Wayfair following Amazon model

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Wayfair following Amazon model

By Louisa Hallett - 08/02/2018
The company released its second quarter financial results and it revealed patterns that should look familiar to retailers.

Wayfair seems to be taking some pages from Amazon’s e-commerce success book.

The company released its second quarter financial results and revealed patterns that should look familiar to retailers.

Wayfair experienced a major GAAP net loss of $100.7 million and a major gross profit of $385 million, or 23.3 percent of its total net revenue. A similar correlation could be found in Amazon's financial reports, particularly when the e-commerce giant first launched. This was Amazon's approach early on -- to gain scale and sales volume and lose lots of money in the process.

The company’s direct retail net revenue, consisting of sales generated primarily through Wayfair’s sites, increased $538.5 million to $1.6 billion, an increase of an impressive 48.8 percent year over year.

These financial patterns are not the only similarity between Wayfair and Amazon. Wayfair also recently hosted its first-ever Way Day holiday on April 25, a peculiarly similar version of Amazon’s infamous Prime Day. Both holidays are centered around the idea of an early “Black Friday holiday.” Amazon launched Prime Day in 2015 to mark its 20th anniversary and has brought it back every July since.

Wayfair also experienced an increase in active customers, with its report revealing that its Direct Retail business reached 12.8 million as of June 30, an increase of 34 percent year over year.

The company experienced an impressive 66 percent of total orders from repeat customers during its second quarter, compared to 61.3 percent in the second quarter of 2017. According to the report, repeat customers placed 4.3 million order, an increase of 62.3 percent year over year. Orders delivered in the second quarter were 6.5 million, an increase of 50.8 percent year over year.

"We are pleased to report a record second quarter and our largest yet year-over-year dollar growth in Direct Retail net revenue. This recent quarter included our biggest revenue day in the history of the company as we introduced Way Day, the first-ever retail holiday for home," said Niraj Shah, CEO, co-founder and co-chairman, Wayfair. "Our long-term investments in further developing our logistics networks, international business, and in scaling headcount to improve our product and service offerings are resonating strongly with new and returning customers. By focusing on bringing customers the best possible experience in shopping for the home, from the home, we are leading the way in our category. We are delighted with the progress that we are making and the way in which we are positioned to keep taking market share as dollars shift online."

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