The Coronavirus Outbreak Is a Boon for Wayfair
As temporary store closures due to the COVID-19 outbreak shook up physical retail, Wayfair’s U.S. sales skyrocketed 19% in its first quarter 2020.
“Millions of new customers shopped at Wayfair over the last several weeks,” Niraj Shah, CEO, co-founder and co-chairman, Wayfair, said during the company’s earnings call.
The home goods and furnishings retailer said it saw a pickup in both traffic and conversion starting in mid-March as customers began to shelter in place at home.
“The competitive landscape also shifted as many physical retail stores closed temporarily, leading customers to move increasingly towards shopping online across all categories, including home,” said Shah. “This pickup in demand has continued to gain momentum. And in the U.S., the rollout of stimulus monies in mid-April served as an added accelerant of new and repeat customers coming to Wayfair.”
Wayfair shoppers bought products like cookware, kitchen appliances, home office products and children's furniture and play items.
However, despite the uptick in e-commerce shopping, Wayfair posted a net loss of $285.87 million, or $3.04 a share, for the quarter ended March 31, compared with a net loss of $200.39 million, or $2.20 per share, in the year-ago period. Excluding one-time items, Wayfair lost $2.30 per share. Analysts expected an adjusted loss of $2.60 per share. Net revenue grew nearly 19.8% to $2.33 billion, topping estimates of $2.31 billion.
“As we execute on the plans we set in motion late last year, we are making significant strides toward profitability by driving gross margin expansion, increasing marketing efficiencies, and gaining leverage on operating expenses,” Shah said in a press release. “Our solid internal progress and healthy balance sheet put us in a position of strength in a highly dynamic environment.”
Wayfair reported the number of active customers in its Direct Retail business jumped 28% year-over-year to reach 21.1 million as of March 31, and 9.9 million orders were delivered in the quarter.
Repeat customers placed 6.9 million orders (69% of total orders) in the first quarter of 2020, a 27% spike year-over-year.
“We're seeing proof of these customers' positive experiences in strong NPS scores and repeat purchasing behavior from new customers that is consistent with or better than previous customer cohorts,” said Shah.
“Time will tell how economic conditions affect future purchasing behavior and the size of the overall home market, but there is little doubt that the quality of experience we can offer to new and returning customers during this challenging time will serve us well in the future.”
Wayfair’s New CTO
In other news, Jim Miller, who had served in the interim CTO capacity since last August, has officially joined Wayfair as its permanent Chief Technology Officer.
“After an extensive global search for a pedigreed technology leader with experience in fast-growing companies operating at tremendous scale, we came back to what we knew all along: best candidate was already in-house,” Shah said.
As CTO, Miller will continue to provide strategic direction and leadership for the rapid scaling of Wayfair’s tech operations. Drawing upon extensive experience leading large teams at Google, Cisco and Amazon during hyper-growth periods, Miller will continue to cultivate an entrepreneurial environment for Wayfair’s engineering team while further fueling Wayfair’s global e-commerce platform and tech-driven supply chain.
Over the past eight months, Miller has become a well-respected leader within the company and has successfully mobilized the engineering organization behind his vision. As CTO, he will continue to lead the product and engineering roadmap and prioritization to drive the success of Wayfair’s tech enabled global business.
“In my tenure as interim CTO and board member, I have gained a deep appreciation for both the strength of Wayfair’s team and the incredible opportunity ahead for Wayfair,” said Miller. “We are building an unparalleled technology platform that is uniquely positioned to serve the growing ecommerce market. When we couple that platform with the company’s world-class supply chain operations and a highly talented team, the opportunity ahead is immense.”
Before joining Wayfair as interim CTO in 2019, Miller served as CEO of AREVO. At Google, Miller served as VP of Worldwide Operations from June 2010 until February 2018. Prior to joining Google, Miller was EVP of Sanmina-SCI Corporation, one of the world’s largest electronic manufacturing service providers, where he had responsibility for their industrial, clean tech, multimedia and automotive businesses. Miller also served as a senior executive at Cisco over a seven-year tenure and as VP of Supply Chain at Amazon where he was responsible for the inception of the company’s supply chain organization and was a key contributor to Amazon’s rapid growth into a global company.
Miller received a B.S. from Purdue University, an M.S. from MIT and an MBA from the Sloan School of Management at MIT. With Miller’s transition to CTO, he will step down from Wayfair’s board, a position he held for the last four years.