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Wayfair.com in 12 years grew to become a web retailer with more than $900 million in annual revenue by building a business plan grounded in listening and learning from customers, day two keynote and Wayfair CEO Niraj Shah told attendees today at IRCE 2014.
If an online retailer of any size wants to grow, its secret to success is listening to what customers want and then finding ways to surpass expectations. That’s the chief way online home furnishings retailer Wayfair.com grew web sales from a small start-up to more than $900 million in annual web sales, CEO Niraj Shah told attendees this morning at the 2014 Internet Retailer Conference and Exhibition in Chicago.
Speaking as day two keynoter on the topic “Connecting with consumers by giving them what they want,” Shah told attendees they can treat customers one of two ways. “You can treat them as smart and meet their expectations or treat them as dumb and lead them into a purchase,” he said. “We chose to treat customers smart.”
Although Wayfair.com, No. 45 in the 2014 Internet Retailer Top 500 soon expects to exceed $1 billion in annual web sales and could file for an initial public offering as soon as next year, Shah as company co-founder in the early start-up days spent most of his time on the phone dealing with customers. “We didn’t have any money and we boot strapped the business for nine years,” Shah said. “The time we spent on the phone with customers learning what they want and giving it to them was how we learned. Our customers taught us how to grow.”
Wayfair was founded as CSN Stores in 2002 as a niche web merchant with more than 240 different micro sites. Shah launched the business in the housewares and home furnishings space after conducting market research that convinced him the area was underserved by other web merchants and offered the opportunity of selling in niche furniture categories such as the company’s first two web stores for bar stools and TV stands.
Today Wayfair offers 7 million products from more than 12,000 suppliers. But even as the company grew Wayfair never lost touch with listening and learning from customers, Shah told attendees. “After a couple of years we had to 70 employees but we pretty much always had everyone on the phone with customers,” Shah said. “Everything else we worked on seemed like a side job.”
Shah spent a considerable amount of time describing how Wayfair listens to customers. A case in point is mobile. Today mobile commerce accounts for about 25% of all web sales but, more importantly, influences about 40% of all sales, Shah said. Wayfair’s core customers are women aged 35-60 with a family and a busy schedule who like to shop when they have time, including on mobile. “One way we see mobile is that helps them to start the process,” Shah said.
In the housewares and home furnishing space, consumer buying is based on discretionary spending of income, which reinforces the importance of listening to customers, Shah said. “When they shop on Wayfair.com they are spending their ‘fun’ money because it’s what they’ve worked for, but it could be a limited amount and they are choosing to spend it with us,” Shah told attendees. “They tell us how we are doing by voting with their dollars and we have to earn that vote.”
The company has been in business for a dozen years but Shah and his co-founder Steve Conine made the decision to rebrand the company as Wayfair.com about two years ago and merge 240 micro sites into a handful of bigger brands under Wayfair. “We are a relatively young brand,” he told attendees. Today Wayfair.com includes brands such as AllModern, which features originally designed modern products; Birch Lane, which includes classic furnishings and home décor; and DwellStudio, another modern furnishings brand.
Wayfair.com also operates Joss & Main, a daily deal site. One way Wayfair listened to customers and looked to differentiate Joss & Main was by letting customers return merchandise, which most other daily deal sites don’t do. Shah said. ”We listened to our most engaged customers and they wanted returns,” Shah told attendees. “We didn’t offer returns in the beginning because it wasn’t standard operating procedure,” Shah said. “But in the end we became pragmatic because we didn’t want to alienate customers and we removed friction.”