Wayfair Thesis
The following are 4 pillars of a Wayfair investment thesis we’re working on. We have ongoing tracker surveys collecting data on all of the following…
Demand Catalysts
Housing (buying new homes and/or moving), setting up at-home offices, and home improvement related activities created a surge in demand for furniture during the pandemic. Respondents who participated in these Covid tailwind behaviors over-indexed in their engagement with Wayfair during that time. We track these behaviors on an ongoing basis and will continue to do so as we lap Covid/post-Covid comps.
Behavioral Factors
Online furniture shopping was slowly grinding higher before Covid. Once the pandemic got underway, shopping behaviors shifted dramatically in favor of buying furniture online. All of those gains didn’t stick – some of it has regressed with consumers weighing the convenience vs. need to see furniture in person before buying it. During late 2020 and for most of 2021, the online vs. in-store purchase preference scale looked different than 2019 and 2022/2023.
Competition
The percentage of Wayfair customers who cross-shop Amazon for identical items has increased over time. These cross-shoppers think Amazon is cheaper, and our identical item pricing analysis confirms that Amazon is actually cheaper more often than not. There was a point in time during the pandemic in which Amazon shipping delays in which Amazon eased up on competitive pricing, but that was short lived. Additionally, we have been looking into Home Depot and Target as growing competitors specifically within furniture (ie, if they increased shopping there during Covid and found furniture while they were there – do they stick and continue buying furniture there in the future, or was it a one-time thing?).
Macro Headwinds
Credit card debt is up, savings are declining, concerns about job security and recessions are up, discretionary spending plans are down, and likelihood of buying a new home has dropped significantly. We track these factors monthly and can show how they are impacting home improvement category engagement and Wayfair shopping engagement.