Chewy Puts a $50 Million Price Tag on AI Productivity
Many companies can’t put a number on what artificial intelligence does for their productivity. Chewy has one. Chewy CEO Sumit Singh said on the company’s second-quarter earnings call that Chewy expects AI to reduce its costs by about $50 million in fiscal 2027, up from the low tens of millions of dollars this fiscal year. […] The post Chewy Puts a $50 Million Price Tag on AI Productivity appeared…
Chewy has assigned a $50 million cost to its AI productivity tools for the fiscal year 2027, compared to the tens of millions spent this fiscal year. CEO Sumit Singh expressed high confidence in these projections, stating that the savings stem from cost reductions in customer service, pharmacy, veterinary care, and employee tools.
Chewy's AI assistant, Cai, has been live for less than a month, serving less than 15% of the company's traffic, handling common requests like orders, returns, and account management. About 30% of these interactions were resolved without a human agent. Chewy's internal service agents, aided by AI, perform tasks more efficiently, matching the performance of experienced agents.
AI is also used in pharmacy to extract and validate data, improving order processing. At veterinary clinics, an AI-powered voice agent, Callie, handles appointment confirmations and follow-ups. Automation accounts for more than half of Chewy's volume, with CFO Chris Deppe noting that lower variable costs are the main driver of the quarterly SG&A leverage.
Chewy spent several quarters building its AI infrastructure and data before launching the assistants, giving the company an advantage over others that might take years or rely on third-party providers. The company plans to use part of the $50 million for growth and to offset wage inflation, with the remaining funds to be reinvested in AI-driven growth.
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