The number of animals in US households continues to increase. The number of households with animals is expected to rise to 71 million by the end of the year. In 2019, a whopping $96 billion was spent on pet products and services by Americans. And because 77% of dog and cat owners consider pets to be family members, there is no question that the cost will continue to increase. For businesses that market pet goods, this is good news.
Online pet store Chewy Inc. (CHWY) is one of the big beneficiaries. The company offers a number of feeds, including subscription for several months in advance through which the customer sets up a schedule to receive feeds. Such revenues accounted for around 70 percent of Chewy’s revenue last year.
Chewy posted revenue of $1.7 billion in the latest reporting period, up 47 percent year-on-year. The business set a record for revenues, fresh customer inflows, and had positive EBITDA earnings for the second consecutive quarter.
Chewy also works to promote diversification and develop beyond the feed market. The company is also starting to work in the area of selling drugs for pets and offering remote veterinary services (based on the model of telemedicine for people).
Chewy has shown the ability to scale the company, sustain high sales rates, diversify and discover new customers in recent quarters. For the business, the pandemic created new opportunities and opened up new markets. All of this may be the base for success in the long term.
On the other end, the insurance company Lemonade Inc. (LMND) will also be the beneficiary of a rise in the number of animals in the United States. The firm sells several types of insurance plans and launched a pet insurance company at the end of the summer. The use of a framework with elements of artificial intelligence to choose the most effective strategy is a special feature of Lemonade.
For Lemonade, the new business proved to be a success, as insurers who come for a pet policy now also buy other items from the firm. Nearly 40 percent of pet policies were marketed to individuals who were not previously clients of Lemonade. In general, in the United States, the demand for pet services (including insurance) is valued at around $10 billion.
In August of this year, Lemonade entered the IPO and in the first week of trading, almost 140 percent of the placement price increased. The convenient Lemonade platform and its capacity to operate efficiently with consumers who have various types of requests have been favorably viewed by investors.
Chewy Inc. (CHWY) stock was down -0.21% while that of Lemonade Inc. (LMND) was up 7.86% in the Monday trading to close at $74.78 and $91.72 respectively.