Wayfair launches a new brand called Perigold to target luxury shoppers, and it explains how 3-D product models help its image presentations.

Wayfair Inc. had a busy quarter expanding its 3-D product model library and launching another e-commerce site, all while posting a 32% increase in e-commerce revenue.

Wayfair’s direct retail revenue, which primarily comes from orders placed online at Wayfair.com, Joss & Main, AllModern, Birch Lane and Dwell Studio e-commerce sites, increased 32.1% to $940.4 million for the first quarter ended March 31 compared with $711.9 million in Q1 2016, the web-only home furnishing giant reported Tuesday. While top-line revenue grew, Wayfair’s net loss grew faster, up 36.9% to a loss of $56.4 million from a $41.2 million loss in Q1 2016.

A few weeks ago, Wayfair soft-launched Perigold, a new e-commerce site geared toward affluent shoppers, CEO Niraj Shah told investors on an earnings call, according to a Seeking Alpha transcript.

Perigold’s products are priced “significantly higher” than typical Wayfair.com products, Shah said.

“Perigold essentially picks up where our current offering ends and then runs all the way through the luxury segment,” Shah said. “We know some affluent customers occasionally shop at Wayfair for their second home, their son or daughter’s college dorm room, or their child’s playroom. But they wouldn’t necessarily think about coming to Wayfair for their master bedroom, living room or dining room.”

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Many of the products are from suppliers that Wayfair already uses. Because the Perigold site uses the same technology and logistics as Wayfair.com and the retailer’s other sites, it took only 100 days to develop Perigold.com, Shah said.

Wayfair eventually will actively market Perigold, but it is not promoting it to consumers as the site is in the early stages. Wayfair says it does not expect advertising spend for the site to impact total ad spend as a percentage of revenue in 2017.

On the call, Wayfair also talked about its augmented reality and 3-D product models, which it has developed since 2015. To date it has more than 25,000 SKUs modeled in 3-D. (Wayfair has more than 8 million products.)

Wayfair is expecting more smartphones to incorporate 3-D sensing technology in the next six to 18 months, which will allow more consumers to access to Wayfair’s augmented reality apps.

In the mean time, Wayfair is getting its 3-D products out to market in any way possible, such as via real estate developers and interior design platform SketchUp, which roughly 60% of Wayfair interior designers use, Wayfair co-founder Steven Conine said.

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While the 3-D models are essential to Wayfair’s virtual reality and augmented reality experiences, the models also benefit its website images, Conine said. “These 3-D models are incredibly valuable for us as an inexpensive way to scale the lifestyle photography on our site at substantially less cost than traditional photography,” he said.

For example, Wayfair will use its library of 3-D product models to digitally render a 2-D image of products together, which is less expensive than using photo studios with the real products, Shah said. Grouping products together with visual imagery is extremely important at Wayfair, because often shoppers don’t know what they want until they see it, Shah said.

Also within the quarter, Wayfair hired 71 employees for a total of 5,708 as of the end of March. In 2016, Wayfair hired 1,800 employees. The retailer says it plans to continue hiring throughout 2017 to keep up with the pace of growth.

In addition, Wayfair’s chief technology officer, Jeremy Delinsky, announced he will leave the company to co-found a healthcare startup. Seven-year Wayfair veteran John Mulliken, who was most recently the retailer’s senior vice president of international retail and global merchandising, will take the CTO position. Delinsky, with a compensation package of nearly $14 million in 2015, was the highest paid e-commerce executive among publicly traded web-only retailers ranked among the top 50 in the 2016 Top 500 Guide.

Wayfair is No. 16 in the Internet Retailer 2017 Top 500.

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For the first quarter ended March 31, Wayfair also reports:

  • E-commerce revenue of $940.4 million up  32.1% from $711.9 million in Q1 2016.
  • Net revenue of $960.8 million, a 28.6% increase from $747.4 million.
  • Net loss of $56.5 million compared with a loss of $41.2 million.
  • 44.6% of e-commerce orders were placed on a mobile device, compared with 38.6%.

 

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