Wayfair has become the largest dedicated home furnishings e-commerce seller, rolling up a vast collection of smaller sites under one umbrella, though it continues to operate specialized home sites under several other names, including Joss & Main, All Modern and others.
It has followed the Amazon model of reinvesting in its business with little regard for profitability—as evidenced by the fact that there has been no profitability to date. That has not prevented the company from being a Wall Street darling, more than quadrupling its stock price over the past two years, though recently it has receded from those lofty levels a bit.
Wayfair, of course, is missing one key factor that has allowed Amazon to break out the black ink on its balance sheet: the cloud and third-party marketplace services that are the backbone of Amazon’s more recent impressive move into profitability.
Wayfair is trying to do it just on the strength of more traditional, straight-forward e-commerce, but with its free shipping overhead and major infrastructure investments, the numbers have not been kind.
So the move into physical stores should not come as a surprise. Customer acquisition costs have proven to be the Achilles heel of many online sellers and that also appears to be the case with Wayfair. The cost of getting someone to walk into your store is turning out to be less than the price tag for getting him/her to make a purchase on your site.
Nor should additional Wayfair locations be considered shocking. Amazon now operates about a half-dozen locations under at least two formats — books and convenience store items — while other e-commerce stalwarts from Casper to Bonobos are all discovering that physical stores have their place in the greater retail picture.
Wayfair’s site currently makes this claim: “Wayfair does not have any physical stores. … No more searching ‘Wayfair store near me’ or planning an all-day family trip to a furniture store to shop.”
Sometime soon, you can expect those words to disappear into the ether about as quickly as Wayfair’s no-store strategy.