What changed in this filing

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Item 1. Business

2023-02-23 compared with 2022-02-24 · 84 added, 75 removed, 131 unchanged (55% of the section changed)

Wayfair is one of the world's largest online destinations for the home.

Its co-founders are lifetime tech innovators who have worked together in the commercial Internet sector since 1995.

As engineers themselves, they have created a company culture deeply rooted in technology and data, and their significant equity ownership in Wayfair has informed their leadership and allowed them to take a long-term view when building the company.

Unless the context indicates otherwise, "Wayfair," "the company," "we," "us," "our" and similar terms refer to Wayfair Inc.

and its subsidiaries.

Through our e-commerce platform, we offer customers visually inspired browsing, compelling merchandising, easy product discovery and attractive prices for over thirty-three million products from over 23,000 suppliers.

Through our e-commerce platform, we offer customers visually inspired browsing, compelling merchandising, easy product discovery and attractive prices for over 40 million products from over 20 thousand suppliers.

We are focused on bringing our customers an experience that is at the forefront of shopping for the home online.

Wayfair customers span a wide range of demographics, with annual household income ranging from $25,000 to $250,000, and also include business professionals.

Because each of our customers has a different taste, style, purchasing goal and budget when shopping for her home, we have built one of the largest online selections of furniture, décor, housewares and home improvement products.

Wayfair customers span a wide range of demographics, with annual household income ranging from $25,000 to over $250,000, and also include business professionals.

We have built one of the largest online selections of furniture, décor, housewares and home improvement products in order to appeal to our customers’ different tastes, styles, purchasing goals and budgets when shopping for their home.

We are able to offer this vast selection of products because we hold minimal inventory.

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Through WDN, we can directly manage large parcel deliveries via consolidation centers, cross docks and last mile delivery facilities, which, alongside CastleGate, enables us to speed up deliveries, decrease our reliance on third parties and undertake efforts to reduce damage.

Our CGF services allow our suppliers to unlock efficiencies on inbound logistics, including through Asia-based product consolidation and port-to-door freight forwarding solutions.

Our CGF services allow our suppliers to unlock efficiencies on inbound logistics, including through Asia-based product consolidation and port-to-door freight forwarding solutions, which ultimately result in faster deliveries to our customers.

We believe these investments in logistics capabilities result in an enhanced experience for our customers and suppliers.

In addition to logistics, we offer a range of supplemental media and merchandising services in support of a seamless selling experience for suppliers.

In addition to logistics, we offer a range of supplemental media services in support of a seamless selling experience for suppliers.

We also believe providing superior customer service is key to delighting our customers.

Our customer service locations are staffed with over 4,200 highly-trained sales and service employees located in the United States (“U.S.”) and Europe.

Our co-founders are lifetime tech innovators who have worked together in the commercial Internet sector since 1995.

As used herein, “Wayfair,” “the company,” “we,” “us,” “our” and similar terms refer to Wayfair Inc.

and its subsidiaries, unless the context indicates otherwise.

Our operating and reportable segments are the U.S.

and International, which includes our businesses in Canada, the United Kingdom and Germany.

See Note 13 to the consolidated financial statements, Segment and Geographic Information , included in Part II, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.

and International, which includes our businesses in Canada, the United Kingdom, Germany and Ireland.

See Note 13, Segment and Geographic Information, in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.

Net revenue of the U.S.

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Addressable Market Size and Growth

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.

We estimate that the annual U.S.

market for home goods is over $450 billion, of which, by our estimate, more than a fifth is sold online.

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.

Census Bureau, there are more than 100 million households in the U.S.

with annual incomes over $25,000.

Moreover, we believe there are more than 200 million individuals between the ages of 20 and 70 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.

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In the market for home goods, consumers with different tastes, styles, purchasing goals and budgets require a broad selection of products and choices.

Traditional brick and mortar home goods retailers must balance scale of selection with the challenges of high inventory carrying costs and limited showroom and storage space - as a result, to browse a vast selection of products, consumers must shop multiple stores.

Traditional brick and mortar home goods retailers must balance scale of selection with the challenges of high inventory carrying costs and limited showroom and storage space - as a result, consumers must shop multiple stores in order to browse and access a vast selection of products.

Other e-commerce retailers that sell home goods typically focus their shopping experiences around keyword search, instead of a browse-oriented journey that encourages discovery.

We believe the lack of an easy-to-browse, one-stop shopping experience with massive selection has led to dissatisfaction with home goods shopping both online and off.

We believe the lack of an easy-to-browse, one-stop shopping experience with massive selection has led to consumer dissatisfaction with home goods shopping both online and off.

Logistics, fulfillment and customer service for home goods products are challenging given the variety of categories and price points and the mix of heavy and bulky items.

Home goods often have a low dollar value to weight ratio compared to other categories of retail, therefore requiring a logistics network that is optimized for items with those characteristics.

Home goods often have a low dollar value to weight ratio compared to other categories of retail, therefore requiring a robust and reliable logistics network that is optimized for items with those characteristics.

Many consumers also seek first-rate customer service so they are not burdened with managing delivery, shipping and return logistics on their own.

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Our Solution - Key Benefits for Our Customers

We offer broad selection and choice.

We have one of the largest online selections of furniture, décor, housewares and home improvement products, with over thirty-three million products from over 23,000 suppliers.

We have built a portfolio of over 120 house brands, which offer a curated brand experience, making it easier for customers to discover styles, products and price points that appeal to them.

We offer a broad selection and choice.

We have one of the largest online selections of furniture, décor, housewares and home improvement products, with over 40 million products from over 20 thousand suppliers.

We have built a portfolio of over one hundred house brands, which offer curated brand experience, making it easier for customers to discover styles, products and price points that appeal to them.

Convenience and value are central to our offering.

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We give suppliers cost-effective access to our large customer base.

We sell products from over 23,000 suppliers, many of which are small, family-run operations without well-known product brands and without easy retail access to a large customer base.

We provide our suppliers with access to our large customer base, with 27.3 million active customers over the last twelve months, enabling them to increase their sales and access the growing e-commerce market.

We sell products from over 20 thousand suppliers, many of which are small, family-run operations without well-known product brands and without easy retail access to a large customer base.

We provide our suppliers with access to our large customer base, with 22.1 million active customers over the last twelve months, enabling our suppliers to increase their sales and access the growing e-commerce market.

Suppliers can leverage our technological expertise to enhance their success on our platform.

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We offer our suppliers a view of our demand and inventory needs via powerful data and analytics.

Suppliers are also able to enhance their media and merchandising by using additional services provided by Wayfair, including through sponsored

content and 3D image creation.

Suppliers are also

able to enhance their media and merchandising by using additional services provided by Wayfair, including through sponsored content.

We believe many of our suppliers have increased their sales through our technology platform, which has strengthened their loyalty to us.

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To help her find the right products for her home, we offer a family of sites, each with a unique brand identity that offers a tailored shopping experience and rich product selection to a different target audience.

Wayfair - Everything home — for a space that's all you.

Joss & Main - The ultimate style edit for home.

AllModern - All of modern, made simple.

Birch Lane - A fresh take on the classics.

Perigold - An undiscovered world of luxury design.

Wayfair represents a significant majority of our net revenue and is currently the only one of our sites that also operates internationally, operating as Wayfair.ca in Canada, Wayfair.co.uk in the United Kingdom and Wayfair.de in Germany.

Everything home — for a space that's all you.

• Joss & Main:

The ultimate style edit for home.

All of modern, made simple.

• Birch Lane:

A fresh take on the classics.

An undiscovered world of luxury design.

• Wayfair Professional:

Just right for Pros.

On our sites, we also feature certain products under our house brands, such as Three Posts ® and Mercury Row ® .

Through these house brands, which feature curated selections refined by style and price point, we help our customers navigate our vast product assortment to find items that uniquely match their needs.

"Direct Retail" sales include net revenue from customers generated through the family of sites and stores described above.

We have custom-built our proprietary technology and operational platform to deliver the best experience for both our customers and suppliers.

We have custom-built large portions of our technology and operational platform to deliver the best experience for both our customers and suppliers.

Our success has been built on a culture of data-driven decision-making, operational discipline and an unwavering focus on the customer.

We believe that control of our technology systems, which gives us the ability to update them often, is a competitive advantage.

Our team of over 3,000 engineers and data scientists has built a full set of technology solutions specific to the home goods market.

We believe that our internal control of our technology systems, which gives us the ability to update them often, is a competitive advantage.

Our team of engineers and data scientists has built a full set of technology solutions specific to the home goods market.

Our storefront consists of a large set of tools and systems with which our customers directly interact, that are specifically tuned for shopping the home goods category by mixing lifestyle imagery with easy-to-use navigation tools and personalization features designed to increase customer conversion.

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Much of the underlying infrastructure for storefront, operations and advertising technology is common across all of our sites and countries.

While we continue to rely on a hybrid data infrastructure, we have transitioned most of our data storage and processing systems from our physical data centers to a cloud-based solution.

Our physical data centers are highly secure, with wide geographic distribution and engineering resources to support high availability.

These systems are monitored 24x7 by our network operations center for performance and security.

Our marketing efforts bring new and repeat customers to our sites.

We have transitioned most of our data storage and processing systems from our physical data centers to a cloud-based solution.

We use a variety of marketing and advertising efforts to drive customer engagement across all of our channels, strengthen and reinforce brand and product awareness, as well as attract new customers and encourage repeat purchases from existing customers.

Our paid advertising efforts consist primarily of online channels, including search engine marketing, display advertising and paid social media, and to a lesser extent direct mail and television advertisements.

Our non-paid advertising efforts include search engine optimization, non-paid social media, mobile “push” notifications and email.

Upon acquiring a customer or a potential customer's email address, we seek to increase their engagement with our sites and drive repeat purchases.

This effort to increase engagement and repeat purchasing is driven by all of

our marketing tools, including personalized email marketing efforts and customer retargeting.

Upon acquiring a

customer or a potential customer's email address, we seek to increase their engagement with our sites and drive repeat purchases.

This effort to increase engagement and repeat purchasing is driven by all of our marketing tools, including personalized email marketing efforts and customer retargeting.

We rigorously manage our paid marketing efforts towards the goal that each new spending initiative is cost-effective with a measurable return on investment within a designated period of time.

Our logistics network was built specifically for the home category, where items can be bulky, heavy and prone to damage.

Historically, our primary method of fulfillment was a drop-ship network where integration into our suppliers' back-end technology infrastructure allowed us to process an order and send the information directly to a supplier's warehouse.

We would then arrange for shipment from the loading dock of the supplier's warehouse to the customer's home.

Depending on the size of the package, the delivery would be made either through carriers such as FedEx, UPS, DHL, the U.S.

Our primary method of fulfillment is a drop-ship network where integration into our suppliers' back-end technology infrastructure allows us to process an order and send the information directly to a supplier's warehouse.

We arrange for shipment from the loading dock of the supplier's warehouse to the customer's home.

Depending on the size of the package, the delivery is made either through carriers such as FedEx, UPS, DHL, the U.S.

Postal Service or third-party line haul trucking companies and third-party last mile home delivery agents.

Today, many of our customer orders are being shipped from our CastleGate warehouses.

This is facilitated by our CGF services, offering inbound freight, drayage and ocean services for suppliers sending products from Asia with direct delivery to CastleGate locations.

The majority of large parcel items are delivered to the customer through our WDN, which includes consolidation centers, cross docks and last mile delivery facilities.

We have also been growing the percentage of our customer orders that are shipped from our CastleGate warehouses over the last several years.

This is facilitated by our CastleGate Forwarding services, offering inbound freight, drayage and ocean services for suppliers sending products from Asia with direct delivery to CastleGate locations.

The majority of large parcel items are delivered to the customer through our Wayfair Delivery Network, which includes consolidation centers, cross docks and last mile delivery facilities.

For smaller items, we partner with carriers to handle the delivery to the customer.

We believe that our proprietary logistics network will help drive incremental sales by delighting our customers with faster delivery times and a better home delivery experience.

We believe that our proprietary logistics network has and will continue to help drive incremental sales by delighting our customers with faster delivery times and a better home delivery experience.

Over time we believe this network will also lower our costs per order by reducing damage rates and leveraging economies of scale in transportation.

Customer Service

Our customer service team consists of over 4,900 highly-trained sales and service employees located across the U.S.

and Europe who are available to help our customers with sales and service via phone, email or online chat.

Because we view superior customer service as one of our key values, our sales and service employees receive extensive training as well as competitive compensation and benefit packages.

The team consists of generalists as well as specialists who have deeper expertise and training in select areas of our catalog, such as lighting, flooring and upholstery.

Our customer service team consists of over 4,200 highly-trained sales and service employees located across North America and Europe who are available to assist our customers with sales and service via phone, email or online chat.

Providing our customers with superior customer service is one of our key values.

As part of our commitment to providing superior customer service, our sales and service employees receive extensive training as well as competitive compensation and benefit packages.

Our customer service team consists of employees focused on general sales and service matters, as well as specialists who have deeper expertise and training in select areas of our catalog, such as lighting, flooring and upholstery.

Our Growth Strategy

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While we are primarily focused on the mass market, we compete across all segments of the home goods market.

Our competition includes furniture stores, big box retailers, department stores, specialty retailers and online retailers and marketplaces in the U.S., Canada, the United Kingdom and Germany, including:

• Furniture Stores:

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• International:

Argos, Canadian Tire, Home24, John Lewis, Leon's, Made, Otto, Westwing, and XXXLutz, in addition to several of the companies listed above who also compete with us internationally.

Argos, Canadian Tire, John Lewis, Leon's, Next, Otto, Westwing, and XXXLutz, in addition to several of the companies listed above who also compete with us internationally.

We believe that the primary competitive factors in the mass market are vast selection, visually inspiring browsing, compelling merchandising, ease of product discovery, price, convenience, reliability, speed of fulfillment and customer service.

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Human Capital

At Wayfair, we believe strongly in our people and want to ensure each and every employee is empowered and positioned to bring their authentic self to work every day.

At Wayfair, we believe strongly in our people.

Supporting our employees has always been central to our work and we believe that it is important that all employees feel welcome and are able to bring their full selves to work every day.

We believe we have a good relationship with our employees, which includes 15,745 full-time equivalent employees as of December 31, 2022.

Our reported headcount includes a substantial majority of the approximately 1,750 employees impacted by the workforce reduction we announced in January 2023, who will no longer be reflected in our headcount by the end of the first quarter of 2023.

Additionally, we rely on independent contractors and temporary personnel to supplement our workforce, primarily in our logistics network.

None of our employees are represented by a labor union or covered by a collective bargaining agreement.

Diversity, Equity and Inclusion

Wayfair has a dedicated Diversity, Equity and Inclusion (“DEI”) team that serves as our internal compass in promoting a global community, ensuring an inclusive culture and growing market penetration through innovation that only a sense of belonging across a diverse workforce can provide.

Through cross-functional partnerships, the DEI team creates the strategy and identifies initiatives to embed a lens of inclusivity into all aspects of the business with a keen focus on increasing diverse representation internally and externally.

We have worked to include DEI best practices into parts of the employee lifecycle, including hiring, performance management and career and leadership development.

We have worked to include DEI best practices into several parts of the employee lifecycle, including hiring, performance management and career and leadership development.

In addition to threading DEI through the employee lifecycle, we have partnered with groups across the business to leverage DEI principles in support of our broader company goals –– not only for our people, but for our customers, our suppliers and our partners.

We believe we have a good relationship with our employees, which include 16,681 full-time equivalent employees as of December 31, 2021.

Additionally, we rely on independent contractors and temporary personnel to supplement our workforce, primarily in our logistics network.

None of our employees are represented by a labor union or covered by a collective bargaining agreement.

COVID-19 Pandemic

In March 2020, the World Health Organization declared the COVID-19 outbreak to be a global pandemic.

While progress has been made to contain the COVID-19 pandemic, it has, and continues to, negatively impact the global economy.

Our focus has been and remains on promoting the health, safety and financial security of our employees and serving our customers.

While it is difficult to predict all of the impacts the COVID-19 pandemic will have on our business, we believe the long-term opportunity that we see for shopping for the home online remains unchanged.

Additional information regarding the impact of the COVID-19 pandemic on our business is set forth within this Part I, Item 1A, Risk Factors and Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations

of this Annual Report on Form 10-K.

Compensation and Benefits

Wayfair’s overall compensation program is structured to attract, motivate and retain highly qualified talent by paying them competitively and equitably, including offering market-competitive salaries, equity and benefits.

Our full-time employees are eligible to receive, subject to the satisfaction of certain eligibility requirements, our comprehensive benefits package including life and health (medical, dental and vision) insurance, a 401(k) retirement plan, where we provide matching contributions competitive with those provided by our peers, paid parental leave, paid time off, and a discount off of purchases made through our family of sites.

Health, Safety and Well-Being

Wayfair is committed to protecting our team members’ health and wellness.

Since the onset of the COVID-19 pandemic we have continued to follow the guidance and recommendations from the Center for Disease Control (CDC) and all local public health authorities.

We strongly encourage all employees to become fully vaccinated.

We also provide benefits and resources to employees to address stress, burnout and mental health and promote self-care.

More Information

Additional information about our human capital management efforts, including our latest Diversity, Equity & Inclusion, can be found on our investor website at investor.wayfair.com.

Global Considerations

As a company with a global business, we are continuing to closely monitor macroeconomic impacts on our business, results of operations and financial results.

Our focus remains on promoting the health, safety and financial security of our employees and serving our customers.

We are also closely monitoring the recent volatility in the global markets and the rise in inflation and interest rates.

These developments could continue to negatively impact global economic activity and consumer behavior, which may adversely affect our business and results of operations.

While it is difficult to predict all of the impacts these global economic events, including rising inflation and interest rates, will have on our business and to predict consumer spending in the near term, we believe the long-term opportunity that we see for shopping for the home online remains unchanged.

Additional information regarding these global impacts on our business is set forth within this Part I, Item 1A, Risk Factors and Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K.

Our business is affected by seasonality, which historically has resulted in higher sales volume during our fourth quarter, which ends December 31.

However, a variety of factors can alter seasonal patterns, including the COVID-19 pandemic.

Beginning in mid-March 2020, the COVID-19 pandemic and the related responses disrupted our usual seasonal patterns, resulting in higher sales volumes during the second and third fiscal quarters of 2020.

As economies across the U.S.

and the globe began to reopen with rising vaccination rates during the spring of 2021, spending patterns shifted as consumers moved back to experiential categories in a broad fashion.

The combination of these changes in consumer spending patterns and the global supply chain

challenges, which also arose due to the COVID-19 pandemic, led to lower sales in the second half of fiscal year 2021 as compared to the first.

Intellectual Property

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We promptly make available on this website, free of charge, the reports that we file or furnish with the Securities and Exchange Commission (“SEC”), as well as corporate governance information (including our Code of Business Conduct and Ethics).

We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and information statements and amendments to reports filed or furnished pursuant to Sections 13(a), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and information statements

and amendments to reports filed or furnished pursuant to Sections 13(a), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding Wayfair and other issuers that file electronically with the SEC.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business