Sumit Singh: Sure, Jian. This is Sumit. I’ll take it. So international expansion has long been a part of our strategy, as we’ve noted on prior calls, it was a matter of when, not if Chewy would take our superior value proposition into new geographies. So we’re excited to talk about it now. We took into account the size of TAM, the geographic proximity and consumer behavior similarities to the U.S., among other factors, as we thought about entry markets that possess attractive characteristics for our initial international expansion plans. And yes, at this point, this is an organic play, not an acquisition per se. In terms of operationalization, I would say, consistent with our track record of operationalizing investments, such as pharmacy could be one.
We are thinking about our international plans and stages with certain milestones that will responsibly govern the pace of our expansion. And then as Mario already noted a few minutes earlier, the revenue active customer and NSPAC impact of launching international operations is fully reflected in our guidance and is not a material contributor to any of those items in the guidance or for core. We — that’s as much as we can share today. We’re excited about sharing more details on our Q1 call.
Jian Li: Great. And one more on the gross margin. Beyond this year — this is, I think, the third quarter that you hit the high end of your current long-term gross margin. So how should we think about kind of an updated long-term gross margin target beyond this year? And what are the key drivers to that? I think you mentioned the — this year going to accelerate some higher-margin verticals. So if you can kind of expand on that?
Sumit Singh: Sure. This is Sumit again. So we’re excited about the continued gross margin or the continued journey that we’re on to expand our gross margins. In the core businesses, we have continued work to do on our private brand area. Private brands is mid- to high single digit, and we want to get it to between 15% and 30% of net sales. At that ratio, we expect several hundred basis points higher premium to our core business as that business achieves that penetration level. Number two, when you look at Chewy Health, Chewy Health is in its early stages relative to categories such as pharmacy. And we have a tremendous runway in this category as consumers more and more shift their preferences to online, and Chewy leads in delivering customer value proposition in that particular area.
It is also a tremendous NSPAC expansion driver for us and is fueling both our growth and mix impact on our gross margin performance. On top of that, then there are verticals which are more nascent in their categories. Sponsored ads is the next one that we are quickly ramping up, happy to click into details if anybody is interested. But we’re pleased with the progress there. We will expect to bring sponsor live at a more fuller scale this year ramping into 2024. Behind that is our categories like insurance, which are on slightly longer arcs because you have to build customer consideration and the consideration to conversion arc there is slightly longer, and therefore, those might be on a one- to three-year arc and can contribute meaningful gross margin expansion opportunities as well.
And then last but not least, our continued work on either expanding our Autoship benefits, working towards loyalty programs or continued supply chain initiatives that we’ve talked about, provide us tailwind opportunities in the future. So we’re excited. There’s a lot of work in front of us. This will not be easy, but at the same time, we have a clear road map and the team’s hard work so far has paid off, and we will continue to remain resilient and focused as we play through 2023 and beyond.
Jian Li: Great. And if I might just like one quick follow-up to that. Is there any — I guess, can you quantify how much of sponsored ads is embedded in the full year guide?
