How to Win in E-Commerce:
Key Considerations for Manufacturers as Consumers Shift Spending Online…

Niraj Shah
CEO, Co-Chairman and co-founder, Wayfair…

Niraj Shah addressed trends in e-commerce, Wayfair’s history and online opportunities for housewares products. He explained some pain points in ecommerce and outlined Wayfair’s solutions.

Spending has moved online and demographics drive the shift, as consumers 17-37 begin to invest in their homes. Consumers see products as related to the physical space of their homes, so one-stop online shopping evolves organically.  Wayfair offers broad categories of furniture, décor, home improvement, kitchen and other types of products. The company aims to be the customer’s preferred online platform for discovering and buying home goods.  Wayfair creates a unique experience based on its selection, merchandising, ease of use, product discovery, delivery and logistics.

Since the Wayfair brand was launched in 2012, its growth has been exponential. It partners with many vendors to offer a huge online catalog while maintaining its minimal inventory. Wayfair offers mass market and luxury brands, with mass market goods at the center of its competitive position. Its Perigold brand competes at the luxury level. Wayfair’s typical customer is the 35-to 65-year-old woman.

Ecommerce focuses on technology-driven customer benefits. Unlike traditional retailers, Wayfair operates by investing in logistics, advertising and technology rather than inventory and physical footprint. In ecommerce, heavily online targeting advertising becomes the “mall” and the “store traffic.”

Ecommerce Satisfies Rising Consumer Expectations

Consumers’ expectations continue to rise for free shipping, guaranteed delivery and free returns.  Logistics and technology are needed to win in this space. Wayfair has built a rich consumer experience accessible on multiple devices. Most of its customers shop by phone, meaning that the camera becomes increasingly important and visual search capability is critical. For example, consumers can insert photos of Wayfair products to view in photos of rooms in their homes and the Wayfair shopping experience can also include 3D imaging of home environments.

Promotions and Advertising

Wayfair’s home page advertises special events targeted to shopper’s preferences, and uses email for opt-in customers, direct mail catalogs and TV. Kitchen and storage products, purchased many times per year, fit well into daily or weekly touchpoints with customers. It also established a wedding registry.

Pain Points and Solutions

Shah outlined how Wayfair organizes its dedicated online channel managers. Focused attention to manufacturers and retailers delivers the best experiences to its consumers.

Price transparency creates challenges and shifts the burden of pricing parity to the manufacturer. He advised vendors to differentiate assortments and avoid becoming a one-retailer supplier. Logistics becomes extremely complex and expensive; few retailers can offer the speed consumers demand and manufacturers are forced to move ever faster. Brick & mortar thinking is hard to break and ecommerce provides the volume to fill the B&M gap. Inventory controls and delivery costs can be managed better with automated daily transactions and collaborating with partners in careful planning. Maintaining brand equity becomes increasingly difficult and manufacturers should control distribution and partner with trusted retailers. Wayfair offers a new way of operation to allow manufacturers to directly reach consumers.