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How Wayfair Blossomed into a Furniture Behemoth

December 2019 Product

Amazon is not the only internet giant that has dealt a severe blow to brick-and-mortar retailing. Another Internet retailer, Wayfair, Inc., has also thrust a sword into conventional retailing. Like Amazon, which began simply as a book retailer, Wayfair has also evolved from an early e-commerce start-up concept into a behemoth.

The Wayfair story began in 1995 when Niraj Shah and Steve Coninr graduated from Cornell University with engineering degrees.

A May 19th, 2019 article in FORTUNE (“It’s All Clicking for Wayfair, A Fortune 500 Newcomer” by Jeffrey O’Brien) describes how Shah and Coniine became entrepreneurs: “Both fresh-faced engineering students who liked talking business, they possessed highly analytical minds and more than their share of pluck and will. But little else.”

Their first venture after graduation was Spinners, an IT consulting business, which they sold for $10 million. They then moved into a second venture, Simplify Mobile, a maker of mobile-phone software for corporate users. Alas, Simplify Mobile never got off the ground.

Wayfair began by combining niche small businesses into and online sales marketplace

According to Kasey Wehrum, writing in an April 3rd, 2012 article in Inc. (“Special Report: Wayfair’s Road to $1 Billion”), Shah and Connie stumbled onto the Wayfair concept by accident. They discovered a company that sold birdhouses and that was doing respectable business. They then searched and found several other companies with similar business models and selling similar products. “They all had the same story — a husband and wife running it out of their garage or two guys running it out of a spare bedroom,” said Shah. “These were folks who didn’t have a lot of marketing or technology expertise. They weren’t getting rich, but they were doing a couple hundred thousand dollars a year in sales — and growing at 20 to 30 percent.”

Wehrum reports that the two entrepreneurs took this concept to the next level by   banding together a number of specialty retailers under one banner. What eventually became Wayfair had $500 million in sales by 2011. In its 2018 earnings report, Wayfair reported revenue growth of 45% over 2017 to $6.7 billion. It has since become the world’s 12th largest online retailer.

While the Shah and Conine idea was good, it didn’t become a success overnight.  For the first nine years of its existence, Wayfair was known as CSN Stores. According to Wehrum, “Rather than one brand, CSN Stores was a collection of more than 200 almost absurdly narrow niche sites, with names such as HotPlatews.com and EveryGrandfatherClock.com.”

The “leap” for Shah and Conine involved learning quantitative marketing via Google AdWords and bonding with suppliers and distributers. Shah and Conine held on to customer service. The business model was replicated over 250 furniture market segments. Conine, quoted in the INC. article said: “We spent nine, ten years building the system and infrastructure and worried less about the front end until we had operational consistency,” said Conine. “It’s easy to start an e-commerce site and build a sexy front-end. It’s very hard to durably deliver the experience you’re promising.”

Amazon’s ascendancy to the summit of the e-commerce also represented an evolution. Jeff Bezos began as a book e-tailer. While his business grew, costs increased disproportionally. Bezos then started selling its backroom and warehouse software and systems. His “leap” was realizing that his systems could sell everything under the Amazon banner.

Wayfair and Amazon will clearly play major roles in the reformulation of retailing in America.

Sidebar: Wayfair did hit a temporary bump in the road last January when employees walked out of its Boston headquarters to protest the selling of furniture to migrants at the southern border. As part of the protest, employees wanted all Wayfair profits to be donated to a not-for-profit organization that reunites families. 



About the author

James T. Berger, Senior Marketing Writer of The Wiglaf Journal, through his Northbrook-based firm, James T. Berger/Market Strategies, offers a broad range of marketing communications, research and strategic planning consulting services. In addition, he provides expert services to intellectual property attorneys in the area of trademark infringement litigation. An adjunct professor of marketing at Roosevelt University, he previously has taught at Northwestern University, DePaul University, University of Illinois at Chicago and The Lake Forest Graduate School of Management. He holds degrees from the University of Michigan (BA), Northwestern University (MS) and the University of Chicago (MBA). Berger is an often-published free lance business writer who has developed more than 100 published articles in the last eight years. For more information, visit www.jamesberger.net or telephone him at (847) 328-9633.

James T. Berger
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