Meet the Young Founders of Chewy.com, Which PetSmart Just Bought for $3.35 Billion
This will be the largest e-commerce deal in history after Walmart’s acquisition of Jet.com.
PHOTO CREDIT: Getty Images
Retail chain PetSmart has acquired pet food and product site Chewy for $3.35 billion on Tuesday, Recode reported. The deal is the largest e-commerce acquisition in history, beating Walmart's $3.3 billion acquisition of Jet.com in August 2016.
Chewy is one of the fast-growing e-commerce sites. In 2016, after just five years of operation, it counted nearly $900 million in revenue. The Fort Lauderdale-based company is known for its 24-hour customer service and sells products for dogs, cats, birds, reptiles and even horses.
CEO Ryan Cohen and CTO Michael Day launched the company in 2011, after meeting in a Java chat room. Cohen, 31, was working in affiliate marketing, the practice of collecting fees for referring customers to e-commerce sites, and met Day when trying to find a programmer for his website, according to Forbes. Day dropped out of the University of Georgia to help him and eventually the two put $150,000 of their own money into an online jewelry startup. After attending a trade show, the pair realized they didn't have the passion for the business and sold their inventory for 80 cents on the dollar.
Cohen told Forbes he sees himself as a "pet parent" and calls his teacup poodles his "No. 1"-- even though he's married. After ditching the jewelry business, Cohen and Day collected what was left in their personal bank accounts and started buying pet products from distributors. Once they found a third-party fulfillment center in Pennsylvania, they launched the site and matched the online prices of competitors.
Investors saw the company's appeal and Chewy raised $236 million in venture capital in late 2013. What's more, the online pet supply retailer saw a 2017 IPO as a possibility, but needed to become profitable (a feat it had not yet achieved).
Cohen and Day are tapping into a huge industry. In 2015, consumers spent a total of $60.2 billion on pet products and services, according to the American Pet Products Association. Since its inception, Chewy has attracted 3 million customers and has 4,000 employees.
PetSmart, which was valued at $8.7 billion in 2015, is expected to close the deal at the end of this year's second fiscal quarter. The company is owned by a group of private equity investors led by BC Partners.