Wayfair vs Amazon – Which company owns more than 30% of the home furnishings market?

Wayfair isn’t new to the world of selling furniture online.

The two co-founders (Niraj Shah and Steve Conine) started the company in 2002 selling media stands and storage furniture under the name racksandstands.com.

By 2006 they were doing $100m in sales and by their IPO in 2014 they were the largest online-only retailer for home furniture in the United States. 

Shah has said that since furniture is hard to ship, free shipping over $35 would be their competitive advantage. 

Between eating shipping costs and spending a fortune on advertising ($1.1B in 2019) their revenue per customer is actually negative.

Last year they reported spending $69 to get a new customer to spend $59 on the site.

This might have seemed insane and unsustainable when you factor in all the places consumers could buy furniture.

Then COVID hit.

We all know what happened next, California and New York issue stay at home orders at the end of March, with the rest of the country following suit early April.

Virtually all of Wayfair’s competitors disappeared overnight as a result.

Some retail analysts have said other than Instacart, Wayfair is the single biggest benefactor of COVID-19. While most of the retail industry was grinding to a halt, their Q1 net revenue soared 20% YOY to $2.3B.

Investors seem to agree, their stock price has gone from $27 on March 28th lows to the current price of $211.

Was it luck?

Wayfair vs Amazon Comparison

Last week we talked about how Amazon is moving away from the first-party sales/wholesale model, shifting to the more profitable and scalable 3rd-party business.

In the meantime, when comparing Wayfair vs Amazon – Wayfair is still buying wholesale, charging $0 fees, covering their own shipping losses, and providing a marketplace of over 20m customers.

Home furnishings is an interesting space because there seems to be a low brand affinity and a huge amount of opportunity, especially if you can imagine even a fraction of the 85% of offline sales moving online in the coming years.

If you have a brand in the space I’d love to learn more about your online strategy and whether you’ve considered selling on Wayfair. 

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