Wayfair Inc. and Overstock.com Inc. both saw sales decline in 2022. The competing ecommerce furniture chains reported slowing sales and fewer active customers, and they’re adopting different strategies to turn things around.
Wayfair is No. 7 in the 2022 Digital Commerce 360 Top 1000, Overstock is No. 33.
Overstock and Wayfair sales are down
Wayfair and Overstock reported a decline in sales in 2022 across the quarter and year.
Wayfair’s total net revenue for the quarter ended Dec. 31 decreased 4.6% year over year to $151 million. The company also reported a net loss of $351 million, significantly higher than the net loss of $202 million in the fourth quarter of 2021.
Net revenue at Wayfair was also down for the 2022 fiscal year, dropping 10.9% over 2021. The net loss over the year was $1.3 billion.
Overstock’s earnings report was even more grim. Net revenue decreased 34% in the fourth quarter ended Dec. 31 to $405 million, though the net loss was a comparatively small $16 million.
Net revenue for the full year was $1.9 million, a 30% decrease year over year. Overstock reported a net loss of $35 million for 2022, with about half of that loss in the fourth quarter.
Active customers declined
Executives at both furniture retailers said they had fewer active customers making purchases. Wayfair reported 22.1 million active customers in the fourth quarter of 2022, a 19% year-over-year decrease.
Overstock is a relatively smaller operation, with 5.2 million active shoppers in Q4, a 36% decline year over year.
This trend is in line with consumer data Digital Commerce 360 collected in an April 2022 survey of 1,113 online shoppers. Three-quarters of respondents said they planned to buy less than half of home goods online, compared to 59% answering that way in 2021.
Consumers planned to pare down their online home shopping. 42% said they would spend the same amount on home goods as they had the previous year. Another 41% said they would spend less. Respondents also said they would spend less on outdoor furnishings, new furniture and home office setups than in 2021, with appliance repairs the only section seeing a slight increase.
Overstock aims at increasing sales to younger customers
Even as overall sales decreased, mobile orders were a bright spot for Overstock. Overstock’s app adoption is growing “rapidly,” CEO Jonathan Johnson told Digital Commerce 360 in a phone interview. It’s now the company’s fastest growing sales channel, making up 52% of fourth quarter sales. The company expects to see at least the same level of app growth in 2023.
Overstock’s typical customer skews “older and more affluent,” Johnson said. App users show higher loyalty, have higher conversion rates and are also younger than the average customer overall, he said, though he declined to share specifics.
Overstock’s other strategy for reaching younger buyers involves influencers, Johnson said, and Overstock is spending more than ever before on marketing. The website partnered with influencers and brand ambassadors with far reach on social media, including HGTV star Tarek El Moussa.
Wayfair focuses on cutting costs
As Overstock concentrates on drawing in new customers, Wayfair has cut costs as a strategy to get back in the black.
The furniture retailer has taken several measures to cut unnecessary costs, CEO Niraj Shah told investors in a Feb. 23 call. Wayfair laid off 1,750 employees in January, totaling about 10% of its total workforce including 1,200 corporate employees. These cuts were on top of earlier layoffs of 900 corporate workers in August to “reduce redundancies and remove excess management layers,” Shah said at the time.
The company has also had a hiring freeze in place since spring 2022, and has been reducing advertising budgets that had grown beyond the small tests that they were originally intended for, Shah said.
Both companies are hoping 2023 will turn things around for the online furniture industry. 2022 was a “year we will not forget nor repeat,” Overstock’s Johnson told investors.
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