Wayfair’s mission is to help people find the perfect product at the right price.
Niraj Shah and Steve Conine met as high school students while being enrolled in a summer program at Cornell University. They both attended the school to study engineering and found themselves in the same dorm, soon becoming good friends. In their final semester of college they took an entrepreneurship class that inspired them to come up with an idea for an online retail firm.
The two studied Internet search patterns and determined that there was a demand that was not being met for the purchase of stereo racks and stands online. They then created a company called CSN Stores, which operated the website racksandstands.com, a seller of home entertainment and storage furniture. Over time CSN launched many more websites offering other types of home goods, with names ranging from cookware.com to strollers.com. By 2010, it maintained over 200 sites that were hauling in $380 million in annual revenues.
In 2011, Niraj and Steve took a major step and consolidated all of the websites into a single one called Wayfair. By 2012, the site was offering millions of products; it also began launching additional brands with items featuring a wide range of styles and price points. In 2014, Wayfair capitalized on its success by going public.
As of 2015, it had four brands and 3,809 employees, and was generating more than $2.25 billion in annual sales. Wayfair continues its efforts to create the ideal home goods shopping experience.
Wayfair has a segmented business model, dividing its customer base into five categories with slightly different needs and problems. These segments align with its five key brands, which are as follows:
Wayfair.com, a mass market brand with a wide range of styles and prices
Joss & Main, an online flash sales site offering home decor and significant savings
AllModern, an online source for original design for modern home enthusiasts
DwellStudio, an online design studio for fashion-forward modern furnishings
Birch Lane, a collection of classic furnishings and timeless home décor
Wayfair offers three primary value propositions: accessibility, customization, and brand.
The company’s main website acts as a one-stop shop, combining the wide range of prices found at big box retailers with the merchandising experience found at specialty retailers.
The sites for its various brands offer a personalized experience, customizing the interface based on past browsing patterns, shopping habits, and personal preferences.
Lastly, Wayfair has a well-established and strong brand as the largest pure-play online retailer in the U.S., with a vast selection of 7 million products.
Wayfair’s main channel is the online channel, consisting of the websites it operates for its five brands; it does not have any physical outlets. The mobile medium represents an increasingly prominent part of its business, as it launched apps for Joss & Main in 2012 and Wayfair.com in 2014.
Wayfair’s customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the main platform while having limited interaction with employees. That said, the firm also offers personal assistance through its customer service organization.
Wayfair’s key activities focus on platform management. The company’s business model entails maintaining a common platform between two parties: customers and product suppliers.
Wayfair’s main partners are its 7,000 suppliers, who provide the stock for its various brands. Many of the companies are small, family-run operations who would otherwise have difficulty gaining access to such a large customer base (over 3.2 million active shoppers).
Wayfair’s main resource is its proprietary technology platform. The system is designed to enable suppliers to easily offer their full merchandise selection, and they are given an updated view of demand and inventory need courtesy of real-time data and analytics.
The platform is maintained by over 300 engineers and data scientists. Another key resource is its customer service organization, which consists of over 600 employees.
Wayfair has a cost-driven structure, aiming to limit expenses through significant automation and the holding of minimal inventory – it usually ships products directly from suppliers to customers.
The company’s biggest cost driver is advertising expenses. Other major expenses are operations/technology/general/administrative (fixed), merchandising/marketing/sales (variable), and customer service and merchant fees (fixed).
Wayfair has two main revenue streams:
Direct Retail: The company generates revenue from the sales of products through the websites of its five brands and those of its retail partners.
Advertising: The company also generates revenues through fees from third-party advertisers that pay based on the number of clicks, actions, or impressions for advertisements placed on its websites.
Co-Founder, Co-Chairman, and CEO
info: Niraj earned a B.S. in engineering from Cornell University. Prior to starting the company he held positions as the CEO and co-founder of Simplify Mobile, COO and board member of iXL, and the CEO and co-founder of Spinners.
Co-Founder and Co-Chairman
info: Steve earned a B.S. in engineering from Cornell University. Prior to starting the company he held positions as the CTO of Simplify Mobile and the COO of iXL’s London branch. He leads development of Wayfair’s architecting and software systems.
Chief Technology Officer
info: Jeremy earned degrees from Wesleyan University and The Wharton School of the University of Pennsylvania. Prior to joining Wayfair he was the CTO at athenahealth. He leads Wayfair’s software development, infrastructure, and technology innovation.
Chief Financial Officer
info: Michael earned a B.S. in economics from The Wharton School. His past positions include Vice Chairman, Strategy and Operations at Warner Music Group and Chairman and CEO of Gartner. He oversees finance, M&A, and business strategy for Wayfair.
Chief Product and Marketing Officer
info: Ed earned a B.A. from Dartmouth College and an M.B.A. from MIT Sloan School of Management. Prior to joining Wayfair he held marketing positions at IBM-Emptoris and Digitas. He leads global Product Management, Marketing, and Analytics.
Chief Administrative Officer
info: Nicholas earned a B.S.B.A. in Accounting from American University and an M.B.A. from Fordham University. His past roles include VP of Finance at Mercator and CFO of SYNNAP. He oversees the finance, legal, HR, and real estate functions.
SVP of Strategic Initiatives
info: John earned an M.B.A. from the London Business School and a B.A. from Reed College. Prior to joining Wayfair he was a Principal at Boston Consulting Group. He oversees international operations and the development of new lifestyle brands.
SVP and General Manager of Wayfair.com
info: Steve earned a B.A. from Hamilton College and an M.B.A. from Northwestern University. Prior to joining Wayfair he worked at River West Brands and FutureBrand Worldwide. He leads overall strategy and execution for Wayfair.com.
Chief Operating Officer
info: James earned a B.A. from Dartmouth College and an M.B.A. from The University of Chicago. Prior to joining he served as a General Manager at Arrowstream and a Global Client Partner at iXL. He leads Wayfair's key operations worldwide.