Wayfair Sees Supercharged Shift to E-Commerce During Pandemic

Wayfair saw “unprecedented demand” and “record numbers of new and repeat customers” in its second quarter of 2020, as shoppers turned to improving their homes during the pandemic and shopping online.

“Accelerated e-commerce adoption was also an important tailwind in Q2, and should bring longer lasting benefits to our business,” said Niraj Shah, CEO, co-founder and co-chairman, Wayfair, during the retailer’s earnings call. “What was even before COVID an inexorable shift to e-commerce then became supercharged over the last several months, and we believe much of the step change in online penetration will prove to be sticky. In fact, our view is that e-commerce adoption is likely to continue to shift faster than it did pre-COVID.”

Wayfair’s U.S. net revenue spiked $1.7 billion in its Q2, which ended June 30, up 82.5% year-over-year. Total net revenue soared 83.7% to $4.30 billion, easily beating analysts’ forecasts of $4.07 billion.

The online home furnishings retailer activated nearly five million net new customers in the second quarter, said Shah, more than the last four quarters combined.

“In the U.S., we also reengaged more than a million past customers who had been absent from the platform for longer than 12 months.”

“In Q2,” he continued “we also saw a slightly different cadence to our customer's order patterns with fewer items per order offset by higher purchase frequency. Shopping via mobile platforms, including our apps, which saw heavy download activity, grew about 600 basis points sequentially in Q2, to over 60% of all orders. It would be overreaching to predict what exactly will play out in the coming weeks and quarters. There's a tremendous amount of macro uncertainty and various pressures on the consumer. This is coupled with clearly changing behavior in terms of what consumers are buying, and how.”

To meet this unprecedented e-commerce demand, Wayfair is now onboarding 1,000 additional members onto its customer service team to bolster the customer experience. It has also moved to leverage more data and technology to inform supplier decision making when setting wholesale costs.

In a normal year Wayfair experiences two seasonal peaks, Way Day in the spring and Cyber Five going into the holidays. [Since] approximately mid-March nearly every day has rivaled those cyclical peaks, noted Shah.

“Simply put, we could not have effectively met over $4 billion of demand as we did in Q2 without the kinds of infrastructure, technology and relationships we've invested in over many years.”