There are far more examples of bricks-and-mortar retailers adding e-commerce than the other way around. It is remodeling its stores to grow hands-on services such as veterinarian care and grooming services, which can’t be provided online. Petco said in its recent investor day presentation that because of its store footprint, it is able to offer same-day delivery that is cheaper and faster compared with pure-play e-commerce. Petco spent roughly $170 of advertising per net new customer in 2019, but that figure declined to $64 per net new customer in 2020 and then to $60 last year. “There’s that natural limit.”Ī pet retailer which generates most of its revenue in its stores. “The cost of customer acquisition has gotten pretty high online because e-commerce has already cherry-picked the customers that are most likely to shop online,” said Mr. But even after taking in those nuances, the broad picture remains the same: Chewy’s acquisition costs were roughly $120 per customer in 2021, a 44% increase compared with 2019, according to estimates from The so-called customer acquisition cost looks less scary if one excludes spending on “retention” marketing for existing customers and takes into account gross new customer additions, not the net number. By 2021, that figure had ballooned to $424 per net new customer and in 2022 is expected to reach $505, based on consensus estimates polled by Visible Alpha. In fiscal 2019, it spent roughly $148 in selling and advertising expenses per net new customer. Parent Meta Platforms said the average price per ad increased 30% year over year in its first quarter.Ĭhewy is facing these hurdles. This puts pressure on retailers to spend more to make sure their ads appear before consumers.
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