Online furniture retailer Wayfair Inc. (No. 12 in the 2019 Digital Commerce 360 Top 1000) reported significantly higher sales for the fourth quarter and year ended Dec. 31 compared with the same periods in 2018. But its net losses increased much faster than sales.
For the quarter, net revenue reached $2.53 billion, up 25.8% year-over-year from $2.01 billion in 2018. For the year, revenue totaled $9.13 billion, up 34.6% compared with $6.78 billion in 2018. However, net loss for the quarter reached $330.2 million, up 129.6% from $143.8 million a year earlier. The net loss for the year was $984.6 million, up 95.3% from $504.8 million in 2018.
In a shareholder letter issued today, Wayfair emphasized the company is taking a long-term view of the opportunities ahead and will continue to invest heavily in things like technology, logistics capabilities and international expansion.
“These large investments are bearing fruit and position us to garner increasingly strong yields over the next decade. This approach of customer orientation, with a bias to creative solutions, while moving quickly and partnering with our suppliers, is how we win,” the letter says. “We particularly like solutions where the value created compounds over time–these are the ones to which we allocate more resources.”
In a conference call with Wall Street analysts today, CEO Niraj Shah reinforced those underlying themes and touted Wayfair’s revenue growth.
“We grew net revenue by 35%, a rate that very few companies of our size ever demonstrate,” Sha said. “This is a testament to the fact that home has historically been underserved both offline and online and that our core strategy and investments are working and resonating with our customers. We estimate that we captured $0.36 of every $1 of home goods expenditures moving online and solidified our standing as the go-to home goods retailer.”
During the call, Michael Fleisher, Wayfair’s chief financial officer, projected revenue between $2.24 billion and $2.28 billion for the first quarter of 2020—representing about 15% to 17% year-over-year overall sales growth.
“We forecast U.S. net revenue growth in the range of 14% to 16% year-on-year and expect international net revenues to be up 22% to 25% year-over-year,” Fleisher said, according to a Seeking Alpha transcript.
Along with Amazon.com Inc. (No. 1), Wayfair is one of two online-only merchants that together capture 63% of online furniture sales, according to data analytics firm 1010data, which tracks online sales via credit and debit card transitions.
In 2019, Wayfair had the largest market share with 33.4% of online furniture sales; Amazon came in second at 29.7% market share. The next-closest retailer was Walmart.com, with only 4.7% of the online furniture market. Market share does not equal 100% because of many smaller retailers making up the remaining share, according to 1010data. That market share position is a slight shift from 2018, when Amazon was the largest online furniture seller with 31.1% of the market, and Wayfair was No. 2 with 28.2%.
1010data collects data from anonymized panels, which it uses to track the spending and store traffic of tens of millions of U.S. consumers. 1010data uses transaction data derived from the dollar value of credit and debit card transactions.
Among the other highlights of Wayfair’s fourth-quarter and year-end results were:
- International (non-U.S.) net revenue reached $393.5 million for the fourth quarter, up 37.1% year over year. For the year, international revenue was $1.36 billion, up 41% compared with 2018.
- The average order value was $226 for the fourth quarter of 2019, compared to $227 for the fourth quarter of 2018. For the full year, those numbers were $241 and $239, respectively.
- Orders delivered in the fourth quarter of 2019 totaled 11.2 million, an increase of 27.1% compared with 8.8 million a year earlier. For the year, Wayfair reported 37.6 million orders delivered, up 33.8% from 28.1 million in 2018.
- Repeat customers placed 68.6% of total orders in the fourth quarter of 2019, compared to 66.4% in the fourth quarter of 2018.