Dive Brief:
- Wayfair on Friday reported third-quarter net revenue fell 2% year over year to $2.9 billion. Within the U.S., net revenue fell 2.3% from the year-ago period to $2.5 billion, while international revenue was flat at $372 million.
- The online home goods retailer narrowed its losses during the period, with operating loss declining 51% to $74 million and net loss falling 55% to $74 million.
- Wayfair’s active customer base contracted in Q3, declining 2.7% from last year to 21.7 million. Orders delivered during the third quarter fell 6.1% year over year to 9.3 million, but average order value increased from $297 last year to $310 this year.
Dive Insight:
Wayfair narrowed its losses in the third quarter despite revenue declines as the retailer continues to face challenges related to softened demand across the home category.
Furniture and home furnishing store sales fell 5.3% year over year in September, according to monthly data released from the U.S. Department of Commerce.
“We remain laser-focused on delivering healthy profitability while setting ourselves up for success as the category rebounds,” Wayfair CEO and co-founder Niraj Shah said in a statement. “The core goal across each of our initiatives in 2024 is to foster customer loyalty and spur repeat business while driving economic value. We're not just aiming for short-term gains, but building long-lasting relationships with our customers that will be accretive on both the top and bottom lines.”
Those initiatives include the recent launch of Wayfair Rewards, a paid loyalty program that costs $29 a year. The new program replaces Wayfair’s existing credit cards rewards program and follows a previous loyalty program, MyWay, that ended in 2020.
“Our biggest learning from MyWay was that the customer value proposition that we had associated with the program — it just wasn't that strong,” Shah said on a call with analysts Friday. Shah pointed to perks associated with Wayfair Rewards, which include free shipping, early access to major sales events and 5% back in rewards on purchases.
“It has some of the basic engineering you want in a program that makes it very obvious and easy for the customer to change kind of where they choose to drive their spend,” Shah said. “I think we've got a very good setup, and … in hindsight, MyWay did not have as good a setup. For that reason, we didn't see the traction we wanted with that.”
The financial report comes after Wayfair announced layoffs that will impact close to 220 employees as it prepares to close a returns center and outlet store in Florence, Kentucky, at the end of 2025. Layoffs will begin at the end of this year and continue throughout 2025, the company said.
