A boost in repeat customers and advertising spend drove up Wayfair LLC’s direct-to-consumer revenue by 92.7% and total revenue by 76.1% in the first quarter ended March 31, the online-only retailer reported today.
Direct-to-consumer sales, which are primarily orders placed online on the Wayfair.com, Joss & Main, AllModern, Birch Lane and Dwell Studio e-commerce sites, increased to $711.8 million from $369.4 million a year ago. Direct-to-consumer sales represented 95.2% of revenue in Q1, compared with 87.0% in the same period a year ago.
The number of active customers, or customers who made a purchase in the past 12 months, rose 68.9% to 6.074 million as of March 31, from 3.597 million a year ago. Repeat customers placed 55.4% of orders in Q1, compared with 53.9% a year ago, Wayfair said.
Wayfair, No. 24 in the Internet Retailer 2016 Top 500 Guide, in March announced plans to hire 1,400 sales and call center employees. In Q1 Wayfair hired a total of 790 full-time employees, some of whom joined its customer service staff while others were hired to build new revenue streams, such as enhancing on-site personalization and building Wayfair’s wedding registry, which will launch later this year, the company said.
Wayfair continues to invest in advertising, increasing its spend 68.4% in Q1 to $97.68 million from $ 58.00 million in Q1 2015. In the past 12 months, Wayfair’s ad spending increased 55% to $318 million from $205 million in the prior year. The e-retailer is investing in online, TV and direct mail advertising, the company said. Online, its largest advertising channel, includes display ads, social media ads and transactional advertisements. Wayfair earned the No. 1 spot in Internet Retailer’s Best Digital Marketers in E-Commerce, which scores retailers on their performance on search, social and email marketing metrics.
“According to Wayfair management, repeat purchasing is primarily driven by the company’s personalization engine and increasing product selection. Specifically, the company leverages user data to create individualized content within site pages and online marketing (e.g., emails), highlighting merchandise that may appeal to specific customers,” Colin Sebastian, e-commerce analyst at Robert W. Baird & Co., wrote in a note to investors. “As a result, customers are allocating more of their home category spending on Wayfair. While there may be some debate whether the higher advertising spend will ultimately result in long-term customer relationships, for now repeat purchasing is increasing as a portion of total orders, which we view as a positive indicator.”
Wayfair is a finalist for three awards at the second annual Internet Retailer Excellence Awards, including E-Retailer Growth Award, E-Retailer Marketer of the Year and Internet Retailer of the Year. The awards will be presented June 8 at the Hyatt Regency McCormick Place during the 12th annual Internet Retailer Conference & Exhibition.
For the first quarter ended March 31, Wayfair reported:
- Revenue of $747.3 million up 76.1% from $424.4 million in Q1 2015.
- Net loss of $41.2 million compared with a loss of $27.2 million.
- Average order value of $238 in Q1, up 15.5% from $206.
- 38.6% of orders delivered in its direct-to-consumer business were placed via a mobile device, up from 33.8% a year ago.