Anyone who keeps up with the housing market and its adjacent industries knows things have been well… stagnant. However, the earnings of the home goods retailer Wayfair are thriving, whereas those of others are struggling. So, how are they maintaining their profitability? The answer may surprise you…
The Wayfair Game Plan to Strengthen Earnings
Earlier, we asserted that decor and furnishing revenue was on a decline.
In fact, sales of these goods saw a 5.1% decrease over the first nine months of 2024. Similarly, Wayfair’s earnings were on a downward trend for the last eight out of ten quarters…
UNTIL THE COMPANY DID SOMETHING ABOUT IT.
First, Wayfair CEO, Niraj Shah laid off 13% of the brand’s workforce in January. This was done to offset the previous overhiring.
Next, the online juggernaut opened its first brick-and-mortar store in May to attract new customers. Wayfair did this to capitalize on shoppers’ preferences for buying products in person.
Further, the company restructured its loyalty program to reward consumers for buying more, more often.
Similarly, Wayfair’s real “secret” to higher earnings is how it runs its promotions — which they now run frequently…
The Power of Great Retailer-Supplier Relationships
Discounting your product to make more money sounds counterintuitive.
AND NORMALLY, IT IS.
A better strategy is to create more value for your customers. But as always, there are exceptions to every rule…
In this case, the brand’s over 20,000 suppliers cover the costs of their discounts!
Additionally, Wayfair’s numbers show that 70% of its earnings come from non-promotional items.
In short, this means that Wayfair takes no loss for running sales. Then, its shoppers end up buying other products at full price.
The best part is that everyone in this scenario wins, which is how you run a strong business in any economy.
Be Great,
GCTV Staff
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