After the 2020 home shopping boom, home furnishings merchant Wayfair reports declining sales and a net loss in Q3 2021. Wayfair also announces a plan to open physical stores over the next two years.

Wayfair Inc.’s sales dipped in Q3 2021 when compared against the pandemic-induced home shopping boom in Q3 2020, the web-only home furnishings merchant reported last week.

Wayfair reported total net revenue of $3.12 billion, an 18.7% year-over-year decrease from $3.84 billion in Q3 2020. Plus, Wayfair broke its short-lived streak of turning a profit and reported a net loss of $78.0 million in Q3, compared with a profit of $173.2 million in the year-ago period. In recent history, Wayfair first reported a profit in Q2 2020, as sales boomed during the pandemic and its fulfillment operations could run more efficiently.

Wayfair did not comment specifically on its profitability in its earnings call, only that supply chain bottlenecks, inventory availability and shifting consumer dollars have contributed to its dip in revenue. As more consumers are vaccinated and enjoying more day-to-day activities, consumers have allocated discretionary dollars toward travel, entertainment and physical stores, and away from ecommerce, CEO Niraj Shah told investors on an earnings call, according to a SeekingAlpha transcript.

“We are, as ever, focused on the long-term, balancing strong growth and profitability over years not quarters, and solidifying our position as the definitive destination for the home,” Shah said. Wayfair is No. 7 in the 2021 Digital Commerce 360 Top 1000.


Supply chain struggles likely to continue into 2022

The home category, like many other retail categories, has supply chain bottlenecks, resulting in inventory shortages, prolonged delivery timelines and inflation in both wholesale costs and retail prices, Shah said.

“Ripple effects from factory closures in Asia, ocean container shortages, port log jams and a tight labor market are all factors that will continue to cloud the picture through much of 2022 even as governments and private enterprises mobilize to remedy them,” Shah said.

Slowly, inventory availability is improving and Wayfair is “reasonably well positioned” for the holiday season, Shah said.

Online shoppers have gotten used to longer lead times on products, Shah said. And so, instead of listing products that have yet to arrive at one of its warehouse as out-of-stock, Wayfair is now listing products that it knows are in transit, such as on the water, as in stock. While the delivery date is further out into the future than typical, this prevents shoppers from seeing “out-of-stock” messages.


Wayfair’s physical store push

Wayfair also announced it plans to open permanent, physical stores over the next two years.

The stores will allow shoppers to purchase and leave with smaller items, however, the vast majority of merchandise will be bigger items such as furniture that shoppers will purchase in store and then have delivered.

While some categories, such as electronics and office supplies, have about a 50% online penetration, the home category only has about a 20% ecommerce penetration, Shah said. Wayfair knows that some shoppers prefer shopping in-store for the home category based on consumer shopping trends seen this summer and its previous experimentation with pop-up stores.

“These data points provide further validation for one of our key future ambitions, which is to establish a new kind of omnichannel shopping experience that blurs the lines between the online and offline. You’ll begin to see that manifest starting next year,” Shah said.


Wayfair said it’s spent the last couples of years hiring talent for its physical store initiatives.

For Q3 2021, Wayfair reported:

  • Total net revenue of $3.12 billion an 18.7% year-over-year decrease from $3.84 billion in Q3 2020.
  • U.S. net revenue of $2.59 billion, a 20.8% year-over-year decrease from $3.27 billion.
  • A net loss of $78.0 million compared with a $173.2 million profit.
  • Repeat customers placed 76.3% of total orders in the third quarter of 2021, compared with 71.9% in the third quarter of 2020.
  • Average order value was $283 for the third quarter of 2021, compared with $243 for the third quarter of 2020.
  • 29.2 million active customers compared with 28.8 million
  • 57.7% of total orders delivered were placed via a mobile device, compared to 60.0% in the year-ago period.

For the first nine months of 2021, Wayfair reported:

  • Total net revenue of $10.46 billion, roughly flat compared with $10.47 billion in the first nine months of 2020.
  • U.S. net revenue of $8.51 billion a 4.6% decrease from $8.90 billion.
  • A net profit of $70.6 million compared with a profit of $161.2 million.
  • Average order value of $264, an increase compared with a $235 AOV.

Percentage changes may not align exactly with dollar figures due to rounding.