Chewy(US:CHWY) The Motley Fool·2026-01-15 08:25Company Overview - Chewy operates in the pet supply e-commerce market, which is currently valued at approximately $152 billion annually in the U.S. and is projected to grow at a compound annual growth rate (CAGR) of 6% through 2028, reaching $192 billion [3] - The company has a market capitalization of $13 billion and reported net sales of $3.12 billion in Q3 2025, reflecting an 8.3% year-over-year increase [5][6] Competitive Landscape - Chewy faces intense competition from major retailers like Amazon and Walmart, which dominate the online pet supply market, with Amazon capturing nearly 50% of e-commerce sales, Chewy at 41%, and Walmart at 33% [4] - The business environment is characterized by thin margins, with Chewy's gross margin at 28.58% and net margin at 1.9%, which, while improved from the previous year, remain lower compared to Amazon's gross margin of around 50% [5][6] Customer Loyalty and Business Model - Chewy has established a strong customer loyalty base, with high ratings for convenience and service, exemplified by personalized customer interactions [2] - The Autoship program is a significant contributor to Chewy's revenue, accounting for 84% of net sales in Q3 2025, providing predictability in cash flow and enhancing customer retention [7] Future Prospects - Chewy is expanding its offerings into pet insurance, veterinary telehealth, and pet prescriptions, which are expected to strengthen its margins further [6] - The company needs to expand its market presence beyond the U.S. and continue innovating to maintain competitiveness against larger rivals [8]