Boston — Wayfair’s CEO, co-founder, and co-chairman Niraj Shah stated during the firm’s third quarter results call that the company is still gaining market share despite consumer spending hesitancy.
“With additional market share capture in Q3 despite ongoing challenges in the category, Wayfair demonstrated resilience once again,” Shah said in a prepared statement.
He pointed out that since the end of 2022, Wayfair has continuously increased its market share every quarter. To do this, it has optimized prices, enhanced logistics, and improved retail experiences on its websites and applications.
Regarding the retail home furnishings industry, Shah stated, “It’s a big, fragmented market.” Even while he praised Wayfair’s achievements, he informed the callers that at least two other businesses, Amazon and HomeGoods, are also succeeding. Shah used the recent closure of Conn’s as an example when he stated, “There are only a few winners and many more on the other side.”
Wayfair’s total net revenue for the quarter ended September 30 decreased by 2% year over year to $2.9 billion, while its U.S. net revenue decreased by 2.3% compared to the same quarter in 2023.
In Q3 2024, orders per customer increased somewhat to 1.85 from 1.83 in the same quarter the year before. While the average order value increased 4.4% year over year to $310, the number of delivered orders decreased 6.1%.
The quarter’s gross profit, or 30.3% of total net revenue, was $873 million. Non-GAAP adjusted EBITDA was $119 million, while the net loss was $74 million.
Kate Gulliver, the chief financial officer and chief administrative officer, stated in her guidance for the fourth quarter that sales are flat or slightly down due to the category’s ongoing difficulties and the election-related diversion of consumers. It is anticipated that the gross margin will fall between 30% and 31%.
Shah acknowledged that before the November election, people were hesitant to spend money on more expensive things like furniture, but he also claimed that Wayfair had been lowering prices for the previous two years, positioning itself to profit when the category did recover.
He cited Wayfair’s recently introduced subscription-based Wayfair Rewards program as an additional factor in the company’s market share growth. Shah stated that the initial objective is to increase that number to three times a year, using the lure of 5% back on all purchases and free shipping on all orders, as the average consumer shops on Wayfair twice a year. Eventually, the goal is to increase that number to four times a year.
Shah responded that “the customer value proposition wasn’t that strong” under the prior model of the company’s My Way rewards program when asked how Wayfair Rewards differentiates from it.
“Loyalty drives incrementality,” Gulliver said, adding that the new program has been successfully tested and would benefit both the corporation and its customers.
Steve Conine, co-founder and co-chairman, discussed possible tariff increases and their effects, saying that having a large assortment of goods from a variety of suppliers acts as a kind of buffer against rising tariffs.
Shah added that suppliers had shifted some of their business from China to Vietnam, Indonesia, and Cambodia since earlier tariffs were implemented. He claimed that “the industry is more cognizant of the risks.”
