Document:

<PAGE>

                                                                   EXHIBIT 10.30

                   MERCHANDISING, PROCUREMENT, DISTRIBUTION,
                           AND FULFILLMENT AGREEMENT

     This Merchandising, Procurement, Distribution, and Fulfillment Agree ment
("Agreement") is made effective as of the 31st day of December, 1999 (the
"Effective Date") by and between PETsMART, Inc., a Delaware corporation having
its address at 19601 N. 27th Avenue, Phoenix, AZ 85027, and its affiliates
("PETsMART"), and PETsMART.com, Inc., a Delaware corporation having its address
at 35 Hugus Alley, Suite 210, Pasadena, CA 91103 ("PETsMART.com").

                                    Recitals

A.   PETsMART.com wishes to sell companion-animal-related products to consumers
and to make related information available to consumers online via an e-commerce
website to be operated by PETsMART.com.

B.   PETsMART.com desires to establish a relationship with PETsMART to provide
procure ment, ordering, distribution and fulfillment services for PETsMART.com's
e-commerce site for the sale of companion-animal-related products to consumers.

C.   PETsMART currently operates a catalog fulfillment center near Rochester,
New York, which provides similar services for PETsMART's catalog operations,
R.C. Steele, Pedigrees, Pet Professional Direct (formerly known as Groomer
Direct), National Bridle, State Line Tack, and Wiese, and for PETsMART's
e-commerce websites, statelinetack.com, nationalbridle.com, and Wiese.com.

D.   PETsMART.com desires to engage the services of PETsMART to provide such
services in North America in accordance with the provisions and conditions
contained in this Agreement.

E.   PETsMART and PETsMART.com have previously entered into a Trademark License
Agreement dated May 12, 1999 (the "Trademark Agreement"), pursuant to which
PETsMART will license the use of the PETsMART trademark and the petsmart.com
domain name to PETsMART.com, and are concurrently entering into a Marketing
Agreement, and a Web and Content Hosting Agreement.

Now, Therefore, the parties agree as follows:

1.   Definitions.

     1.1  "Anaheim Facility" means the existing facility owned and operated by
PETsMART.com located at 1835 South Lewis Street, Anaheim, California 92805.

<PAGE>

     1.2  "Outside Products" means SKUs offered or desired to be offered for
sale by PETsMART.com but which are not Products (i.e., they are neither PETsMART
Products nor PETsMART.com Unique Inventory).  "Outside Products" shall not
include products purchased from PETsMART Competitors, products branded with
brands of retail competitors of PETsMART, but may include equine products.

     1.3  "PETsMART Catalog Fulfillment Center" means PETsMART's catalog
fulfillment center, located at 1989 Transit Way, Brockport, New York 14420, or
any other catalog fulfillment center operated by PETsMART in the future.

     1.4  "PETsMART Competitor" means any national competitive brand (including
pet specialty retailers such as PETCO, grocers such as Safeway, discount chains
such as Wal-Mart, warehouse clubs such as Sam's Club or Price Costco, and the
like, but not including independently operated small boutique brands such as
Three Dog Bakery).  "PETsMART Competitor" also includes catalog competitors such
as Doctors Foster & Smith.

     1.5  "PETsMART's Cost" means the transfer price for any Product which shall
be calculated at the point of distribution by PETsMART based on PETsMART's fully
loaded cost, in accordance with Exhibit A ("Activity-Based Costing") to this
Agreement.  [*]

     1.6  "PETsMART Forward Distribution Centers" means PETsMART's distribution
centers other than the PETsMART Catalog Fulfillment Center, whether currently
existing or opened during the Term, that primarily provide deliveries of
consumable products to PETsMART retail stores.

     1.7  "PETsMART Products" means any non-equine product then carried by
PETsMART in its retail stores or made available through its existing consumer
catalogs and which PETsMART has the right to sell to PETsMART.com.  "PETsMART
Products" includes products sold under national brands, PETsMART's corporate or
private-label brands, and any other brands, but specifically excludes equine
products.

     1.8  "PETsMART Non-Catalog Products" means that subset of PETsMART Products
which PETsMART then carries in its retail stores, but does not then make
available through its existing catalogs or its warehouse store at the PETsMART
Catalog Fulfillment Center.

     1.9  "PETsMART.com Unique Inventory" means any then-current PETsMART Non-
Catalog Products, and any items that would otherwise be Outside Products but for
the fact that PETsMART agrees to procure, stock, fulfill, distribute, or
otherwise handle such items, intended for sale online by PETsMART.com that are
(at PETsMART.com's request) stocked in inventory by PETsMART for PETsMART.com at
the PETsMART Catalog Fulfillment Center or Forward Distribution Centers.
"PETsMART.com Unique Inventory" shall not include products purchased from or
branded by PETsMART Competitors or equine products. Items currently car-

[*]   CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
      WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
      RESPECT TO THE OMITTED PORTIONS.
<PAGE>

ried at the warehouse store in the PETsMART Catalog Fulfillment Center will not
be deemed PETsMART.com Unique Inventory.

     1.10 "Products" means PETsMART Products and PETsMART.com Unique Inventory.

     1.11 "SKU" means a stock-keeping unit of any product.

     1.12 "Website" means the e-commerce website operated by PETsMART.com at the
petsmart.com domain name.

2.   Exclusivity.

     2.1  PETsMART.com: Exclusive Online Exemplification Of PETsMART.
PETsMART.com shall be the exclusive online exemplification of PETsMART's
physical stores and PETsMART will not market, advertise, or sell companion-
animal-related products online. Notwithstanding the foregoing, PETsMART:

          (a) acknowledges that the R.C. Steele companion-animal-related
products e-commerce business (rcsteele.com) will be operated by PETsMART.com;

          (b) may continue to promote and sell equine products online through
its existing e-commerce businesses (e.g., nationalbridle.com and
statelinetack.com), and such other equine-product e-commerce business(es) as
PETsMART may commence; and

          (c) may promote and sell companion-animal-related products online
directly to businesses (e.g., through an e-commerce business based on its Pet
Professional Direct (formerly known as Groomer Direct) catalog).  PETsMART
agrees to take commercially reasonable steps (such as the steps performed in
connection with its business-to-business catalog operations) to confirm that a
business to which it sells such products is indeed a business.

     2.2  PETsMART Activities. PETsMART explicitly reserves the right to
commence e-commerce businesses as online representations of its current Pet
Professional Direct (formerly Groomer Direct), Wiese, and National Bridle
catalogs.  Nothing in this Agreement precludes PETsMART from providing
procurement, distribution and fulfillment, customer support, third-party website
administration, and other services ("Enumerated Services") on an outsourced
basis to third parties selling companion-animal-related products online, (i) so
long as such products or services are not marketed to consumers using the
PETsMART trademark and do not include any PETsMART corporate or private-label
brands, (ii) and provided PETsMART does not provide such Enumerated Services to
any online retailer of companion-animal-related products whose total SKUs of
companion-animal-related products exceeds 30% of its total number of SKUs
offered for sale to consumers under the auspices of its Corporate identity
(e.g., PETsMART could not provide the Enumerated Services to Buy.com if 30% or
more of Buy.com's total SKU's offered to consumers from any Buy.com entity (such
as any
<PAGE>

buy.home.com, buy.travel.com, buy.books.com) consists of companion-animal-
related products); and (iii) provided PETsMART shall not provide the Enumerated
Services to any of the following direct competitors of PETsMART.com: Pets.com,
Petopia.com, Petstore.com, Allpets.com, Petco.com, Petwarehouse.com,
Petplanet.com, and online grocery stores whose primary business is food (i.e.,
90% or more of its revenues are derived from food sales), such as Webvan.com and
Webgrocer.com. Notwithstanding the foregoing, PETsMART may provide the
Enumerated Services to its existing clients as of the Effective Date of this
Agreement. PETsMART agrees to use reasonable best efforts to assist in
introducing any such third party to PETsMART.com to provide PETsMART.com the
opportunity to negotiate with such party to enter into a relationship with
PETsMART.com to integrate the third party's online offering into the Website.
PETsMART also reserves the right to place online advertisements with third
parties to promote its physical retail locations and/or catalogs.

     2.3  PETsMART: Exclusive Provider To PETsMART.com.  PETsMART shall be the
exclusive provider to PETsMART.com of the procurement and distribution services,
and the initial provider of the customer support services, set forth in this
Agreement for PETsMART Products and PETsMART.com Unique Inventory during the
term of this Agreement, subject to the following exceptions:

          (a) Drop-Ships.  PETsMART.com may arrange for vendor-to-consumer drop
ships of Products where appropriate;

          (b) Use of Anaheim Facility.  PETsMART.com may ship Products to
customers from the existing PETsMART.com Anaheim Facility;

          (c) Shipping of Outside Products.  PETsMART.com may ship Outside
Products to its customers using any non-PETsMART facility or method which
PETsMART.com elects, in its sole discretion, to use; and

          (d) Shipping of Non-Catalog Product.  As may be mutually agreed upon,
PETsMART.com may use PETsMART Forward Distribution Centers to ship PETsMART
Non-Catalog Product.

     2.4  Customer Support Services.  PETsMART will be the initial provider of
customer support services to PETsMART.com.  Notwithstanding the foregoing,
provided that PETsMART.com reimburses PETsMART for direct and actual costs
identified by PETsMART as incurred in connection with providing or preparing to
provide such anticipated services during the Term (including unamortized non-
refundable capital investments and return on capital directly related to such
services), PETsMART.com may, at its sole discretion, obtain from third parties
or itself provide customer support services for Outside Products and
PETsMART.com Unique Inventory instead of using PETsMART for such services.

3.   Procurement.  During the term of this Agreement, PETsMART will be
PETsMART.com's exclusive source of procurement services (except for Outside
Products).
<PAGE>

     3.1  Procurement In General.  PETsMART will purchase inventory in
accordance with PETsMART.com's binding sales forecasts pursuant to Section 4.4
("Sales Forecasting") below. PETsMART is only obligated to purchase product in
accordance with PETsMART.com's sales forecasts, and PETsMART.com acknowledges
that the inventory levels sales forecast by PETsMART.com may not always result
in vendor purchase discounts, vendor purchase allowances, volume discounts, or
the like.

     3.2  Procurement Of PETsMART Products.  PETsMART will procure PETsMART
Products for sale by PETsMART.com in accordance with PETsMART.com's binding
product sales forecasts pursuant to Section 4.4 ("Sales Forecasting") below.
PETsMART will use commercially reasonable efforts to consolidate its orders for
PETsMART Products with PETsMART.com's. Regardless of whether such orders are
consolidated or not, to the extent that it is permitted to do so under its
purchase agreements with individual vendors, PETsMART will obtain for
PETsMART.com purchase terms which are at least as favorable as the most
favorable terms that PETsMART receives from such vendors for its own purchases
of PETsMART Products under similar purchase volumes and circumstances.

     3.3  Procurement Of PETsMART.com Unique Inventory.  Unless otherwise agreed
by the parties, PETsMART.com must use PETsMART for procurement of any
PETsMART.com Unique Inventory to be held in inventory by PETsMART for
PETsMART.com. PETsMART will procure PETsMART.com Unique Inventory for sale by
PETsMART.com in accordance with PETsMART.com's binding product sales forecasts
pursuant to Section 4.4 ("Forecasting") below.

     3.4  Procurement of Outside Products.  PETsMART shall have no obligation to
provide procurement services for Outside Products, and PETsMART.com shall be
responsible for all aspects of Outside Products (e.g., ownership, procurement,
shipping, etc.), except for certain customer support services relating thereto
which may be provided by PETsMART hereunder upon prior request by PETsMART.com
as set forth below.

     3.5  Procurement of Premiums and Prizes.  PETsMART.com may, but shall not
be obliged, to use PETsMART for procurement of prizes and premiums associated
with promotional programs operated by PETsMART.com in which PETsMART is not
involved. Notwithstanding the foregoing, if procurement of such items by
PETsMART.com from a PETsMART source would affect coop or rebate dollars or
percentages, PETsMART.com must use PETsMART for such procurement.

4.   Sales Forecasting and Inventory.

     PETsMART Products and PETsMART.com Unique Inventory.  For a fee calculated
in accordance with Exhibit A ("Activity-Based Costing") to this Agreement,
PETsMART.com will use PETsMART to stock inventory of PETsMART Products and
PETsMART.com Unique Inventory to be sold by PETsMART.com.  PETsMART will stock
such PETsMART Products at
<PAGE>

the PETsMART Catalog Fulfillment Center or, as may be mutually agreed, at the
PETsMART Forward Distribution Center(s), unless otherwise agreed by the parties.
PETsMART reserves the right not to stock certain items at its Forward
Distribution Centers based on factors such as logistics, safety, legal, or other
commercially reasonable criteria.

     4.1  PETsMART Non-Catalog Products.  For a fee calculated in accordance
with Exhibit A ("Activity-Based Costing") to this Agreement, PETsMART.com may
choose for PETsMART to stock inventory of PETsMART Non-Catalog Products at the
PETsMART Catalog Fulfillment Center.

     4.2  Location of Inventory.  PETsMART reserves the right to stock inventory
for PETsMART.com through other PETsMART facilities in addition to or instead of
the PETsMART Catalog Fulfillment Center, as determined efficient, appropriate,
cost-effective, and logistically feasible by PETsMART in its reasonable
discretion; notwithstanding the foregoing, if such stocking outside the PETsMART
Catalog Fulfillment Center, could result in additional cost or liability to
PETsMART.com such stocking must be mutually agreed by the parties in advance.

     4.3  Title.  Title to Products will remain with PETsMART until shipped,
whether to the consumer or to PETsMART.com's Anaheim Facility.  Title will
transfer to PETsMART.com upon shipment and consignment to the common courier.
PETsMART will not hold title to any Products which PETsMART.com holds in
inventory at, orders for, or ships from PETsMART.com's Anaheim Facility.

     4.4  Sales Forecasting.  From the Effective Date through May 12, 2000,
PETsMART.com will comply with the requirements of this Section 4.4.  During that
period, PETsMART agrees not to enforce this Section 4.4 against PETsMART.com,
with the sole exception of the inventory carrying cost payment provision of
Section 4.4(c) ("Adjustment Of Non-binding Sales Forecasts"). As of May 12,
2000, this provision will be in full force and effect and enforceable by
PETsMART.

          (a) Sales Forecasts For Domestic, Imported and Seasonal Products.
Beginning February 1, 2000, and continuing throughout the term of this
Agreement, PETsMART.com will provide PETsMART with a [*] rolling product sales
forecast by SKU, and will specify whether each SKU is a PETsMART Non-Catalog
Product, PETsMART Product, or PETsMART.com Unique Inventory. PETsMART.com's
sales forecast will be updated [*] on the [*] of each [*] and will specify
PETsMART.com's requirements as follows:

              (i)   for Products purchased and shipped from vendors located in
the United States ("Domestic Products") for the [*] period starting
[*] after the date of the sales forecast;

              (ii)  for Products purchased and shipped from vendors located
outside of the United States ("Imported Products") for the [*] period starting
[*] after the date of the sales forecast;

[*]   CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
      WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
      RESPECT TO THE OMITTED PORTIONS.
<PAGE>

              (iii) for Products with a holiday or seasonal focus ("Seasonal
Products") for the [ * ] period starting [ * ] after the date of
the sales forecast; and

              (iv)  if a vendor requires a longer sales forecast lead time than
those set forth above at (i) through (iii), PETsMART will so inform
PETsMART.com, and PETsMART.com will adjust the timing of its sales forecasts for
the SKUs sold by such vendor to allow PETsMART to order inventory of such SKUs
in compliance with the vendor's required lead time.

          (b) Binding And Non-Binding Sales Forecasts. PETsMART.com's monthly
sales forecasts shall be [ * ] of the sales forecast period, and non-binding for
the [ * ] (For example, PETsMART.com's [ * ] sales forecast update will set
forth PETsMART.com's Domestic Products requirements for the [ * ] which sales
forecast shall be binding as to [ * ] and [ * ] and PETsMART.com's Imported
Product and any Seasonal Product requirements for the [ * ] of the upcoming
[ * ] which sales forecast shall be binding as to [ * ] and [ * ].)

          (c) Adjustment Of Non-Binding Sales Forecasts.   In each updated
[ * ] sales forecast, PETsMART.com may adjust any non-binding sales forecast as
follows: during the [ * ] after the Effective Date, by no more than [ * ] upward
or downward from the immediately preceding sales forecast; during the [ * ] by
no more than [ * ] upward or downward from the immediately preceding sales
forecast; and during the [ * ] and thereafter, by no more than [ * ] upward or
downward from the immediately preceding sales forecast. Binding sales forecasts
may not be adjusted, and inventory purchased by PETsMART based on PETsMART.com's
binding sales forecasts will, upon arrival at the PETsMART Catalog Fulfillment
Center, be subject to carrying cost calculated in accordance with Exhibit A
("Activity-Based Costing").

     4.5  Discontinued Products.  If PETsMART discontinues any PETsMART Product
SKU, PETsMART.com may choose to continue such SKU as PETsMART.com Unique
Inventory.

     4.6  Excess, Overstock, and Aging Inventory.  If inventory purchased by
PETsMART according to a PETsMART.com binding sales forecast remains
significantly undersold after [ * ], PETsMART may, using its sole discretion,
declare such inventory to be "Excess Inventory" and shall so notify
PETsMART.com. Upon receiving such notification, PETsMART.com will, as directed
by PETsMART in PETsMART's sole discretion, reduce such inventory either by
increasing its sales of such SKU (e.g., through advertising, price reductions, a
clearance sale, etc.) or by providing PETsMART with instructions for the
disposition of such Excess Inventory. If PETsMART.com fails to dispose of Excess
Inventory within [ * ] of receiving PETsMART's notice of Excess Inventory,
PETsMART may take ac-

[*]   CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
      WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
      RESPECT TO THE OMITTED PORTIONS.
<PAGE>

tions as necessary to reduce such Excess Inventory (e.g., through sale or
liquidation), and PETsMART may invoice PETsMART.com for any costs associated
with such inventory reduction, calculated in accordance with Exhibit A
("Activity-Based Costing").

5.   Customer Order Processing.

     5.1  Online Orders: Processing.  At the request of PETsMART.com, PETsMART
will receive orders and, subject to PETsMART.com's review and acceptance,
process credit card payments in connection therewith (using PETsMART.com's
account).  PETsMART.com will bear the risk of collecting all monies from
customers for orders processed through PETsMART. PETsMART will not be
responsible for processing of any orders for Outside Products. PETsMART will
provide other customer support services as set forth in Section 5.3 ("Other
Customer Support Services") below.

     5.2  Telephone Or Facsimile Orders.  PETsMART.com may implement customer
order telephone or facsimile numbers which, as set forth in the Joint Marketing
and Cooperation Agreement, shall be publicized only on the Website.  In the
event that PETsMART.com implements such a telephone number, the parties will
cooperate in the design and implementation of the telephone or facsimile order
service.  The telephone or facsimile service shall serve as a conduit for the
receipt of online orders, in that PETsMART telephone customer service
representatives ("CSRs") will receive and input such orders online through the
Website, which orders shall be subject to PETsMART.com's review and acceptance.
If the Website is unavailable to PETsMART's CSRs, the CSRs will take orders,
process credit card transactions (using PETsMART.com's account), and advise
customers of the possibility that SKUs ordered by the customer may be out of
stock.

     5.3  Other Customer Support Services.  PETsMART will provide other customer
support services via email and telephone as mutually agreed by the parties, such
as order status inquiries, product inquiries, and return and refund inquiries,
in accordance with the standards set forth at Exhibit B ("Customer Service
Standards"). PETsMART will provide customer support services with regard to
Outside Products upon request by PETsMART.com, provided that PETsMART.com
provides reasonable advance notice.

     5.4  Fulfillment.  If PETsMART does not have sufficient inventory of a
Product SKU to meet PETsMART.com's and PETsMART's forecasted needs for that SKU,
and orders accepted by PETsMART.com and PETsMART exceed PETsMART's inventory of
that SKU, PETsMART will allocate available inventory as follows:

          (a) Until May 12, 2000, PETsMART will give reasonable priority (in
PETsMART's discretion) to orders accepted by PETsMART.com over those accepted by
PETsMART;

          (b) After May 12, 2000, PETsMART will allocate available inventory [*]

[*]   CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
      WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
      RESPECT TO THE OMITTED PORTIONS.
<PAGE>

If orders accepted by PETsMART.com for an SKU exceed PETsMART.com's binding
sales forecast for that SKU, [*]

6.   Distribution and Delivery.  PETsMART will provide pick, pack and ship
services for Products through the PETsMART Catalog Fulfillment Center and, as
may be agreed, the PETsMART Forward Distribution Center(s), except that PETsMART
may reasonably refuse to stock any PETsMART Non-Catalog Product if such stocking
would be commercially unreasonable for PETsMART.  PETsMART.com will be solely
responsible for such distribution and delivery of Outside Products unless
otherwise agreed to by the parties. Unless otherwise agreed by the parties,
PETsMART.com shall handle all customer returns and any related customer
adjustments.

     6.1  Delivery of PETsMART Non-Catalog Products.  PETsMART and PETsMART.com
will mutually determine a process for delivery of orders for PETsMART Non-
Catalog Products in the most cost-effective manner possible, which may include
shipments from PETsMART Forward Distribution Centers as agreed by the parties,
subject to the con straints set forth in Section 2.3(d) ("Shipping of Non-
Catalog Product").

     6.2  Method of Delivery.  PETsMART will provide delivery services through
standard UPS ground shipping, United States Postal Service (first class and
parcel post), a reputable overnight or two-day delivery service, or other
commercial carriers, as directed by PETsMART.com.  Customers may choose their
method of delivery from those offered at the Website, and PETsMART will use the
method of delivery chosen by the customer. PETsMART.com will make commercially
reasonable efforts to ensure that the Website notifies customers of available
delivery options and that customer orders for such delivery options are
immediately transmitted to PETsMART (or, for Outside Products, to PETsMART.com);
absent notification of customer selection of delivery option, PETsMART will use
a mutually agreed upon default delivery option (or, if there is no such default,
such option as PETsMART deems reasonable).

     6.3  Personalization and Gift-Wrapping Services.

          (a) Services Offered.  For fees calculated in accordance with Exhibit
A ("Activity-Based Costing") to this Agreement, PETsMART will provide the same
product personalization services for Products as PETsMART currently offers
through its catalog operations.  PETsMART may apportion, in its discretion,
performance of personalization services between orders placed through the
Website and orders placed through PETsMART's catalog operations.  PETsMART will
use its best efforts to provide gift-wrapping services for Products by no later
than March 30, 2000, provided that PETsMART.com provides sufficient advance
notice regarding what services it desires to have available for which Product
SKUs.  To the extent that de-

[*]   CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
      WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
      RESPECT TO THE OMITTED PORTIONS.
<PAGE>

mand through the Website leads PETsMART to increase the volume or kinds of
personalization services performed, PETsMART may recoup its additional cost,
calculated in accordance with Exhibit A ("Activity-Based Costing").

          (b) Performance of Services. Customers may choose their method of
product personalization and/or gift wrapping services from those offered at the
Website, and PETsMART will provide the service chosen by the customer.
PETsMART.com will make commercially reasonable efforts to ensure that the
Website notifies customers of available personalization and/or gift-wrapping
options and that customer orders for such personalization and/or gift-wrapping
options are immediately transmitted to PETsMART; if such orders are not
transmitted to PETsMART, PETsMART shall proceed in accordance with a mutually
agreed upon default option (or, if no such default exists, then as PETsMART
deems reasonable).  Because of the additional lead time involved in performance
of personalization and gift-wrapping services, such services will not be subject
to the customer service standards set forth in this Agreement at Section 9
("Service Standards") and Exhibit B ("Customer Service Standards"). PETsMART.com
will be solely responsible for delivery, personalization, and gift-wrapping of
Outside Products.

7.   Office Space Rental and Related Services.  For fees calculated in
accordance with Exhibit A ("Activity-Based Costing"), during the term of this
Agreement and at PETsMART's sole discretion, PETsMART will make available
reasonable office space, office facilities (including, but not limited to,
computers, furniture, telephone service, and mail service), for up to eighteen
(18) employees of PETsMART.com at PETsMART's Phoenix, Arizona headquarters.  The
number of such employees may be increased upon written approval of PETsMART's
chief executive officer.  Such employees shall be issued special identification
badges by PETsMART and shall conform to normal rules of conduct and to
PETsMART's policies with respect to use of the facility, as communicated from
time to time, but shall at all times remain the employees (or consultants, as
applicable) of PETsMART.com.

8.   Payment.

     8.1  Products.  PETsMART will invoice PETsMART.com for the products and
services described herein and provided hereunder, on or before the tenth (10th)
day after the end of each month for PETsMART's Cost (calculated in accordance
with Exhibit A ("Activity-Based Costing")), and PETsMART.com shall pay such
invoice by wire transfer on or before the tenth day after receipt of such
invoice.

     8.2  Taxes.

          (a) Indemnity. PETsMART.com shall be liable for, and shall indemnify,
defend, and hold harmless PETsMART from and against, all "Indemnifiable Taxes,"
as defined in this Section 8.2(a).  For the purposes of this Section 8.2,
"Taxes" shall mean all taxes (other than taxes based on PETsMART's income),
fees, duties, and other governmental charges (including any taxes, fees, duties,
or other governmental charges imposed on a third party that PETsMART is required
to withhold or collect) and any interest, additions to tax, or penalties related
thereto.
<PAGE>

For the purposes of this Section 8.2, "Indemnifiable Taxes" shall mean all Taxes
incurred with respect to goods or services provided by either PETsMART or
PETsMART.com pursuant to this Agreement and all reasonable out-of-pocket
attorneys' fees and other reasonable out-of-pocket expenses, including court
costs, associated with the resolution of any Contest (as defined below) with
respect to such Taxes.

          (b) Notice.  If PETsMART is made aware as part of an audit or other
administrative proceeding related to Taxes (a "Contest"), that a taxing
authority is asserting a claim for Indemnifiable Taxes, then PETsMART shall
promptly notify PETsMART.com of such claim in writing.

          (c) Control.  PETsMART shall permit PETsMART.com, at PETsMART.com's
own cost and expense, to control that portion of the Contest related to
Indemnifiable Taxes; provided, however, that PETsMART.com's control must not
unreasonably interfere with the remaining portion of the Contest.  In the event
that PETsMART.com does not reasonably contest the imposition of Taxes on
PETsMART, PETsMART may assume control of the portion of the Contest attributable
to Indemnifiable Taxes at PETsMART.com's reasonable expense. PETsMART.com may
re-assume control of that portion of the Contest related to Indemnifiable Taxes
at any time.

          (d) Settlement.  PETsMART shall not settle or otherwise compromise any
portion of a Contest related to Indemnifiable Taxes without the prior written
consent of PETsMART.com, which consent shall not be unreasonably withheld.
PETsMART.com must inform PETsMART of all terms of any proposed settlement prior
to settling that portion of the Contest related to Indemnifiable Taxes and, if
PETsMART objects to PETsMART.com entering into such settlement, PETsMART.com
shall pay to PETsMART the amount that would be payable by PETsMART.com under
this Section 8.2 if such settlement were entered into, and upon payment of such
amount, any liability of PETsMART.com under this Section 8.2 shall terminate for
the portion of the Indemnifiable Taxes that would have been settled.

          (e) Consistency.  PETsMART shall not take any position that
Indemnifiable Taxes may be due and owing without the prior consent of
PETsMART.com which consent may not be unreasonably withheld.  PETsMART shall not
take any action that could result in any taxing authority asserting a claim
subject to indemnification hereunder. For purposes of this section 8.2(e), a
position or action shall not be a breach of this section unless such action or
position is (i) part of a course of conduct, (ii) a significantly frequent
practice, or (iii) intentional.

          (f) Powers of Attorney.  PETsMART shall execute any powers-of-attorney
or similar documents necessary for PETsMART.com to control the portion of a
Contest related to Indemnifiable Taxes.

          (g) Information.  PETsMART.com shall promptly notify PETsMART of
material developments in that portion of a Contest that is controlled by
PETsMART.com.
<PAGE>

          (h) Cooperation.  PETsMART.com and PETsMART shall provide, or cause to
be provided, to each other, the assistance of officers, employees,
representatives and affiliates, or such assistance as may reasonably be
requested by the other party in connection with the portion of the Contest
related to Indemnifiable Taxes.  The requesting party shall reimburse the other
party for the reasonable out-of-pocket cost of such other party making the
assistance of such persons available.  The parties shall use reasonable best
efforts to make available persons no longer employed.  PETsMART.com and PETsMART
shall retain, or cause to be retained, for so long as any taxable year in which
this Agreement is in effect shall remain open for adjustments, any records or
information related to Indemnifiable Taxes; provided however, that PETsMART
shall not be required to retain, or cause to be retained, records and
information that PETsMART.com maintains in the ordinary course of PETsMART.com's
operations. PETsMART shall, in the case of any particular calendar year, be
responsible for costs of retaining any records or information related to
Indemnifiable Taxes for the ten year period following such calendar year and,
thereafter, any such costs shall be borne equally by each of PETsMART and
PETsMART.com.  With reasonable notice, any records or information so retained
shall be made available to the requesting party in a commercially reasonable
manner.  The requesting party shall reimburse the other party for such party's
reasonable out-of-pocket costs, including without limitation, copying costs,
reasonably incurred in making such records or information available.  In
addition, the requesting party shall enter into reasonable non-disclosure and
use agreements that limit the use of the records and the information contained
therein by the requesting party to use only in the particular Contest.

          (i) Non-Compliance.  If PETsMART fails to comply substantially with
any of the provisions set forth in this Section 8.2, PETsMART.com shall be
relieved of any obligation under this Section 8.2 to the extent of any actual
prejudice suffered by PETsMART.com as a result of such failure.

     8.3  Audits.  PETsMART.com will have the right, during normal business
hours and upon at least thirty (30) days' prior notice, to have a nationally
recognized independent accounting firm selected by PETsMART.com and reasonably
acceptable to PETsMART audit PETsMART's records related to the cost components
set forth in Exhibit A ("Activity-Based Costing") in order to verify that
PETsMART.com has paid to PETsMART the correct amounts paid under this Agreement.
The audit will be conducted at PETsMART.com's expense and no more than once in
any twelve month period during the term of this Agreement.  In the event of a
discrepancy, PETsMART shall reimburse PETsMART.com or PETsMART.com shall pay
PETsMART, the applicable amount as the case may be; in the event of a
discrepancy of at least five percent (5%) in PETsMART.com's favor, PETsMART
shall reimburse PETsMART.com its costs of audit.  Any confidential information
of PETsMART disclosed to PETsMART.com or the independent accounting firm in the
course of the audit will be subject to the confidentiality terms set forth in
Section 11 ("Confidential Information") of this Agreement.

     8.4  Late Payment.  PETsMART.com will pay interest on late payments at the
rate of one and one-half percent (1.5%) per month or the highest interest rate
allowed, whichever is lower.
<PAGE>

     8.5  Adjustment.  As set forth throughout this Agreement, all costs and
fees PETsMART charges PETsMART.com for services and products provided by
PETsMART to PETsMART.com pursuant to this Agreement are to be calculated in
accordance with Exhibit A ("Activity-Based Costing"). During the term of this
Agreement, PETsMART reserves the right to adjust Exhibit A ("Activity-Based
Costing") as may be necessary to achieve the objective of more accurately
reflecting PETsMART's actual costs.

9.   Service Standards.  The services provided by PETsMART under this Agreement
will conform to the standards set out in Exhibit B ("Customer Service
Standards").

10.  Warranty.

     10.1 Representations and Warranties.  Each party represents and warrants
that it has the authority to enter into this Agreement, and to perform all of
its obligations hereunder.  Each party further represents and warrants that it
has the capacity to perform all of its obligations hereunder.

     10.2 Disclaimer of Warranties.  EXCEPT AS SET FORTH HEREIN, EACH PARTY
EXPRESSLY DISCLAIMS ALL WARRANTIES OR CONDITIONS OF ANY KIND, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRAN  TIES OF TITLE, NON-
INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

11.  Confidential Information.

     11.1 Confidential Information.  Each party (the "Disclosing Party") may
from time to time during the term of this Agreement disclose to the other party
(the "Receiving Party") certain information regarding the Disclosing Party's
business, including technical, marketing, financial, employees, planning, and
other confidential or proprietary information ("Confidential Information").
The Disclosing Party will mark all Confidential Information in tangible form as
"confidential" or "proprietary" or with a similar legend.  The Disclosing
Party will identify all Confidential Information disclosed orally as
confidential at the time of disclosure and provide a written summary of such
Confidential Information to the Receiving Party within thirty (30) days after
such oral disclosure.  Regardless of whether so marked or identified, however,
any information that the Receiving Party knew or should have known, under the
circumstances, was considered confidential or proprietary by the Disclosing
Party, will be considered Confidential Information of the Disclosing Party.

     11.2 Protection of Confidential Information.  The Receiving Party will not
use any Confidential Information of the Disclosing Party for any purpose not
expressly permitted by this Agreement, and will disclose the Confidential
Information of the Disclosing Party only to those employees or contractors of
the Receiving Party who have a need to know such Confidential Information for
purposes of this Agreement and who are under a duty of confidentiality no less
re-
<PAGE>

strictive than the Receiving Party's duty hereunder. The Receiving Party will
protect the Disclosing Party's Confidential Information from unauthorized use,
access, or disclosure in the same manner as the Receiving Party protects its own
confidential or proprietary information of a similar nature and with no less
than reasonable care.

     11.3 Exceptions.  The Receiving Party's obligations under Section 11.2
("Protection of Confidential Information") with respect to any Confidential
Information of the Disclosing Party will terminate if and when the Receiving
Party can document that such information: (a) was already known to the Receiving
Party at the time of disclosure by the Disclosing Party; (b) was disclosed to
the Receiving Party by a third party who had the right to make such disclosure
without any confidentiality restrictions; (c) is or through no fault of the
Receiving Party has become, generally available to the public; or (d) is
independently developed by the Receiving Party without access to, or use of, the
Disclosing Party's Confidential Information.  In addition, the Receiving Party
will be allowed to disclose Confidential Information of the Disclosing Party to
the extent that such disclosure is (i) approved in writing by the Disclosing
Party, (ii) necessary for the Receiving Party to enforce its rights under this
Agreement in connection with a legal proceeding; or (iii) required by law or by
the order of a court or similar judicial or administrative body, provided that
the Receiving Party notifies the Disclosing Party of such required disclosure
promptly and in writing and cooperates with the Disclosing Party, at the
Disclosing Party's reasonable request and expense, in any lawful action to
contest or limit the scope of such required disclosure.

     11.4 Return of Confidential Information.  The Receiving Party will return
to the Disclosing Party or destroy all Confidential Information of the
Disclosing Party in the Receiving Party's possession or control promptly upon
the written request of the Disclosing Party on the expiration or termination of
this Agreement, whichever comes first. At the Disclosing Party's request, the
Receiving Party will certify in writing that it has fully complied with its
obligations under this Section.

     11.5 Confidentiality of Agreement.  Neither party will disclose any
financial and/or costing or payment terms of the Agreement to anyone other than
its attorneys, accountants and other professional advisors under a duty of
confidentiality except (a) as required by law; (b) pursuant to a mutually
agreeable press release; (c) in connection with a proposed merger, financing or
sale of such party's business, provided that any third party to whom the terms
of this Agreement are to be disclosed signs a confidentiality agreement
reasonably satisfactory to the other party to this Agreement.

12.  Limitation of Liability; Indemnity.

     12.1 Limitation of Liability.  Neither party shall be liable to the other
for any indirect, incidental, special or consequential damages, or for any loss
of profits or loss of revenue, or failure to realize expected savings for any
services performed by such party pursuant to this Agreement. Except for each
party's obligations pursuant to Section 12.2 ("Indemnity"), each party's
<PAGE>

maximum liability for any damages whatsoever to the other party arising out of
this Agreement shall be the amount paid or owed by PETsMART.com to PETsMART
hereunder.

     12.2 Indemnity.

          (a) By PETsMART.  PETsMART agrees to defend, indemnify, and hold
harmless PETsMART.com from and against any claims, suits, losses, damages,
liabilities, costs, and expenses (including reasonable attorneys' fees) brought
by third parties to the extent such claim results from or relates to (i)
violation of any applicable law or regulation arising from a PETsMART Product;
(ii) injury to or violation of, the rights of a third party, arising from a
PETsMART Product; (iii) violation of any applicable law or regulation by
PETsMART in the performance of its obligations hereunder; or (iv) injury to or
violation of the rights of a third party by PETsMART in the performance of its
obligations hereunder.

          (b) By PETsMART.com.  PETsMART.com agrees to defend, indemnify, and
hold harmless PETsMART from and against any claims, suits, losses, damages,
liabilities, costs, and expenses (including reasonable attorneys' fees) brought
by third parties to the extent such claim results from or relates to (i)
violation of any applicable law or regulation arising from an Outside Product
(or any item which would be an Outside Product but for the fact that PETsMART
agrees to procure, stock, fulfill, distribute, or otherwise handle such item;
(ii) injury to or violation of, the rights of a third party, by an Outside
Product (or any item which would be an Outside Product but for the fact that
PETsMART agrees to procure, stock, fulfill, distribute, or otherwise handle such
item; (iii) violation of any applicable law or regulation by PETsMART.com in the
performance of its obligations hereunder; or (iv) injury to or violation of the
rights of a third party by PETsMART.com in the performance of its obligations
hereunder.

          (c) Mechanics.  Each party's (the "Indemnifying Party") obligation to
indemnify under this Section 12.2 is conditioned on the party seeking indemnity
(the "Indemnified Party") (i) giving the Indemnifying Party written notice of
the relevant claim, (ii) cooperating with the Indemnifying Party, at the
Indemnifying Party's expense, in the defense of such claim, and (iii) giving the
Indemnifying Party the right to control the defense and settlement of any such
claim, except that the Indemnifying Party shall not enter into any settlement
that affects the Indemnified Party's rights or interest without the Indemnified
Party's prior written approval. The Indemnified Party shall have the right to
participate in the defense at its expense.

13.  Dispute Resolution.  PETsMART and PETsMART.com are implementing this
Agreement in good faith.  However, should either party believe that the other
party is in breach of this Agreement, the parties shall attempt in good faith to
resolve any dispute arising out of or relating thereto promptly by negotiations.
All negotiations at all levels pursuant to this Section 13 are confidential and
shall be treated as compromise and settlement negotiations for purposes of the
Federal Rules of Evidence and state rules of evidence.  Each party shall bear
its own expenses in connection with such negotiations.
<PAGE>

     13.1 Notice And Cure.   Except in the case of expedited arbitration under
Section 13.2(c), either party (the "Non-Breaching Party") may give the other
party (the "Breaching Party") written notice of any material breach. The
Breaching Party shall then have thirty (30) days to cure the material breach.
If the Breaching Party does not effect a cure to the Non-Breaching Party's
satisfaction, the chief executive officers of the parties shall, within the
following fifteen (15) days, confer in good faith for the purpose of
satisfactorily resolving the material breach.

     13.2 Arbitration.

          (a) Arbitrators.  No later than March 15, 2000, the parties will
jointly select a list of at least three, and no more than six, arbitrators (the
"Panel") from whom arbitrator(s) shall be selected to resolve any disputes.

          (b) In General.  If a resolution satisfactory to the Non-Breaching
Party is not achieved within the fifteen-day period set forth in Section 13.1,
the parties agree promptly to submit the dispute to binding arbitration before
an arbitrator selected from the Panel, such arbitration to be held in the city
of the defending party's home offices under the then-existing rules for
commercial disputes of the American Arbitration Association. Each party
irrevocably submits to the jurisdiction and venue set forth in this Section
13.2(b).

          (c) Expedited.  The parties agree and acknowledge that certain
disputes may require more immediate resolution than set forth in Section
13.2(b).  If the Non-Breaching Party claims that the Breaching Party has
breached Sections 2.3 ("PETsMART Exclusive Provider to PETsMART.com"), 4.6
("Excess, Overstock, and Aging Inventory"), 5.4 ("Fulfillment"), 6
("Distribution and Delivery"), 6.1 ("Delivery of PETsMART Non-Catalog Product"),
6.2 ("Method of Delivery"), 8.1 ("Products"), 9 ("Service Standards"), or
14.3(b) ("Inventory Repurchase") and that such breach substantially interferes
with the Non-Breaching Party's ability to conduct its business, the Non-
Breaching Party may give notice of expedited arbitration.  Within fifteen (15)
days of notice of expedited arbitration, executive representatives from each
party shall meet and confer in good faith to resolve the dispute.  If the
parties remain unable to resolve the dispute, the parties will contact the first
arbitrator on the Panel (or, if unavailable, successive arbitrators until one is
available), which arbitrator shall conduct an expedited arbitration within the
next twenty-one (21) days and shall render a binding opinion within three (3)
business days after the conclusion of the expedited arbitration.

14.  Term and Termination.

     14.1 Term.  The initial term shall commence on the Effective Date of this
Agreement, and shall expire on the fifth anniversary of the Effective Date of
this Agreement (the "Term"), and shall thereafter automatically continue for two
successive one-year terms unless either party provides notice of non-renewal at
least one hundred eighty (180) days before the expiration of the then-current
term (which may be the Term or a successor term).  Following the Term,
PETsMART.com may terminate this Agreement, without cause, with one hundred
twenty (120)
<PAGE>

days' prior written notice to PETsMART. If either party notifies the other of
non-renewal before expiration of any term, both parties shall continue to be
bound by all of the terms of this Agreement, and PETsMART.com shall continue to
sell PETsMART Products in accordance with the terms of this Agreement for a
transition period of one hundred twenty (120) days (the "Transition Period")
after the expiration of the then-current term. This Agreement shall
automatically expire on the final day of the Transition Period, unless renewed
before that date.

     14.2 Termination for Breach.

          (a) By PETsMART.  PETsMART shall have the right to terminate this
Agreement in the event PETsMART.com materially breaches any term of this
Agreement and fails to cure such breach in the course of the dispute resolution
procedures set forth above at Section 13 ("Dispute Resolution").

          (b) By PETsMART.com.  PETsMART.com may terminate this Agreement, or
any portion hereof, only after an arbitrator first determines (i) that PETsMART
is in material breach and such material breach substantially affects
PETsMART.com's ability to conduct its business, (ii) which aspects of the
Agreement PETsMART.com may terminate, and (iii) which unamortized or committed
costs, commitments, expenses, or other liabilities incurred in connection with
PETsMART's provision of products and services to PETsMART.com hereunder shall be
reimbursed by PETsMART.com to PETsMART.

     14.3 Effect of Termination.

          (a) Survival.  Sections 1 ("Definitions"), 8 ("Payment"), 10
("Warranty"), 11 ("Confidential Information"), 12 ("Limitation of Liability;
Indemnity"), 13 ("Dispute Resolution"), 14 ("Term and Termination"), and 15
("General Provisions") shall survive termination of this Agreement.

          (b) Inventory Repurchase.  Upon the expiration or termination of this
Agreement for any reason, PETsMART shall submit to PETsMART.com within ten (10)
days a summary of the number and type of Products on order or held in stock by
PETsMART for PETsMART.com based on PETsMART.com's sales forecasts, including
PETsMART.com Unique Inventory and PETsMART Products (including PETsMART Non-
Catalog Products), and PETsMART.com shall purchase all PETsMART.com Unique
Product inventory from PETsMART at PETsMART's Cost, plus shipping and insurance
at PETsMART.com's expense, within ten (10) days following receipt of such
notice.

15.  General Provisions.

     15.1 Governing Law and Venue.  This Agreement will be governed and
construed in accordance with the laws of the State of California as such laws
apply to contracts between California residents performed entirely within
California without giving effect to principles of conflicts of laws.
<PAGE>

    15.2 Force Majeure.  Any party's delay in the performance of any duties or
obligations under this Agreement (except the payment of money owed) (including,
but not limited to, PETsMART's compliance with the standards set forth on
Exhibit B ("Customer Service Standards")) will not be considered a breach of
this Agreement if such delay is caused by a labor dispute, shortage of
materials, fire, earthquake, flood or any other event beyond the control of the
party, provided that the party uses reasonable efforts, under the circumstances,
(a) to notify the other party of the circumstances causing the delay and (b) to
resume performance as soon as possible.

     15.3 Subcontracting.   PETsMART may perform its obligations through the use
of PETsMART-selected independent contractors; provided, however, that PETsMART
shall not be relieved of its obligations under this Agreement by the use of such
contractors.

     15.4 Notices. Any notices given under this Agreement shall be in writing
and shall be delivered to the addresses set forth below the signatures of the
parties or at such other address as the party shall specify in writing.  Notices
shall be deemed effectively given: (a) upon five (5) days after being sent by
certified or registered mail, postage prepaid, return receipt requested; (b)
upon he next business day after being sent overnight by U.S. Express Mail or by
a major U.S. express document courier; or (c) upon receipt of confirmation
following transmission by a facsimile machine if sent on a business day during
business hours (otherwise, deemed received six hours after the beginning of the
next business day).

     15.5 No Assignment.  Except as permitted by Section 15.3
("Subcontracting"), PETsMART may not assign its rights or delegate its duties
without PETsMART.com's prior written consent in PETsMART.com's sole discretion.
PETsMART.com may assign, transfer, delegate or grant all or any part of its
rights pursuant to this Agreement to any person or entity. Any assignment or
delegation in violation of this Section shall be void and of no effect. Subject
to the prohibitions against assignment contained herein, this Agreement shall
inure to the benefit of and shall be binding on the parties hereto and their
respective successors and permitted assigns.

     15.6 Severability; Waiver.  If any provision of this Agreement is held to
be invalid or unenforceable for any reason, the remaining provisions will
continue in full force and effect without being impaired or invalidated in any
way.  The parties agree to replace any invalid provision with a valid provision
which most closely approximates the intent and economic effect of the invalid
provision.  The waiver by any party of a breach of any provision of this
Agreement will not operate or be interpreted as a waiver of any other or
subsequent breach.

     15.7 Headings.  Headings used in this Agreement are for reference purposes
only and in no way define, limit, construe or describe the scope, intent, or
extent of the section or in any way affect this Agreement.
<PAGE>

     15.8 Independent Contractors; No Agency.  The parties to this Agreement are
independent contractors, and no agency, partnership, joint venture, or employee-
employer is intended or created by this Agreement.  Neither party is the agent
of the other, and neither party shall have the power to obligate or bind the
other party.  Personnel supplied by each party shall work exclusively for that
party, and shall not, for any purpose, be considered employees or agents of the
other party, and each party assumes full responsibility for the acts of
personnel supplied by it while performing services hereunder and, with regard to
any personnel supplied by it, each party shall be solely responsible for their
supervision, direction and control, compensation, benefits, and taxes.

     15.9 Entire Agreement.  This Agreement, including the Exhibits attached
hereto, sets forth the entire understanding and agreement between the parties
regarding the subject matter of this Agreement, and supersedes any and all oral
or written agreements or understandings between the parties as to that subject
matter.  It may be changed only by a writing signed by both parties. Neither
party is relying upon any warranties, representations, assurances, or
inducements not expressly set forth herein.

     In Witness Whereof, each of the parties hereto have executed this Agreement
as of the date first written above.

PETsMART.com:                               PETsMART:

  /s/ Tom McGovern                              /s/ Philip L. Francis
----------------------------------        --------------------------------------
By:      Tom McGovern                     By:      Philip L. Francis
Title:   President and CEO                Title:   President and CEO
Address: 53 Hugus Alley, Suite 210        Address: 19601 North 27th Avenue
         Pasadena, CA 91103                        Phoenix, AZ 85207
Fax:     (626) 817-7101                   Fax:     (623) 580-6513

List of Exhibits:

A - Activity-Based Costing
B - Customer Service Standards
<PAGE>

                                                                       EXHIBIT A
                                                                       ---------

                       FULFILLMENT ACTIVITY BASED COSTING

[*]

[*]   CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
      WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
      RESPECT TO THE OMITTED PORTIONS.

<PAGE>

                                                                       EXHIBIT B
                                                                       ---------

                      PETsMART CUSTOMER SERVICE STANDARDS

Overall:  PETsMART's ability to meet any customer service standard depends on
the variance between projected and actual customer volume.

Customer Order Processing Service Standards.

PETsMART CSRs will meet the following standards (applied as a monthly average)
for answer  ing telephone calls to the Website customer service telephone
number:

  .  [*] answered within [*] seconds and less than [*] abandon call rate.

  .  [*] of all calls will be coded as to the source/nature of the call (e.g.,
order taking, order status, site problem, etc.)

PETsMART CSRs will meet the following standards (applied as a monthly average)
for respond  ing to emailed customer inquiries.

  .  [*] personal contact (e.g., automatic email response) within [*] by
March 2000.

  .  [*] resolved within [*].

Merchandise "In Stock" Availability.

  .  Key Items merchandise, as mutually agreed upon from time to time (so-called
"A" items) will be "in stock" and will have a [*] fulfillment rate measured in
line items calculated on a monthly average.

  .  All other items (so-called "B" items) will have a [*] fulfillment rate
measured in line items calculated on a monthly average.

Fulfillment.

PETsMART will meet the following fulfillment service rates (applied as a monthly
average) for in-stock inventory (except for personalization and gift-wrapping):

  .  [*] fulfillment rate measured in line items, shipped within [*] of
PETsMART Direct's computers' receipt of complete and accurate order.

                                       2

[*]   CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
      WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
      RESPECT TO THE OMITTED PORTIONS.

<PAGE>

  .  [*] fulfillment rate measured in line items, shipped within [*] of
PETsMART Direct's computers' receipt of complete and accurate order.

                                       3

[*]   CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
      WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
      RESPECT TO THE OMITTED PORTIONS.<PAGE>

                                                                   EXHIBIT 10.31

                            FORM OF STANDSTILL AGREEMENT
                            ----------------------------

          This Standstill Agreement, dated February [_], 2000 (the "Agreement"),
is entered into by and between PETsMART.com, Inc., a Delaware corporation
("PETsMART.com") and PETsMART, Inc., a Delaware corporation ("PETsMART").

                                    RECITALS
                                    --------

          WHEREAS, PETsMART beneficially owns as of the date of this agreement,
an aggregate of [_______________________] shares of the common stock of
PETsMART.com (the "Common Stock");

          WHEREAS, substantially concurrently with the execution of this
Agreement, PETsMART and PETsMART.com have entered into a Web and Content Hosting
Agreement, a Merchandising, Procurement, Distribution, and Fulfillment
Agreement, and a Marketing Agreement, each dated as of December 31, 1999;

          WHEREAS, PETsMART.com and PETsMART desire to enter into this
Agreement;

          NOW, THEREFORE, in consideration of the mutual promises hereinafter
made, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound hereby, agree as follows:

                                   AGREEMENT
                                   ---------

     1.   Standstill
          ----------

          1.1  Limitations.  For a period of 30 months from the date of this
               -----------
     Agreement, without the prior written consent of the Board of Directors of
     PETsMART.com, specifically expressed in a resolution adopted by a major-
     ity of the directors of PETsMART.com who are not affiliates of, and are
     neither officers nor directors of, PETsMART or any corporation or other
     entity controlling, controlled by or under common control with PETsMART
     (each a member of the "PETsMART Group"), PETsMART shall not, and shall not
     permit any member of the PETsMART Group to, in any manner, directly or
     indirectly:
<PAGE>

               (i)   acquire, or offer or agree to acquire, directly or
          indirectly, by purchase or otherwise, any capital stock of
          PETsMART.com ("Capital Stock"), or any securities convertible into or
          exchangeable for, or any other right to acquire, Capital Stock
          (collectively, "Convertible Securities") (except by way of stock
          dividends or other distributions made on a pro rata basis with respect
          to securities of PETsMART.com acquired by any member of the PETsMART
          Group prior to the date of this Agreement) if, immediately following
          such acquisition, the members of the PETsMART Group would beneficially
          own, in the aggregate, more than 49.9% (the "Threshold Percentage") of
          the then outstanding Common Stock (assuming the conversion, exchange
          and/or exercise of all Convertible Securities beneficially owned by
          members of the PETsMART Group but not of any Convertible Securities
          owned by any other person or entity); provided, that if PETsMART.com
                                                --------
          repurchases or recapitalizes any of its shares and such repurchases or
          recapitalization result in the members of the PETsMART Group owning
          more than the Threshold Percentage at the effective time of such
          repurchase or recapitalization, no member of the PETsMART Group shall
          be obligated to divest itself of shares of Capital Stock to meet the
          Threshold Percentage, but no member of the PETsMART Group shall
          acquire any additional shares of Capital Stock unless such acquisition
          would otherwise be permitted under this Section 1;

               (ii)  solicit proxies or consents or become a "participant" in a
          "solicitation" (as such terms are defined in Regulation 14A under the
          Securities Exchange Act of 1934, as amended) of proxies or consents
          with respect to securities of PETsMART.com with regard to any matter;

               (iii) seek to advise, encourage or influence any person with
          respect to the voting of any securities of PETsMART.com, or induce,
          attempt to induce or in any manner assist any other person in
          initiating any stockholder proposal or tender or exchange offer for
          securities of PETsMART.com or any change of control of PETsMART.com,
          or for the purpose of convening a stockholders' meeting of
          PETsMART.com; provided, that PETsMART may tender in any such tender or
          exchange offer;

                                       2
<PAGE>

               (iv)  acquire or agree to acquire, by purchase or otherwise,
          more than 5% of any class of equity securities of any entity which,
          prior to the time the PETsMART Group acquires more than 5% of such
          class, is publicly disclosed (by filing with the Securities and
          Exchange Commission or otherwise), or is otherwise known to PETsMART,
          to be the beneficial owner of more than 5% of the outstanding Common
          Stock;

               (v)   make any public announcement, regarding any possibility,
          intention, plan or arrangement, relating to a tender or exchange offer
          for securities of PETsMART.com or a business combination (or other
          similar transaction that would result in a change of control), sale of
          assets, liquidation or other extraordinary corporate transaction
          between any member of the PETsMART Group and PETsMART.com, or take any
          action that could reasonably be expected to require PETsMART.com to
          make a public announcement regarding any of the foregoing;

               (vi)  other than [    ] shares of Common Stock purchased
          pursuant to that Stock Subscription Agreement, dated February [_],
          2000, between PETsMART.com and PETsMART, deposit any securities of
          PETsMART.com in a voting trust or subject any securities of
          PETsMART.com to any arrangement or agreement with respect to the
          voting of securities of PETsMART.com; or

               (vii) form, join or in any way participate in a partnership,
          limited partnership, syndicate or other group (or otherwise act in
          concert with any other person) other than other members of the
          PETsMART Group for the purpose of (A) acquiring, holding, or voting of
          securities of PETsMART.com or (B) taking any other actions restricted
          or prohibited under clauses (i) through (vi) of this Section 1, or
          announce an intention to do, or enter into any arrangement or
          understanding with others to do, any of the actions restricted or
          prohibited under clauses (i) through (vi) of this Section 1.

          1.2  Notice of Capital Stock Purchases.  For a period of  30 months
               ----------------------------------
     from the date of this Agreement, PETsMART shall notify PETsMART.com as to
     any acquisition by any member of the PETsMART Group of beneficial ownership
     of Capital Stock or Convertible Securities, within ten (10) busi-

                                       3
<PAGE>

     ness days after such action in order for PETsMART.com to monitor compli-
     ance with the terms of this Agreement. All such purchases shall be made in
     compliance with applicable laws and regulations.

          1.3  Permitted Transaction. The restrictions contained in Section 1.1
               ---------------------
     of this Agreement shall immediately and automatically be suspended upon the
     occurrence and during the continuation of any of the following events:  (a)
     the filing with the Securities and Exchange Commission ("SEC") of a
     Schedule 13D (or any successor filing) by any person, entity or group
     outside the PETsMART Group indicating that such person, entity or group has
     acquired more than 5% of the outstanding shares of Common Stock, which
     Schedule 13D expresses the filing party's intention to assume control of
     the Company, whether by tender offer, merger, proxy contest or otherwise;
     (b) the commencements of a tender offer by any person, entity or group
     outside the PETsMART Group to acquire 30% or more of the outstanding shares
     of Common Stock; or (c) the solicitation of proxies by any party other than
     PETsMART.com or a member of the PETsMART Group to which Rules 14a-3 to 14a-
     15 under the Securities Exchange Act of 1934, as amended (or any successor
     rules) applies that is intended to effect a change in the majority of
     members of the PETsMART.com Board of Directors.

          1.4  No Waiver Request.  No request or proposal to amend, modify or
               -----------------
     waive any provision of this Section 1 (other than a request or proposal
     made or solicited by PETsMART.com) shall be made or solicited during the 30
     months beginning on the date of this Agreement.

          1.5  No Limitation on Disposition.  Nothing in this Agreement shall be
               ----------------------------
     construed in any manner to limit any member of the PETsMART Group's rights
     to sell or otherwise dispose of Capital Stock in any manner or to any
     person(s) or entity(ies).

     2.   Miscellaneous
          -------------

          2.1  Merger Clause.  This Agreement constitutes the complete agreement
               -------------
     between the parties hereto with respect to the subject matter hereof and
     shall continue in full force and effect until terminated by mutual
     agreement of the parties hereto or pursuant to the terms hereof. The
     section headings used herein are for reference purposes only and shall not
     in any way affect the meaning or interpretation of this Agreement.

                                       4
<PAGE>

          2.2     Choice of Law.  This Agreement shall be construed, performed
                  -------------
     and enforced in accordance with, and governed by the internal laws of the
     State of Delaware, without giving effect to the principles of conflicts of
     law thereof, and each party consents to personal jurisdiction in such state
     and voluntarily submits to the jurisdiction of the courts of such state in
     any action or proceeding relating to this Agreement.  Whenever possible,
     each provision of this Agreement shall be interpreted in such a manner as
     to be effective and valid under applicable law, but if any provision hereof
     is held to be invalid, illegal or unenforceable under any applicable law or
     rule in any jurisdiction, such provision will be ineffective only to the
     extent of such invalidity, illegality, or unenforceability, without
     invalidating the remainder of this Agreement.  This Agreement may not be
     modified or amended and no provision hereof may be waived, in whole or in
     part, except by a written agreement signed by the parties hereto.  No
     waiver of any breach or default hereunder shall be considered valid unless
     in writing, and no such waiver shall be deemed a waiver of any subsequent
     breach or default.

          2.3    Remedy.  PETsMART acknowledges that PETsMART.com would not have
                 -------
     an adequate remedy at law for money damages in the event that this
     agreement is not performed in accordance with its terms and therefore
     PETsMART agrees that PETsMART.com shall be entitled to specific enforcement
     of the terms hereof, without being required to post any bond, in addition
     to any other remedy to which it may be entitled, at law or in equity.

          2.4  Notices.  All notices, consents, waivers, and other
               -------
     communications under this Agreement must be in writing and will be deemed
     to have been duly given when (a) delivered by hand (with written
     confirmation of receipt), (b) sent by facsimile (with written confirmation
     of receipt), provided that a copy is mailed by registered mail, return
     receipt requested, or (c) when received by the addressee, if sent by a
     nationally recognized overnight delivery service (receipt requested), in
     each case to the appropriate addresses and facsimile numbers set forth
     below (or to such other addresses and facsimile numbers as a party may
     designate by notice to the other parties):

                                       5
<PAGE>

          (i)  If to PETsMART.com:

               PETsMART.com, Inc.
               35 Hugus Alley, Suite 210
               Pasadena, CA 91103
               Facsimile No.: (626) 817-7101
               Attn:  Tom McGovern, Jr.

               With a copy to:

               Skadden, Arps, Slate, Meagher & Flom LLP
               300 South Grand Avenue, Ste. 3400
               Los Angeles, CA   90071
               Facsimile No.:  213-687-5600
               Attn:  Michael A. Woronoff

          (ii) If to PETsMART:

               PETsMART, Inc.
               19601 N. 27/th/ Avenue
               Phoenix, AZ 85027
               Facsimile No.:  (623) 580-6513
               Attn: Philip L. Francis

               With a copy to:

               PETsMART, Inc.
               19601 N. 27/th/ Avenue
               Phoenix, AZ 85027
               Facsimile No.:  (623) 580-6513
               Attn:  General Counsel

          2.5  Counterparts.  This Agreement may be executed in counterparts,
               ------------
     all of which shall be taken together as one and the same instrument.

                                       6
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.

                              PETSMART.COM, INC.

                              By:
                                  -------------------------------
                                  Name:
                                  Title:

                              PETSMART, INC.

                              By:
                                  -------------------------------
                                  Name:
                                  Title:

                                       7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00001-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00001-of-00352.parquet"}]]