumers door, can help increase the company’s profitability. Due to our recent pandemic, many households have come accustomed to online-shopping, quick delivery service, and weekly/monthly subscriptions. By offering this service to consumers at Chewy’s, creates a steady and stable customer base with re-occurring subscription option for all the busy pet parents out there, all accessible from the comfort of their homes provided by a company they trust. The week-by-week subscription option, allows pet-parents to customize their pet’s meals, with options to add additional ingredients to help create a well-balanced diet or remove certain ingredients according to their pet’s food-allergens. With Chewy’s already existing Social Media presence and loyal customer base, this new service aims to target both existing customers and attract new customers.

Risks and Opportunities:

There are a few risks that comes with introducing this type of service. Since Chewy is already an e-commerce type of business, this type of service would require an actual location to perform these services. New competitors that have similar services may already have a brickand-mortar location for easy and faster access to pick-up. Another risk would be, it’ll require the company to invest in different types cooking equipment, licenses, and employ more employees to manage this service.

Growth Opportunities: Offering the Fresh Food Delivery service would only help enhance Chewy’s mission by providing pet-parents the ability of convenience to choose and select freshly prepared meals all with the touch of a finger. Not only does this service help increase the business’s revenue, but also captive new incoming customers meanwhile providing a service for keep loyal-returning customers. With the subscription option, the service would be able to generate a steady-flow of income as well as, turning new customers into life-long partnerships. With Chewy’s brand name already amongst the online-leaders of pet-products, statistics indicating an annual growth rate of 7.6% internet users (approx. 900,000 new users each day) and a continuous rise of new petowners, Fresh Food Delivery subscription service would only see an increase in profitability, customer-base and popularity to the Chewy name.

Distinguish as a New Product or Innovation: Chewy’s mission is to be the “most trusted and convenient online destination for pet parents everywhere” and Chewy’s Fresh Food Delivery service does just that. With the week-byweek subscription option, busy pet-parents won’t ever have to worry about preparing meals for

their fur-babies. With the ability to customize each meal, pet-parents will have the option to add additional ingredients to help create a well-balanced diet or remove ingredients according to their pets with food-allergens. For any changes, pet-parents have to simply log-on to their account through Chewy’s website and make any adjustments needed on their pet’s meal schedule. Petparents can access their pet’s meal schedule anywhere with internet access, there’s no need to go purchase ingredients from the market, and no more worrying about having to prepare meals, how convenient! Pet-parents can finally sit back and relax, as their trusted Chewy providers delivers their fur-babies’ meals straight to the front door knowing the meals are freshly prepared with healthy and all-natural ingredients to create the perfect-balanced diet.

Target Segment: This new service aims to target all pet-parents around the world. Whether you have a dog, a cat, a horse, a sheep, or a Komodo Dragon, this service aims to provide fresh and healthy prepared meals straight to the door. By offering a week-to-week subscription with this service, busy pet-parents won’t ever have to worry about preparing meals for their beloved fur-babies. This type of service is relatively new within the pet-industry, there are currently little to no competitors, thus providing the opportunity for a new market space for Chewy to step-foot in.

Speculate Sales: According to Chewy’s most recent quarterly reports, nearly 70% of the company’s total net sales was made up from auto-shipment subscriptions. In addition, in 2020, household pets have increased by 5.7% compared to a compound annual growth rate of only 0.6% in the give years through 2019. According to (SEI) Subscription Economy Index, “businesses that offer

subscription-based services have been growing with a 11.6% growth from the previous year and experience a revenue growth of 21% in the fourth quarter of last year.” The market opportunity for this service is relatively high as the public becomes more aware about wellness and keeping a healthy balanced diet for both themselves and their pets. According to recent reports, 54% of US households owns at least one pet, representing 68-Million households across the country alone. It was estimated that pet-owning households would increase to 71-Million by the end of 2020. Throughout the pandemic, many households have opened up their homes to recused animals as foster parents, which ultimately became permanent homes. It was also said that the numbers of pet-owners will only continue to rise even after the pandemic.

Speculate Profitability: Chewy’s new Fresh Food Delivery service is expected to bring an overall increase in revenue to the company. According to (SEI) Subscription Economy Index, “businesses that offer subscription-based services have been growing with a 11.6% growth from the previous year and experience a revenue growth of 21% in the fourth quarter of last year.” Based off of Chewy’s financial records for 2020, the total revenue was 7.14-Billion. With the expected 10% growth, this new service would bring $714-Million towards the total revenue. Even with a 50-Million startup costs for this service, Chewy will still make a profitable return. According to multiple statistics, the startup costs to start a meal-prep delivery business ranges between $1,767 – $32,569. Even with an over-exaggerated startup costs of 50-Million, this new service would still be able to bring an increase to Chewy’s Revenue.

Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expense Income from operations** Other income Income before tax and interest** Other expense (interest) Income before income tax Income tax expense Net income

Previous Fiscal Year $7,146,264 $5,325,457 $1,820,807 $513,302 $1,397,969 $1,911,271 $-90,464 $ $-90,464 $ $-92,486 $ $-92,486

24-Month Projections $8,218,203 $6,124,275 $2,093,928 $590,297 $1,607,664 $2,197,961 $-104,033 $ $-104,033 $ $-106,358 $ $-106,358

This service is predicted to have a 15% increase. Based off of Chewy’s 24-Month Projections, this new service would help Chewy gain revenue, although the “income from operations” seems to be in the negative, as of Chewy’s current financial statements, the company has continuously attempted to decrease the debt. As of Chewy’s current financial statements, there has been a drop from -90,464 to -3,857, at this rate, the 24-Month Projection would turn from a negative amount over to a positive amount once the new service has been established along with the continuous work on decreasing debt.

CSR Plan: Chewy's CSR is all about "giving back", when a home adopts a pet from one of the rescues that Chewy's supporting, the company would donate items on their behalf towards local shelters. "Since 2012, Chewy's donated more than $76M in products to ensure that shelter and rescue animals get the quality care they deserve." Chewy also offer a "wishlist" for shoppers to donate essentials to rescues in need. With this commitment, the company's image captives’ new customers and encourages returning customers by giving a sense of "good-

deed" when supporting Chewy. Chewy's new "Fresh Delivery" service aligns with the company's CSR program by potentially offering left-over foods to local animal shelters and rescues centers too. Instead of creating wasteful left-over food that'll eventually end up in a garbage can, Chewy can donate these ingredients to animal shelters all across the 50 states. By offering this CSR program along with Chewy's new service, customer can feel confident and conservative towards supporting and working with Chewy. It is important for Chewy and the new Food Delivery service to continue with this positive CSR plan, as this helps gain good publicity imagine for the Chewy brand. In doing so, would encourage more new incoming customers to the Chewy brand and continue to keep their loyal customers.

DEI Plan: Over at Chewy's, the company has a score of 82/100 across various culture categories, placing Chewy at the top 5% of companies with 10,000+ Employees for Comparably's Diversity score. The company is very proud of their A+ score ranking in diversity in addition to their A+ score in Employee Environment Reviews. Employees from all over the many departments within the Chewy company agrees that "everyone at the company is equally invested, and equally strained in delivering results". Approximately 85% of employees agrees the company offers equally fair pay and benefits as well as having a diverse team all across each of the company's departments. At Chewy's, dogs are allowed in the office, "it has a no door policy and always open to ideas", and "everyone is always open to hear constructive criticism and strives to be great". (Comparably.com) Chewy has an employee policy indicating that "The Company is committed to a supportive work environment, where employees can reach their fullest potential. They are expected to do their best to create a

respectful workplace culture that is free of harassment, intimidation, bias, and unlawful discrimination of any kind."

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Sydney Ly, 2021. The True Value of Bringing Diversity, Equity, and Inclusion Into your workplace. Retrieved from https://www.15five.com/blog/diversity-equity-andinclusion/

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Camparably.com. 2021. Diversity at Chewy. Retrieved from https://www.comparably.com/companies/chewy/diversity

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Chewy.com. 2021. Chewy Gives Back. Retrieved from https://www.chewy.com/g/give-back

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Chewy's Code of Conduct. 2019. Chewy, Inc. Retrieved from https://s23.q4cdn.com/610444331/files/doc_downloads/gov/Code-of-Conductand-Ethics.pd

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Yahoo Finance. (2021) Chewy, Inc. (CHWY-NYSE). Retrieved from https://finance.yahoo.com/quote/CHWY/financials?p=CHWY

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Chewy. (2021). Chewy Investors – Quarter 2021 Financial Results. Retrieved from https://investor.chewy.com/news-and-events/news/news-details/2021/Chewy-AnnouncesFirst-Quarter-2021-Financial-Results/default.asp

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