The web-only furnishings retailer credits its supply chain network and focus on mobile commerce as contributors to another $1 billion-plus quarter.

Home furnishings giant Wayfair Inc. credits its supply chain network and focus on mobile commerce as key factors driving its 41.8% growth in the third quarter, CEO Niraj Shah told investors on an earnings call, according to a Seeking Alpha transcript.

Wayfair’s e-commerce sales reached $1.18 billion in the third quarter ended Sept. 30, up from $832.4 million in the year-ago time period. In the U.S., e-commerce sales increased 35.6% to $1.03 billion in the third quarter up from $759.7 million a year earlier. Wayfair is No. 16 in the Internet Retailer 2017 Top 500.

This increased level of engagement is also reflected in purchase behavior, with the average revenue of app visitors being over three times that of other visitors.
Wayfair CEO Niraj Shah

This quarter, Wayfair added three of its own last-mile delivery facilities in in Cleveland, Tampa and Denver. It now operates a total of 15 such facilities, which gives the retailer last-mile coverage for roughly half of Wayfair’s U.S. large-parcel orders, Shah said. Wayfair classifies large parcels as products that are more than 80 pounds and 22 cubic feet.

Around 70% of U.S. large parcels are shipped via Wayfair’s controlled middle mile network, which reduces the number of times the product is touched (which leads to a lower damage rate) and speeds delivery.

“This ongoing reduction in our reliance on third-party operators enables us to increase delivery speeds, reduce damage and costs, and improve customer satisfaction across a greater and greater proportion of our business,” Shah said. “We are pleased with the results that we are seeing in the markets where Wayfair delivery network last mile facilities have been introduced and we expect to continue rolling out additional facilities in 2018.”

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With 45% of orders completed on mobile in the third quarter, mobile is a substantial part of Wayfair’s business, Shah said. The retailer thinks mobile’s share of sales will increase, and so Wayfair is investing in mobile features such as Apple Pay, mobile messaging with customer service agents, and augmented reality.

“With mobile increasingly becoming the preferred device of our shoppers, our team of over 1,200 engineers treat it as central to their work in building a shopping experience that is leading the way in e-commerce for the home,” Shah said.

Consumers have downloaded Wayfair’s app more than 11 million times, which is a drastic increase from the end of 2015, when the app had roughly 2 million downloads.

Plus, app shoppers are more lucrative for Wayfair, as app visitors view more products per session and convert at a higher rate compared with other shoppers, Shah said.

“This increased level of engagement is also reflected in purchase behavior, with the average revenue of app visitors being over three times that of other visitors,” he said.

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The number of active e-commerce customers increased 39.2% year over year in the quarter to 10.3 million shoppers, and the average order value increased 2.5% to $250 in the third quarter compared with $244 in the year-ago period.

Repeat customers placed 2.9 million orders, or 61.0% of total orders in the third quarter of 2017, compared to 56.9% in the third quarter of 2016.

For the third quarter ended Sept. 30, Wayfair also reports:

  • E-commerce revenue of $1.18 billion, up 41.8% from $832.4 million in Q3 2016.
  • Net revenue of $1.20 billion, a 39.3% increase from $861.5 million.
  • Net loss of $76.4 million compared with a loss of $60.9 million.
  • 45.4% of e-commerce orders were placed on a mobile device, compared with 40.3%.

For the first nine months, Wayfair reported:

  • E-commerce revenue of $3.22 billion up 40.0% from $2.30 billion in the first nine months of 2016.
  • Net revenue of $3.28 billion up 36.7% from $2.40 billion.
  • Net loss of $171.8 million compared with a loss of $150.4 million.
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