Chewy Seeks to Prove Its No in Its IPO

They say you can't teach an old dog new tricks, but Chewy (NYSE: CHWY), the online pet products seller, hopes to prove that an old business model can work new magic.

Nearly a generation after became one of the most memorable busts of the dot-com era, Chewy is seeking to show that, in an Amazon (NASDAQ: AMZN)-dominated e-commerce ecosystem, there's still room online for a pure-play pet retailer.

The company calls this the "WOW" experience, and it's a key reason why it has a net promoter score of 86, or the percentage of its customers that would recommend the brand to a friend.

The autoship business acts as its own competitive advantage, creating a barrier to entry for the company and a sustainable, easily predictable revenue stream.

In addition to the challenges in the direct selling model, Chewy also faces increased competition in the pet products industry, which has attracted interest from companies big and small due to its steady growth and its resistance to recessions.

Considering all of the activity in the sector, even if Chewy succeeds in proving the opportunity in pet products e-commerce, the company will be far from alone in the space, and the additional competition could easily translate into narrower margins.

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