Wayfair sales soar because it puts the "home" in WFH — but still no profit
Zooming from a teal Daulton Side Chair... Wayfair is the somewhat-chic, kind-of-techy, relatively affordable online furniture and home decor store — you probably know someone under the age of 30 in Boston who works there. Now Wayfair is winning in the lockdown economy:
- Sales jumped 20% last quarter as people flocked to Wayfair websites to make their homes (and home offices) more palatable for 24/7 lockdown living.
- Despite the sales boost, Wayfair lost $286M last quarter. Still...
- Wayfair stock shot up 24% to its highest point in a year and is now up 132% in a month.
If it acts like tech... Wayfair doesn't call itself a furniture company. It calls itself "the e-commerce leader in home." Despite its furniture fame, Wayfair doesn't actually manufacture any of the 14M products it sells across its five websites — it just connects furniture-makers with customers and takes a cut (so it doesn't really have to touch your geometric area rug).
Online-only doesn't mean business runs cheap... At first glance, we marvel at why techy companies like Lyft (with seemingly just an app and a few offices to run) are still losing billions a year. It's because they've got massive (though not immediately obvious) expenses:
- Wayfair still hasn't been able to turn a profit, since it's dropping major $$$ on costs like marketing, customer service, and delivery.
- In 2018 Wayfair splurged over $1.3B on marketing alone, which helped erase the profit it made on $7B worth of goods sold.