“Last year we sent about 50,000 pet portraits to our customers,” says Chew CEO Sumit Singh.  “We’re an experience-driven company. This is not a cost. This is an engagement mechanism. We’ve partnered with about a thousand local artists across the country. We think of this as an experience building. We have 90 percent re-ups (of our subscriptions). Our customers love engaging with us.”

Sumit Singh, CEO of Chewy, discusses their IPO (launched today) and how customer engagement has driven their phenomenal growth in an interview on CNBC:

We Are An Experience-Driven Company

Last year we sent about 50,000 pet portraits to our customers. We’re an experience-driven company. This is not a cost. This is an engagement mechanism. We’ve partnered with about a thousand local artists across the country. They show up to your doorstep unannounced. It’s a total surprise. You can’t buy them. When they do (the paintings) they create memories. People talk about them. They drive dinner table conversations. They show up on social media. It’s just an emotive category.

We think of this as an experience building. We have this because we want it, not because we need it in some way. Once we get out there and once this shows up on your doorstep the engagement that it creates generates the loyalty, the repeat purchase rate. In fact, our cohorts just keep growing from $330 to $500, $600, and $700 as they go from year five, six, and into year seven. This is what does it. Pets is the only category where a consumer refers to themselves as a pet parent. The only other category where consumers do that is kids.

Our Customers Love Engaging With Us

Pet ownership is underrepresented in the growth of e-commerce. First of all today in the United States we’re only about 14 percent penetrated from an online point of view. Chewy, if you look at it, is a $70 billion dollar industry. We’re penetrated in about roughly 10 percent of the households. We have 11 million customers. We’re growing fast and we’re engaging them hard.

They stay with us. It’s the two flywheels, the engagement, and the acquisition. It just spins really well. Our investors love that. Our customers love that. We like it. We have 90 percent re-ups (of our subscriptions). Two-thirds of our revenue comes from Autoship and our subscription program. Our customers love engaging with us.

We Have An Incredible Amount of Data

Our shipping (cost) is built into our gross margins. What you’ve seen is as we’ve gotten big fast, we’ve also gotten fit fast. Our gross margin has expanded over 500 basis points over the last three years. We have a dense network. We have the predictability of Autoship. We can plan supply plan tighter and baseload build a lot tighter and get it to our customers fast and in a reliable manner. That’s how we make it work.

We have a ton of data. When you contact us you’re giving us (information). Pet profiles is an amazing way for us to engage with you. Customers are leaning in. We talked to you via customer service. At this point, we have 11 million customers but we manage over 27 million relationships between pets and pet parents. That is an incredible amount of data and facts to have on base.

Pets.com Was 20 Years Ago

The company (Pets.com) was 20 years ago. Look at the way the e-commerce has built out, the inputs are changing. Look at our stickiness. Look at the number of customers that we’re attracting. The fact that we’re servicing greater than 95 percent of US households in less than two days and the fact that customers keep coming back to us. Also, the necessity and desire to continue to engage and seek information via the high-touch high-class customer service that we provide. We just closed the loop better than anybody else out there.