As the largest online pet retailer, Chewy has seen explosive growth since its founding in 2011. The company now boasts over 20 million active customers, $7.15 billion in annual net sales, and a 45% share of the pet e-commerce market according to its latest investor presentation. But amid this rapid rise, conscientious consumers are asking: is Chewy an ethical company I should trust with my pet supply purchases?
To find out, I conducted an extensive evaluation of Chewy‘s business practices and values, assessing everything from its product sourcing to employee treatment to environmental impact. Here‘s what I uncovered:
Inside Chewy‘s Business Model
Chewy‘s main revenue driver is selling pet food, supplies and medications direct to consumers online. The company‘s vast selection, low prices and fast shipping have fueled its ascent in the $100+ billion U.S. pet industry. Over 70% of Chewy‘s sales come from subscription "Autoship" orders, providing a recurring revenue stream.
However, some question the sustainability and ethics of Chewy‘s growth-at-all-costs model. The company has yet to turn a profit, losing $92 million in 2020 even as net sales jumped 47%. Chewy also holds $2.4 billion in debt after being acquired by PetSmart in 2017 for $3.35 billion, the highest price ever paid for an e-commerce site.
"Chewy‘s business model looks a lot like Amazon‘s in the early days—rapidly growing sales but bleeding cash to grab market share," said Sucharita Kodali, VP analyst at Forrester Research. "It‘s part of a ‘land grab‘ in online pet retail. But if you‘re losing that much money, there‘s always the temptation to cut corners on things like product quality and worker treatment."
Chewy has made some progress on profitability, achieving positive adjusted EBITDA in 2020. But its ultimate financial success and ability to maintain ethical practices at scale remain an open question. As one of the few pure-play pet e-commerce companies, Chewy will face pressure from shareholders to turn consistent profits.
Examining Chewy‘s Product Sourcing and Supply Chain
The quality and safety of Chewy‘s products are top concerns for ethical consumers. Especially after high-profile recalls of dangerous pet foods in recent years, customers want to know they can trust where Chewy‘s products come from.
According to its website, Chewy "only sells products from reputable brands" that meet safety standards. Top brands like Purina, Pedigree and Iams make up a large portion of sales. For its private label brands, Chewy says it sources ingredients from "FDA-approved manufacturers and distributors."
However, a lack of transparency makes it difficult to fully assess Chewy‘s supply chain ethics. The company does not disclose a full list of its brand partners, suppliers, or manufacturing locations. There is also no info on third-party certifications or quality audits.
By comparison, some specialty retailers like Only Natural Pet disclose a lot more granular detail on sourcing and quality standards. Brands can also apply to get on Chewy based just on customer requests.
"Selling such a huge range of brands online is a double-edged sword," said Anne Kunder, executive director of nonprofit industry watchdog Truth About Pet Food. "Chewy may be able to offer greater choice and convenience. But with thousands of products from all over, it‘s harder to do the proper vetting and quality control compared to stores that purposely curate a smaller selection."
Given the complex, global nature of the pet food supply chain, Chewy may be exposed to potential ethics risks like:
- Unsafe or counterfeit ingredients
- Environmental damage or worker mistreatment at suppliers
- Animal welfare concerns, especially for products containing meat or animal-tested
- Greenwashing or misleading claims about product benefits
- Wasteful packaging and large carbon footprint from shipping
Chewy‘s Pharmacy division, which requires verifying prescription info with vets, adds another layer of potential privacy and security concerns. In 2018, Chewy reported a data breach that exposed customer names, email addresses and prescription details.
Without more visibility, it‘s hard for consumers to verify Chewy‘s products are truly safe and ethically made. Shoppers must put a great deal of trust in Chewy to properly screen its assortment.
Evaluating Employee Treatment at Chewy
How Chewy treats its 18,000+ employees offers key insights into its organizational ethics. The company has invested heavily in hiring, adding over 5,000 new positions since March 2020 to keep up with pandemic-fueled demand.
On employee review site Glassdoor, Chewy has a 3.7 out of 5 rating and 74% of employees would recommend working there to a friend. Common themes among positive reviews include:
- Excellent health insurance and benefits
- Energetic startup culture with lots of growth
- Focus on promoting diversity and inclusion
- Fun perks like bringing your pet to the office
"I‘ve been at Chewy over three years now and can honestly say it is an amazing company to work for," wrote a current supervisor in Florida. "The leadership team is extremely supportive and transparent. Employees are valued, heard and there are many opportunities for career development."
However, Glassdoor reviews also reveal some worker criticisms:
- Inconsistent management that is "still learning"
- High-pressure environment to hit sales targets
- Lack of work/life balance and long hours
- Below-industry-average pay, especially in lower positions
At Chewy‘s fulfillment centers, some employees have reported workplace hazards like high temperatures, repetitive strain injuries and COVID-19 outbreaks. In 2019, workers at Chewy‘s Mechanicsburg, PA warehouse protested unsafe conditions. OSHA records show Chewy was fined for labor violations there in 2018 and 2019.
"Warehouse jobs at any online retailer are demanding and often thankless," said Edgar Ndjatou, executive director of Workplace Fairness. "Because Chewy is so focused on fast shipping and low costs to gain customers, there‘s a risk of that coming at the expense of worker well-being."
Compared to competitors, Chewy‘s Glassdoor ratings are similar to PetSmart (3.6) and Petco (3.4). Online retail giant Amazon rates lower at 3.3. Specialty chain PetPeople tops the list at 4.1.
Overall, Chewy appears to provide solid benefits and is taking positive steps on diversity and inclusion. But like many fast-growing startups, it seems there is room for improvement on management training, work-life balance and warehouse conditions as the company matures. Rapid hiring and a changing remote/hybrid environment amid COVID-19 may exacerbate employee relations challenges.
Assessing Chewy‘s Customer Service and Satisfaction
Customer experience is one area where Chewy consistently receives rave reviews. The company‘s "wow" service philosophy has generated countless stories of staff going above and beyond, from surprising customers with hand-painted pet portraits to overnighting emergency food during snowstorms.
Chewy has a world-class 86 Net Promoter Score, measuring customers‘ likelihood to recommend the brand. For comparison, Amazon‘s NPS is 62. Petco and PetSmart do not disclose net promoter scores but rate lower than Chewy on sites like Consumer Affairs and TrustPilot.
"Chewy‘s customer service is outstanding," wrote one five-star reviewer. "When my senior dog passed away recently, someone from Chewy saw my Facebook post and sent flowers with a handwritten note. It was such a touching, personal gesture that proved they really do care about pets and their parents."
Chewy‘s "100% unconditional satisfaction guarantee" backs up this service with a 365-day return window for most items. The company even surprises some new customers with free welcome gifts. During the pandemic, Chewy also went above and beyond to help those facing hardships.
"We heard from many customers who were affected by COVID-19 and no longer had stable income," said Chewy CEO Sumit Singh on the company‘s April 2020 earnings call. "We extended our returns window and set up payment plans so no one had to choose between essentials for themselves or their pets."
This commitment to customer experience has translated into intense brand loyalty, with Chewy achieving 112% net sales per active customer from 2012-2020. Chewy‘s first-time customer orders are also increasingly coming from word-of-mouth and unpaid sources, showing its reputation precedes itself.
Where Chewy can still improve is with more detailed information on shipping times and inventory levels to manage expectations. Some customers have reported frustration when items are unexpectedly backordered or "out for delivery" for multiple days past the estimated date. Chewy is investing in supply chain technology and new fulfillment centers to provide more accurate updates.
Customers should also be aware that Chewy‘s prices are not always the lowest. On some items, stores like Walmart may offer a slightly better deal. Shoppers can compare prices with reputable sites by using a tool like PriceSpy for pet supplies.
Chewy‘s Charitable Giving and Social Responsibility
Chewy states a commitment to "make communities happier" through philanthropic programs. Its initiatives include:
| Program | Details | Impact |
|---|---|---|
| Chewy Gives Back | Donate portion of select product sales to animal welfare orgs | $76M+ donated |
| Rescue and Shelter Network | Partner with 6,500+ nonprofits to donate food and supplies | $100M+ donated |
| Wish List | Allow shelters to create wishlists for customers to donate items | 1500+ lists |
| Adoption Support | Give adopters 20% off first Autoship and free vet visit | 500K+ pets adopted |
Chewy has also delivered pet food to those impacted by hurricanes, fires and COVID-19. During the 2020 holiday season, Chewy donated $1M to Greater Good Charities‘ GOODS Program and partnered with the Humane Society to cover $250K in adoption fees.
"As the industry leader, we believe Chewy has a responsibility to give back to the pet community," said Mita Malhotra, Chewy‘s VP of Healthcare and Shelters. "We will continue to use our unique position to support pets in need."
Still, Chewy has room for growth in its corporate social responsibility when compared to top retailers in other industries. The company does not issue a formal CSR report, disclose lobbying/political contributions, or have specific targets for reducing its carbon footprint. Its board of directors also lacks racial diversity.
By contrast, competitor PetSmart releases an annual CSR snapshot with stats on charitable giving, energy/waste reduction, and responsible sourcing. It has donated over $300M through PetSmart Charities, the largest funder of animal welfare in North America.
As Chewy matures, customers will likely demand greater transparency around its larger societal impact. Publicly setting sustainability goals, expanding board diversity, and releasing progress reports are becoming table stakes for modern corporate responsibility.
The Bottom Line: Is Chewy Ethical?
After thorough research, I believe Chewy is a relatively ethical company that genuinely cares about pets and their owners. While not perfect, it leads the pack in customer experience, gives generously to animal welfare causes, and has a strong corporate culture.
However, there are several areas where Chewy has room for improvement on ethics:
- Increasing transparency on product sourcing/quality control and holding suppliers accountable to high safety and sustainability standards
- Ensuring fair compensation and safe conditions for all workers, especially in fulfillment centers, and empowering them to unionize if desired
- Providing more granular data and goal-setting on environmental impact and social responsibility initiatives
- Diversifying its board and publicly disclosing political contributions for increased accountability
As a conscientious pet parent, I look for companies that treat all stakeholders – including employees, suppliers, communities and the planet itself – with respect. Chewy‘s incredible growth story is commendable, but must be matched with controls to ensure it doesn‘t come at the expense of ethics.
If you‘re comfortable with Chewy‘s overall direction and some potential gaps, it can be a convenient, affordable option to spoil your pet. For those who want to shop with brands taking a more proactive, progressive stance on corporate responsibility, exploring smaller businesses with B-Corp certifications or 1% for the Planet memberships may be preferable.
Ultimately, consumption is an act of voting with your dollars for the kind of world you want to see. By supporting companies that align with your values, you can help shape a more ethical retail landscape. The most important thing is to make an informed choice you feel good about, so your four-legged friend gets the best possible care.