Wayfair Expects eCommerce Slowdown as Consumers Return to Stores

Major online furniture retailer Wayfair is grappling with the simultaneous challenges of inflation and the end of COVID-related lockdowns, both of which are leading customers to shop online, The Wall Street Journal reported Thursday (Feb. 24).

Wayfair added “millions of customers” during peak pandemic year of 2020, according to the WSJ, but maintaining those gains has proved elusive, financial filings made public on Feb. 24 indicated.

“Although household savings remain robust, our customers are seeing widespread inflation impact their lives and pressure their wallets,” Michael Fleisher, Wayfair’s chief financial officer, told analysts, per the report. “They also have more choices around where to direct their dollars as pandemic restrictions ease.”

According to those filings, active customers — those who have placed at least one order during the prior 12 months — declined 21% to 27.3 million during fiscal and calendar year 2021. Moreover, it saw a decline in fourth-quarter revenue and its second quarterly loss in a row.

Wayfair, which was founded in 2002 and is something of an Amazon clone targeting the home goods sector, is building several brick-and-mortar stores, and in 2023 plans to build a brick-and-mortar store larger than any of its others, according to the WSJ.

Another big player in the home goods space, Home Depot, told investors it expected slower growth in sales in 2022 then during the prior two years. Also, Shopify indicated earlier this week that growth in sales was appearing to slow.

Related: Home Depot Touts Agility in Ever-Changing Economic Landscape

Wayfair assessed the U.S. home goods market in its annual report filing with the federal Securities and Exchange Commission.

The assessment states: “We estimate today the annual U.S. market for home goods is approximately $460 billion, of which approximately 20% is sold online by our estimates. According to data released by the U.S. Census Bureau, there are approximately 98 million households in the U.S. with annual incomes between $25,000 and $250,000. Moreover, we believe there are nearly 200 million individuals between the ages of 20 and 64 in the U.S., many of whom are accustomed to purchasing goods online.

“As younger generations age, start new families and move into new homes, we expect online sales of home goods to increase. In addition, we believe the online home goods market will further grow as older generations of consumers become increasingly comfortable purchasing online. Including our presence in Canada and Western Europe, we believe our total addressable market is more than $800 billion.”