HBR On Strategy A Lesson on Balancing Scaling with Stability
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May 14, 2025 Jeffrey Rayport, a senior lecturer at Harvard Business School, shares insights on the pivotal decisions Ryan Cohen faced at Chewy.com regarding logistics strategy. The discussion highlights the delicate balance between outsourcing and in-house fulfillment amid rapid growth. Rayport explores Chewy's unique blend of technology and personal customer service, along with competitive pressures from giants like Amazon. The case study illustrates critical risks and rewards in scaling operations, ultimately revealing the lessons learned from Chewy's remarkable success.
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Handwritten Notes Build Loyalty
- Ryan Cohen's team wrote five million handwritten notes to customers to differentiate Chewy from Amazon.
- This personal touch scaled a high-touch service on a tech platform, creating notable defensibility for Chewy.
Chewy's True Business Model
- Chewy redefined their business as scaling the personal, emotional experience of local pet stores online.
- This provided differentiation in a commoditized category dominated by grocers and Amazon.
Humanization Drives Premiumization
- The pet industry transformed as consumers humanized pets and bought premium, human-grade products.
- This created higher price points and improved the economic potential for online pet retailers like Chewy.