Mario Marte: Yes. At this point, it’s still fairly small. It’s still a small expectations for this year. We’re just ramping — we’re excited about where it is and the trajectory it’s on, but it’s still not a meaningful driver yet.
Operator: The next question is from the line of Doug Anmuth with JPMorgan. You may proceed.
Doug Anmuth: Just on the international expansion, is it safe to assume that at the core, you’ll be looking to replicate the strong and differentiated approach in terms of customer service? So that’s number one. And then second, just circling back to the customer growth in ’23. Just trying to understand really what drives the confidence there given that you’re not really building in either macro improvement or discretionary product really coming back much. It sounds like it’s just some improvement or working through the big cohort over the last couple of years.
Sumit Singh: Sure. Doug, this is Sumit. So on international, your assumption is 100% right. We plan and expect to bring all components of our value proposition to the international market. And at the same time, we are going to be very actively listening to the voice of the customer and designing our launch working backwards from that. So that there is no dissidence in the way that we show up in the cultural nuances as Chewy’s brand enters the international market. On the balance, we are excited and confident about our brands’ resilience and extension outside of the United States per se. So that’s the first one. In terms of customer adds, there are several programs that we are working internally inside the Company, which are — they’re not dependent on the macro, but despite the macro, we are excited about these particular programs.
These are — when you look at kind of the way that we’re optimizing our site, improving our search results, maximizing conversion, particularly as it comes to new search traffic that lands on our website. And we’re seeing some early, very early signs of goodness there. Number two, we’ve talked about this in the past where Chewy is not actively invested in CRM type capability, and we’re building out our CRM capability in 2023 to a much more fuller extent than we had in 2022. Now the work will continue through 2023. But again, these are programs that allows us to recognize customers, segment them accordingly, target them and then track them through their life cycle to be able to either incentivize, motivate or offer propositions to be able to reactivate towards Chewy at a greater degree.
So the combination of those two kind of gives us confidence that there is more than just the market that is happening inside Chewy. But of course, we have to bring these to life and play them through.
Operator: The next question is from Corey Grady with Jefferies. You may proceed.
Corey Grady: I wanted to ask about the automated FC initiative. So apologies if I missed this, but what percent of volumes did you say are running through the automated fulfillment centers currently? And where do you think that can get by the end of the year? And then what’s assumed in that 50 bps of SG&A leverage?
Mario Marte: Yes, this is — Corey, this is Mario. I’ll answer that. So, we’ve said that we’re about 30% of the volume going through automated facilities at this point, which is an increase from where we were certainly in the third quarter and almost double the volume that was going through our quarter at the same time last year, meaning Q4 ’21. But we haven’t given a target by the end of the year. But you can see that we’re going from having three out of 13 to now having four facilities are automated out of 13 once we launch our Nashville in the next couple of months. So, we are — we continue to move volume into the automated facilities for many reasons. One of them, obviously, is a lower cost to variable cost per order, which then flows through to SG&A and EBITDA. So we’ll continue to push as much volume as we can into those facilities. Anything to add, Sumit?
