Along with news that the company grew 14% in its first quarter of fiscal 2022, Chewy’s recent financial report unveiled the specific key factors behind its continued success.
Throughout the first quarter, which ended on May 1, Soft saw a significant increase in net sales of $2.43 billion, some active customer growth, and record Autoship sales. Moreover, despite his YOY decline in gross margin, the company is up 210 basis points sequentially from the fourth quarter of 2021. So, let’s break down the different facets propelling e-commerce.
High priority products and services
Consumables and healthcare products had the strongest sales this quarter, unsurprisingly given their vital role in maintaining the health and well-being of pets, and it s This is a consistently strong category in the entire pet industry.
For Chewy, products from these two categories also played a key role in boosting its Autoship profits, which accounted for the majority of the online retailer’s total net sales (72%). It shows that the company’s strategy of positioning itself as a convenient one-stop-shop for at least pet necessities continues to pay off. Clearly, the ability to set up repeat deliveries of items that need to be constantly available and save time and money in the long run remains attractive to long-standing and emerging customer bases.
The main customers
The company saw a 4.2% year-over-year increase in active customers, ending the first quarter at 20.6 million, and two-thirds of that group joined in the past three last years. New and existing customer engagement and spend in the first quarter increased 15% to $446 million.
As the company constantly sees changing cohorts and seeks to welcome new consumer groups, its primary focus is to engage with the high value customers within each group – those who will provide consistent revenue streams. in the long term, while the company anticipates and takes advantage of their purchasing habits. Autoship comes into play here once again, as the habits of these high-value customers are ingrained in this service.
Ultimately, Chewy focuses on customers with whom they can build a loyal relationship, who continue to make repeat purchases year after year, consolidating and gradually increasing their spending over time, resulting in an inclination in net spending. per active customer (NSPAC ) for the company. It is by effectively engaging with growing and consistent customer cohorts that Chewy recovers more than is lost to attrition and differentiates its model from that of a flat-rate subscription.