Wayfair CEO Reveals His 4 Drivers of Long-Term Retail Success
Niraj Shah, CEO of Wayfair (formerly CSN Stores), the Boston-based online seller of home furnishings, with 1,250 employees, a global presence, 2012 revenue of $600 million and a 40 percent growth rate, offered his four drivers of long-term retail success during a session at the 2013 Internet Retailer Conference & Exhibition in Chicago last week. They include the following:
1. Build a company that embraces change. "Hire smart people and let them use their brains," Shah said. "Reward smart risk taking, even when it fails, and encourage experimentation."
Other ways to build a company that embraces change are to recognize excellence and promote on merit, bring people together, and make work fun, Shah said.
2. Make decisions with the end game in mind. "Know when to stick with your guns and when to adapt," Shah said.
To illustrate his point, Shah discussed how Wayfair underwent a transformation in 2012 when it decided to fold the more than 200 sites that it created or acquired — e.g., Cookware.com, Luggage.com, Strollers.com, BedroomFurniture.com, etc. — into one megasite in an effort to create a more memorable brand. Only two of the companies it's created, AllModern.com and members-only retailer Joss & Main, operate outside of the Wayfair brand.
"Our aspiration was to be the online leader in home goods, so we decided to build that brand and introduced Wayfair," Shah said. "Within a year we shut [down] the category websites, got out of the sunglass and footwear business, and as a result lost traffic. While in the near term it didn't seem like the best decision, we did it with a long-term vision in mind. We wanted to focus on where we knew we could be the leader.”
Other examples of Wayfair making decisions with the end game in mind include instituting its current 100 percent drop-ship model to begin stocking inventory; opening new warehouses to offer two-day shipping; experimenting with TV advertising; and adjusting media buys and creative.
3. Map out different opportunities so you always have an answer to “What's next?" "Invest profit into new ideas and strategic growth initiatives," Shah said. "And, most importantly, listen to all your customers. They will always tell you what's next."
4. Spend efficiently and measure everything so you have the means to adapt. “Keep expenses low while driving growth,” Shah said. In addition, “act quickly when change is needed; make sure your ROI justifies every spend; and discover new ways to measure old approaches (e.g., TV advertising).”
Shah also discussed how Wayfair uses content to help shoppers find the perfect product at the right price. “The content on our site offers real-life solutions and practical ideas to consumers, bringing inspiration to life in affordable ways,” Shah said.
Wayfair is currently generating content in two ways: one, via in-house editors who develop material for what it calls its Idea Lounge and two, via content from shelter magazine editors. Last September, for example, Wayfair added a section to its website merchandised by the editors of Time Inc.'s Coastal Living magazine. The section includes short articles, recipes and design tips from previous issues. A Coastal Living-written article called "Seaside Holiday," for example, appears alongside products that complement the article's theme. There's also a link to sign up for a subscription to the magazine.
