Specialist
Former Senior Manager, Amazon Pets at Amazon.com Inc
Agenda
- Competitive landscape for online pet supplies – Chewy (NYSE: CHWY), Amazon (NASDAQ: AMZN), Petco and Petsmart
- Online sales uptick by category
- Inventory management and vendor relationships
- Distribution centre challenges and fulfillment logistics
- Outlook for long-term growth
Questions
1.
Could you give an overview of the pet supplies industry? What key trends and themes do you think everyone in the investment community should monitor? How would you describe the operating environment?
2.
How do you think pet supplies players across brick-and-mortar and e-comm are approaching the coronavirus pandemic?
3.
What volume increases might online players have experienced since the pandemic started? Could you maybe break this down by product category for us?
4.
Could you compare Chewy’s performance vs Amazon’s and the online businesses of big box retailers such as Walmart and Target?
5.
Could you discuss Chewy’s brand loyalty in comparison to Amazon’s? How much of a competitive advantage is that in today’s environment?
6.
Do you foresee any changes to consumer shopping behaviour from the coronavirus pandemic in this industry?
7.
How do you think e-commerce sales penetration for pet supplies will trend, given your prediction that e- commerce will reach 20-30% of total retail sales? Could they reach the mid- to high 30s?
8.
Did you notice any uptick in pet food or other products immediately after the coronavirus hit the US, as happened in categories such as food and beverage?
9.
Do you know if there a was shift to cheaper and private label products in customers’ purchases in the stocking-up period and more recent weeks? Did a lot of consumers stay with the branded products?
10.
Could you discuss how supply chains have coped during this crisis? Have major suppliers such as Pet Food Expert, Phillips and Animal Supply remained more or less operational? Have they faced major issues?
11.
One theory I’ve heard is that retailers such as Walmart and Target have had a competitive advantage over the online pure plays from being deemed essential. What are your thoughts on this theory? How many customers going to Walmart, Target or Costco are stocking up on pet supplies?
12.
How could speciality pet retail chains such as Petco and PetSmart be affected if e-comm market share reaches the high 20s, given their weakness online?
13.
Could you estimate the share of mom-and-pop pet supply shops that might close as a result of the crisis?
14.
Chewy has historically faced supply chain challenges from shipping costs and moving items such as large bags of food. How might the company’s supply chain issues be compounded by the volume increases in today’s environment?
15.
Do you have any insight into customer stickiness in this industry from your experience at Amazon? You mentioned that it’s hard to get pet owners to switch where they buy food from. What might it take to shift a customer to Amazon from Chewy or vice versa? Who do you think will benefit from the online share shift which is occurring?
16.
Could you discuss how the operating environment is affecting vendors? Pet supplies is conceivably an easy product category to plan, at least in the food sub-category, given the predictability of demand. Would vendors think there’s any advantages around working capital management efficiency from working with Amazon or Chewy vs Walmart, Target and the mom-and-pops?
17.
What are your thoughts on Chewy pursuing its pharmacy business in this operating environment? Could Amazon could enter the pet pharmacy market? If so, when?
18.
How significant would you say is the opportunity for retailers to offer subscription bundles of food, meds and virtual business?
19.
How have MAPs [minimum advertised prices] affected drugs and the shift to online pet medications?
20.
What long-term changes could the coronavirus cause to this industry? Could there be consolidation? Are there any players you would highlight as potential candidates for acquisition?
21.
Why do you think it’s unlikely that Amazon could acquire Chewy?
22.
How seriously would you say Amazon, Walmart and Target take the pet supplies category?
23.
Could any changes be made to shipping, supply chains and unit economics to make pet supplies businesses less cumbersome and more profitable? Do you think these things will remain unchanged in the near term?
24.
Do you have any closing comments on Chewy and the pet supplies industry?
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