Chewy's Pet Pharmacy Sales Could Surge 68% With Increased Customer Penetration

Americans' affection for their pets has become a significant economic driver. In 2024, U.S. households allocated nearly $40 billion to veterinary care and pet pharmaceuticals, making it the second-largest category of pet spending after food and treats. The broader pet market is anticipated to reach $173 billion by 2027, with veterinary care expected to accelerate as millions of pets adopted during the pandemic enter their senior years and require more medical attention.

Chewy, initially an online pet-food retailer, has evolved into a major player in the pet care industry. Founded by Ryan Cohen, who later sold the company for $3.35 billion in 2017, Chewy has grown into a public company with a $16 billion market cap and a customer base exceeding 20 million. The company has become the largest online pet pharmacy in the U.S., with $1.1 billion in annual sales and a 7% market share. However, only about a quarter of Chewy’s customers currently use these pharmacy services, leaving significant room for growth. If the penetration of these services rises to 40%, Chewy could unlock an additional $750 million in sales, especially as pets age and require more medications.

The ASPCA estimates that Americans adopted 23 million pets during the pandemic. These animals are now reaching middle age, fueling demand for more frequent vet visits, medications, and specialized care. The pet-health sector is expected to grow 4% annually, with a likely acceleration in 2026 and 2027 as the “COVID cohort” of pets ages.

Chewy’s foray into veterinary clinics, branded as Chewy Vet Care (CVC), has shown promising results. The first 11 clinics have received an average rating of 4.8 out of 5 stars from over 1,000 reviews on Google. Customers praise the modern facilities, transparent pricing, and seamless integration with Chewy’s online ecosystem. Management has characterized the early data as “promising,” noting that the CVCs are exceeding expectations in engagement and acquiring new customers. However, some negative reviews mention high prices and diagnosis issues, with customers expressing concerns about the cost of wellness visits and the accuracy of diagnoses.

Chewy’s expansion into vet care and pharmacy positions it to capture a growing share of the booming pet health market. As the company scales its clinics and deepens its pharmacy penetration, it could add over $1 billion in new revenue. The U.S. has more than 34,000 vet clinics, with the space being fragmented. Roughly 30% of the nation’s vet clinics are owned by private-equity firms and 20% by corporations, with the remaining 50% mostly independent. Some of the largest players include Mars Veterinary Health, National Veterinary Associates, SVP & MVP, Thrive Pet Healthcare, and Petco, which range from over 2,000 locations in the U.S. to roughly 300. This fragmentation presents a significant opportunity for Chewy to expand its presence in the market.

Chewy’s nationwide footprint, with 17 fulfillment centers and a nationwide pharmacy footprint, allows it to deliver to 80% of the population overnight and almost 100% in two days. This logistics advantage, combined with its growing customer base and expanding service offerings, positions Chewy to capture a larger share of the pet health market. As the company continues to invest in its vet clinics and pharmacy services, it is well-positioned to benefit from the growing demand for pet health care in the coming years.