What changed in this filing

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Item 1. Business

2024-02-22 compared with 2023-02-23 · 79 added, 101 removed, 114 unchanged (61% of the section changed)

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

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.

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

Through our e-commerce platform, we offer customers visually inspired browsing, compelling merchandising, easy product discovery and attractive prices.

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 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.

We specialize in the home category and this has enabled us to build a shopping experience and logistics infrastructure that is tailored to the unique characteristics of our market.

Our customers span a wide range of demographics, with annual household incomes ranging from $25,000 to over $250,000, and also include business professionals, from small startups to global enterprises.

Our selections of furniture, décor, housewares and home improvement products appeal to our customers’ different tastes, styles, purchasing goals and budgets when shopping for their homes and businesses.

To meet our customers where they are, 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.

The destination for all things home.

• Joss & Main:

The ultimate style edit for home.

All of modern, made simple.

• Birch Lane:

Classic style for joyful living..

The destination for luxury home.

• Wayfair Professional:

Just right for Pros.

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, Wayfair.de in Germany and Wayfair.ie in Ireland.

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.

The delivery experience and overall customer service we offer our shoppers are central to our business.

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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 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.

Our global customer service locations are staffed with over 3,100 full-time highly-trained sales and service employees.

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Our Growth Strategy

Our goal is to further increase our leadership in the home goods market by pursuing the following key strategies:

• continue to build our brands by delighting our customers;

• increase repeat purchases from existing customers and acquire new customers;

• invest in technology to further improve our customer and supplier experiences;

• grow certain categories where we under-index the broader home goods market today;

• increase delivery speed and improve the delivery experience for our customers through the continued build-out of our proprietary logistics network;

• continue to expand internationally and;

• continue to execute our omni-channel strategy with the launch of physical retail stores across our family of brands;

and opportunistically pursue strategic acquisitions.

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, Germany and Ireland.

Our operating and reportable segments are the United States (“U.S.”) 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.

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The home goods market is large and characterized by specific consumer trends, structural challenges and market dynamics that are shaping the future of our industry.

Addressable Market Size and Growth

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 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.

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.

Why Home is Different

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However, we believe big box retailers that serve the mass market for home goods are often unable or unwilling to provide this level of service.

Our Solution - Key Benefits for Our Customers

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Key Benefits for Our Customers

We offer a broad selection and choice.

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Superior customer service is a core part of the experience we offer shoppers.

Our customer service organization has over 4,200 employees who help consumers navigate our sites, answer questions and complete orders, as well as specialists focused on specific product classes.

Our customer service organization has over 3,100 full-time employees who help consumers navigate our sites, answer questions and complete orders, and offers specialists focused on specific product classes.

This team helps us build trust with consumers, build our brand awareness, enhance our reputation and drive sales.

Our Solution - Key Benefits for Our Suppliers

Key Benefits for Our Suppliers

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

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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.

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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This fulfillment network is a key component of our custom-built and seamlessly integrated technology and operational platform.

Sites and Brands

Each of our customers has a different taste, style, purchasing goal and budget when shopping for her home.

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.

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 ® .

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

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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.

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.

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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.

Depending on the size of the package, the delivery is made either primarily through FedEx, for our small parcel products, or third-party line haul trucking companies for our large parcel products and third-party last mile home delivery agents.

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.

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.

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

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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 4,200 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

Our goal is to further increase our leadership in the home goods market by pursuing the following key strategies:

• continue building our brands by delighting our customers;

• increase repeat purchases from existing customers and acquire new customers;

• invest in technology to further improve our customer and supplier experiences;

• grow certain categories where we under-index the broader home goods market today;

• increase delivery speed and improve the delivery experience for our customers through the continued build-out of our proprietary logistics network;

• continue to expand internationally;

• continue to execute our omni-channel strategy with the launch of physical retail stores across our family of brands;

• opportunistically pursue strategic acquisitions.

The market for online home goods and furniture is highly competitive, fragmented and rapidly changing.

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American Freight, Ashley Furniture, Bob's Discount Furniture, Havertys, Raymour & Flanigan and Rooms To Go;

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• Big Box Retailers:

Bed Bath & Beyond, Home Depot, IKEA, Lowe's, Target and Walmart;

Home Depot, IKEA, Lowe's, Target and Walmart;

• Department Stores:

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• Specialty Retailers:

Arhaus, At Home, Container Store, Crate and Barrel, Design Within Reach, Ethan Allen, Floor & Decor, LL Flooring, Mitchell Gold + Bob Williams, Restoration Hardware, Room & Board, Serena & Lily, TJX Companies and Williams Sonoma;

Arhaus, At Home, Container Store, Crate and Barrel, Design Within Reach, Ethan Allen, Floor & Decor, LL Flooring, Restoration Hardware, Room & Board, Serena & Lily, TJX Companies and Williams Sonoma;

• Online Retailers and Marketplaces:

Amazon, Build.com, Houzz, eBay, Etsy and Overstock;

Amazon, Build.com, Houzz, eBay, Etsy and Bed Bath & Beyond;

• International:

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We believe our technological and operational expertise allows us to provide our customers with a vast selection of goods, attractive price points, reliable and timely fulfillment, plus superior customer service and that the combination of these capabilities is what provides us with a sustainable competitive advantage.

Human Capital

Human Capital and Corporate Responsibility

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.

We believe we have a good relationship with our employees, which includes approximately 14,400 employees, of which approximately 12,800 are full-time equivalents, as of December 31, 2023.

Our reported headcount includes a substantial majority of employees impacted by the workforce reduction we announced in January 2024.

The workforce reduction included approximately 1,650 employees, of which 1,200 are corporate employees, who will no longer be reflected in our headcount by the end of the first quarter of 2024.

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

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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 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.

Wayfair is strongly dedicated to Diversity, Equity and Inclusion (“DEI”).

Through cross-functional partnerships, our Head of DEI creates a center of excellence for our DEI strategy, aiming to ensure that all of our employees feel supported and can maximize their contributions and development opportunities.

Through these cross-functional partnerships, the DEI team creates the strategy and identifies initiatives aimed at embedding a lens of inclusivity into all aspects of the business.

We have worked to provide an equitable employee journey for all employees by giving them actionable feedback and training managers to lead with empathy and without bias.

Additionally, 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 .

Compensation and Benefits

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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

Health, Well-Being and Safety

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.

We continue to evolve our programs to support our employees’ health and wellness needs.

We also provide benefits and resources to employees aimed at addressing stress, burnout and mental health and the promotion of self-care.

Maintaining a safe work environment is also important to us, and our management team reaffirms our objectives each year to our frontline employees through our annual Commitment to Safety

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Our efforts include incident and hazard reporting, standard operating procedures aimed at reducing risk of injury, training, promotion of best practices, and measurement of key safety metrics.

Environmental, Social and Governance

As a multinational retailer with a global supply chain, Wayfair is committed to responsible practices across our business—from showcasing more sustainable products through our Shop Sustainably program, to implementing waste reduction initiatives, lowering emissions and adopting sustainable business practices where practicable.

We have established and publicly announced our goal to reduce our Scope 1 and 2 greenhouse gas, or GHG, emissions by 63% by 2035 in comparison to the 2020 baseline.

This past year, Wayfair made progress toward this goal by signing agreements to install on-site solar panels at several fulfillment centers and by joining an aggregated virtual power purchase agreement.

As part of this agreement, Wayfair is contracted to offtake 15 MW of power from the solar project annually.

Wayfair also continues to evaluate and incorporate energy efficiency features across its global facilities.

Building on the initial success of our Shop Sustainably program, we have expanded the number of suppliers’ products that meet the standards for one or more of the third-party certifications included in the program, including energy or water efficiency, sustainably sourced wood, organic textile use, or Fair Trade Certified™.

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.

Additional information about our human capital management efforts, including our latest efforts related to DEI, can be found on our investor website at investor.wayfair.com.

The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC, and the reference to our website is intended to be an inactive textual reference only.

Government Regulation

We are subject to domestic and foreign laws and regulations regarding general business, as well as laws and regulations governing the Internet and e-commerce, many of which are still evolving.

Adverse legal or regulatory developments could substantially harm our business.

Additional information regarding laws and regulations applicable to our business is set forth in Part I, Item 1A, Risk Factors , in 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 and includes the November and December holiday sales period.

Intellectual Property

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In addition to these contractual arrangements, we also rely on a combination of trademarks, trade dress, domain names, copyrights, trade secrets and patents to help protect our other intellectual property.

What changed 10-K

Item 1. Business