Chewy’s LTV to CAC is 2.4x for a 3 year old cohort. 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.” Older cohorts are performing slightly better than new cohorts for Chewy, but that’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).
Angie’s List had stable CAC, while tripling marketing spend. Angie’s List, an online review site with memberships, had very little change in CAC from 2009 to 2011 with CAC of $74, $85, and $78. Over the same period, paid memberships went from 411k to 1.1mm and marketing expense rose from $16mm to $56mm. In other words, marketing expense more than tripled but CAC stayed the same. That’s remarkable scale.
Visit us at blossomstreetventures.com and email us directly with Series A or B opportunities at sammy@blossomstreetventures.com
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