Wayfair Inc. the web-only seller of housewares and home furnishings, today reported a 52% year-over-year revenue gain for the first quarter of 2015, thanks in part to more advertising.
“We are off to a strong start this year and are particularly pleased with the revenue strength and accelerated growth in our Direct Retail business,” says Niraj Shah, co-founder, CEO and co-chairman of Wayfair, No. 33 in the Internet Retailer 2015 Top 500 Guide. 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.
The retailer’s spending on advertising, including TV spots, increased 33.5% year over year in the first quarter, to nearly $59.0 million from $44.2 million. “It was a year-ago in Q1 2014 that we began to aggressively ramp our advertising spend to both grow our brand awareness and improve customer lifetime value through the acquisition of customers who have a higher propensity to repeat,” Shah told analysts today during the Q1 conference call.
“The increase in our advertising spend last year helped attract new, and higher-value customers, driving both revenue growth and advertising spend leverage this quarter,” Shah said.
Company executives also pointed to other improvements that have strengthened Wayfair’s e-commerce. “Our new category landing pages help the customer truly discover the right product by combining proprietary imagery from our photo studios, helpful content and buying guides created by our editors, trend forecasting from our merchants, and enhanced navigation and discovery from our engineers,” Steve Conine, co-chairman, chief technology officer and co-founder said today on a conference call with analysts, according to a Seeking Alpha transcript. “The result is a 25% to 35% reduction in exit rates on a revised landing pages in Q1 2015 compared to the same period a year ago. In the past nine months the site merchandising team has updated over 600 of these pages and we expect to see continued improvement as we roll out this initiative across our family of brands.”
For the quarter ended March 31, Wayfair reports:
- Total revenue of nearly $424.4 million, up 52.3% from $278.7 million in the first quarter of 2013.
- Total direct-to-consumer sales of nearly $369.4 million, up 63.4% from $226.0 million a year earlier. Net loss of $27.1 million, which compares to a $28.0 million net loss for the same period last year. Those salesincludes sales from any of the retailer’s five retail brands: Wayfair.com, Joss & Main, AllModern, Birch Lane and DwellStudio. “The growth in 2015 was driven by success in all our sites, but in particular continued strength and momentum in our largest business, Wayfair.com,” chief financial officer Michael Fleisher told analysts today.
- It delivered 1.8 million orders during the quarter, up 57.9% from the year before.
- Repeat customers accounted for 53.9% of orders placed in the first quarter. That compares with 50.7% in the first quarter of 2014. “This number is somewhat muted because the large number of new customers added in the quarter may not yet have had a chance to repeat,” Fleisher said, adding that Wayfair in Q1 gained 380,000 net new customers for 3.6 million total active customers. According to data found at Internet Retailer’s Top500Guide.com, return shoppers made up 45% of all the retailer’s traffic in 2014.
- An average order value of $206, up 3.5% from $199 for the same period last year.
- A 110.9% increase in merchandising, marketing and sales spending, to $23.2 million from nearly $11.0 million in the same period last year.
- A 43.0% increase in operations, technology, general and administrative spending, $32.6 million from $22.8 million.
Last year, Wayfair raised $319 million in its initial public offering.
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