When a new Wayfair worker joins the team – and as of late, there have been an awful lot of Wayfair workers – their first lesson is in customer service. The goal of the Wayfair worker is to work on “innovating better together,” becoming “fast fixers and builders” and to help customers to better “envision the spaces where they live their lives.”
It’s a tall order for a Boston-based furniture company – but Wayfair has always thought big, even when it was very, very small. So small, in fact, that when it first started in 2002, the entire operation fit easily into the spare bedroom of Co-founder Steve Conine’s Boston home.
As of today, that one-room idea has grown to $6.6 billion in annual revenue, a stock market value of $10 billion and a headcount that is growing quickly toward 10,000 – about 20 percent of which was added in the last year. And the growth is something of an ongoing concern: Wayfair is looking to branch out from its Copley Place headquarters in downtown Boston, and will be overflowing into a neighboring building that reportedly has enough space to accommodate it.
“Over the first 10 years, we went from bootstrapping to going to half-a-billion dollars in sales,” Co-founder Niraj Shah told The Boston Globe. “But we knew we wanted to build a nationally known mass retailer.”
The explosive growth comes with one small asterisk next to its name: Wayfair has gotten big and clearly intends to get quite a bit bigger, but it still isn’t making a profit. As of 2017, the firm was reporting a net loss of $245 million. According to Daniel McCarthy, a marketing professor at Emory University, Wayfair actually loses $10 for every new customer it adds – meaning the more it sells, the more it loses. And that, over a long-term scale, isn’t a great strategy.
“The big question is, how is that growth transferring into profitability?” Emory told The Globe.
But then, Wayfair has a long track record of perhaps surprising success. Furniture, unlike clothes, food and books, is not considered an ideal product for online sale. It’s large, heavy and expensive to ship. Also, because it is a major purchase that one tends to have to live with for a while, it has historically been classified as the type of good a consumer wants to have a hands-on experience with before deciding to make it a permanent feature of their living room.
But the technologist team at Wayfair has thought of a few paths around that problem. AR and VR tech, for example, means a customer can upload photos of the intended room for an item to get an idea of how, say, the new couch might fit into the picture. Moreover, Wayfair’s algorithms are good at reading consumers’ purchases and browsing patterns to figure out what they might be doing. Is a home renovation underway? Is the consumer hitting the reset button on a kid’s bedroom? Wayfair’s obsession is with data, and with using it to help predict a customer’s needs and then pitch directly to them.
It is, in short, the moneyballing of furniture sales.
And while Wayfair has been largely successful, the home goods and homeware segment where it first planted its flag 16 years ago is getting to be a very crowded place. It is something its founders always anticipated would happen – Wayfair used to be several different eCommerce sites clustered around homewares and home goods, but its founders condensed it into a single brand because they realized their future ability to really compete with players like Walmart, Target, Home Depot and Amazon would likely depend on it.
Probably a wise decision, since all of those brands have dramatically upped the level of the home game in the last 18 months. Amazon, for example, has tripled its furniture sales to $4 billion from 2015 to 2017, according to One Click Retail.
And yet, Team Wayfair is interested and watching – but not as wholly terrified as one might imagine a digital brand would be when Amazon’s eye falls upon their vertical.
“For us, it’s a primary focus,” Shah said. “With logistics, fast delivery, accurate dates, high quality and minimizing damage, we’re taking care of the customer, and that’s something we continue to do better and better as the years go by.”