Chewy quantifies AI savings

CEO Sumit Singh said Chewy expects AI to cut costs by $50 million in fiscal 2027, up from the low tens of millions this year. He expressed high confidence in both figures.

“Chewy expects AI to reduce its costs by about $50 million in fiscal 2027”

Cai resolves 30% of chats alone

Chewy's new AI assistant Cai handles common requests like orders, returns and account changes. In less than a month with under 15% of traffic, it resolved 30% of chats without human help.

“About 30% of those chats ended without a human agent.”

Backend tools boost agent speed

Chewy built AI tools that pull answers from multiple systems for service agents, helping new staff match experienced workers' performance. The company also uses AI in pharmacy to validate data and at vet clinics to schedule appointments.

Data work came first

Chewy spent several quarters building infrastructure and cleaning data before launching its AI assistants. This groundwork gives Chewy a lasting advantage competitors would need years to match.

“Chewy spent several quarters building infrastructure and getting its data right before it shipped the assistants.”

Savings offset wage pressure

Singh said the $50 million won't simply add to profit margins. Part will offset wage inflation and other cost pressures, while some may be reinvested in marketing, membership redesigns and new products.

Industry trend: AI funds AI

A Bain survey found 44% of companies plan to fund their next AI spending with savings from current AI projects. Most enterprises in finance, healthcare and media reported positive AI returns over the past year.