Chewy’s LTV to CAC seems to be declining. Chewy doesn’t disclose CAC or LTV individually, but does disclose the ratio. The chart below shows the 2015 and 2014 cohorts seemingly performing better than the 2016 and perhaps the 2017 cohorts. According to Chewy’s prospectus “We measure LTV on a rolling three-year basis, which, as a multiple of acquisition cost, was 2.4x for our most recent 2015 cohort, and continues to grow as it ages. We have included a chart below that shows the ratio of LTV to CAC for the 2012–2017 cohorts. Our most recent cohorts had similar behavior for ordering our products as prior cohorts.” While older cohorts performing better than new cohorts isn’t what you want, it’s not unusual (early adopters are typically cheaper to acquire). In addition, keep in mind Chewy’s marketing expense is growing every year: advertising and marketing expense was $254mm and $393mm in 2017 and 2018 respectively (11% to 12% of net sales).
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