Home furnishings giant Wayfair Inc. posted another quarter of surging revenue—66.5% year over year—reaching $3.84 billion in Q3 2020, along with $173.2 million in profit for its third quarter. The 66.5% growth means an extra $1.53 billion in revenue for Wayfair this quarter.
Wayfair (No. 6 in the 2020 Digital Commerce 360 Top 500) is benefiting from several broad consumer shopping trends spurred by the coronavirus pandemic: more consumers shopping online and more consumers purchasing home goods.
While the home category initially boomed at the start of the pandemic—such as for sales of office and outdoor furniture—Wayfair says its growth has been significant across all categories.
“The home category is seeing broad-based demand as our customers reprioritize their spending on where and how they live, and away from other experiences like travel, entertainment and dining,” CEO Nirjah Shah told investors on an earnings call this week according to a SeekingAlpha transcript.
Way Day—Wayfair’s annual sales event typically in April—also bolstered the quarter’s strong sales. Wayfair moved the sale to Sept. 23-24 and extended it to 48 hours, up from 24 hours in the second quarter in the past. Even after months of elevated revenue, the promotional event still spurred record sales and elevated web traffic, the retailer says.
“Thanks to an extended 48-hour timeframe, Way Day drove the two biggest sales days in Wayfair history, in line with our internal forecasts and an impressive result, particularly when considered against the backdrop of several months of peak demand,” Shah said.
When excluding Way Day, “we did see moderation in growth in the latter half of Q3,” chief financial officer Michael Fleisher said without providing details.
For further proof that Wayfair’s recent sales boom is across its categories and not just concentrated on one pandemic-induced category surge, Shah said its five best-selling categories during Way Day 2020 were the same as Way Day 2019, “despite drastically different macro circumstances this year,” Shah said without revealing what those categories were.
Also in Q3, Wayfair turned a profit for the second consecutive quarter. Wayfair went public in 2014, and while sales have grown in the last six years, it reported losses for several quarters as it continually built and expanded its robust fulfillment and operations network, and spent on advertising and hiring. Then, with the surge in sales earlier this year, in Q2 2020 Wayfair posted a profit. Similar to Q2, the elevated sales volume in Q3 allows Wayfair to use its facilities and operations to-scale, which helps improve efficiencies and its margin, Shah said.
“While some of these benefits will fade over time, we believe a good portion of the gains will persist, even as the growth rate eventually moderates to a new normal,” Shah said.
Wayfair also increased the number of active customers 50.9% year over year to 28.8 million customers. Active customers are shoppers who have made a purchase in the last year.
Plus, repeat customers placed 11.3 million orders in the quarter, representing 71.9% of total Q3 orders, compared with repeat shoppers placing 67.3% of the orders in Q3 2019.
More repeat customers help reduce some of Wayfair’s advertising costs, and thus help with net income, as the retailer does not need to spend as much to market to a returning customer compared with acquiring a new shopper, Fleisher said.
For the third quarter ended Sept. 30:
- Net revenue increased to $3.84 billion, a 66.5% rise from $2.31 billion in Q3 2019.
- U.S. net revenue increased to $3.27 billion, a 66.0% rise from $1.97 billion.
- Net income surged to $173.2 million, up from a net loss of $272.0 million.
- Active customers increased 50.9% year over year.
- Shoppers placed 60% of orders on a mobile device, up from 53.8% in the year-ago period.
- Wayfair’s average order value was $243, compared with $252.
For the first nine months ended Sept. 30
- Net revenue increased to $10.47 billion, a 58.9% rise from $6.59 billion in the first nine months of 2019.
- U.S. net revenue increased $8.90 billion, a 58.4% rise from $5.62 billion.
- Net income increased to $161.2 million, up from a net loss of $654.4 million.
Percentage changes may not align exactly with dollar figures due to rounding.Favorite