Home > Uncategorized > Wayfair’s web sales soar 81% in Q2

Wayfair’s web sales soar 81% in Q2

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August 13, 2015, 12:56 PM

The furniture and home decor e-retailer says new customer gains and more repeat buyers propelled the big sales gain.

Wayfair Inc.’s more than 4 million active customers in the second quarter placed nearly 2 million online orders, pushing the furniture and home décor retailer’s Q2 web sales up nearly 81% to $440.3 million versus $243.5 million a year earlier.

Executives say a shift in advertising strategy is helping attract higher-value customers more likely to make multiple purchases. Wayfair spent $61.5 million on advertising in the quarter, up 44.7% from $42.5 million a year earlier. It says yearly spending per active customer is $357, up 7.5% from a year ago, and active customers place 1.67 orders a year with the e-retailer, up from 1.62 orders a year ago. Repeat customers accounted for 56.6% of orders in Q2 versus 51.6% in Q2 2014.

“As orders from the existing customers become a larger portion of the base, we anticipate continued improvement in ad spend leverage,” Michael Fleisher, chief financial officer, said in a call Wednesday with investors.

Direct-to-consumer revenue—the result of orders placed on Wayfair.com, Joss & Main, AllModern, Birch Lane and Dwell Studio—accounted for 89.5% of Wayfair Inc.’s Q2 total revenue of $491.8 million. A year earlier, direct-to-consumer revenue accounted for 82.4% of total revenue of $295.4 million. The difference between direct retail revenue and total revenue includes revenue from its media business, such as the sale of ad space on Wayfair-owned sites, and sales through other retail sites that sell Wayfair products, Wayfair says.

In tandem with sales growth, the company hired 225 new employees during the quarter and is expanding its recruiting team to hire more. “We believe it’s important to invest in our team now to meet the growing needs of our business,” Fleisher said. That includes planning for a third customer service center to support its North American business. It already operates customer service centers in Boston and Orem, Utah; it is scouting for a third location. Wayfair also has two customer service centers overseas to serve international customers. Customer service agents number 800 at Wayfair, and executives noted that the e-retailer has 350 engineers and data scientists on staff.

Wayfair also is in the process of opening a 50,000-square-foot photo studio near Boston and continues to work on growing its own delivery operations. In some markets, Wayfair operates its own trucks for delivery of Wayfair orders, although co-founder and CEO Niraj Shah says the program is in its early development stage. “We’re increasingly moving to dedicated delivery operations where whether it’s us operating it or a partner operating it, it’s dedicated to Wayfair orders.  By dedicating it to Wayfair orders, they can follow our procedures and our service levels for every order on the truck every day, which is going to allow the drivers to specialize; it allows us to use our technology around scheduling and things like this,” he said on the call, according to a transcript from SeekingAlpha.

Last month, Wayfair began working with retailer Mattress Firm to deliver mattresses and related goods the same day they are ordered on Wayfair.com.

For the quarter ended June 30, Wayfair, No. 33 in the Internet Retailer 2015 Top 500, reported:

  • Total revenue of nearly $491.8 million, up 66.5% from $295.4 million in the second quarter of 2014.
  • Net loss of $19.3 million, which compares to a $28.0 million net loss for the same period last year.
  • It delivered 1.96 million orders during the quarter, up from 1.08 million.
  • It had 4.04 million active customers during the quarter, up 53.0% from 2.64 million.
  • An average order value of $225, the same as a year ago.
  • A 78.9% increase in merchandising, marketing and sales spending, to $23.8 million from nearly $13.3 million.
  • A 54.7% increase in operations, technology, general and administrative spending, to $36.5 million from $23.6 million.

For the six months ended June 30, Wayfair reported:

  • Total direct-to-consumer revenue of $809.7 million, up 72.5% from $469.5 million.
  • Total revenue of $916.1 million, up 59.6% from $574.1 million.
  • A net loss of $46.5 million versus a net loss of $63.2 million a year ago.

Wayfair says it expects to generate $445-$475 million in direct retail revenue in the third quarter.

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