Wayfair Inc. · NYSE:W
Wayfair — Investor Day (August 2023)
150 slides from Wayfair's investor day presentation, Aug 10, 2023
Slide 1: Wayfair Investor Day 2023
sowaytair Wayfair Investor Day 20235
Slide 2: Safe Harbor
This presentation contains forward-looking statements within the meaning of federal and state securities laws. All statements other than statements of historical fact contained in this presentation—including statements regarding our future results of operations and financial position, including our p
Slide 3: Agenda
1:00 Welcome and Kickoff 1:15 Core Business Deep Dives 2:45 Break 3:00 Supplier Fireside Chat Agenda 3:30 Growth Drivers Deep Dive 4:10 Financials Deep Dive 4:30 Q&A 5:00 Reception 3
Slide 4: Welcome & Kickoff
Welcome & Kickoff Niraj Shah, CEO, Co-Founder, Co-Chairman Steve Conine, Co-Founder, Co-Chairman 4
Slide 5: Shopping for the home is different
Shopping for the home is Home shopping is browse-based, different not search-based Customers value individuality and have an emotional connection to their homes The Home category is largely unbranded and very fragmented Bulky and damage-prone products require tailored delivery and customer service 5
Slide 6: 2030 TAM >$1T
2030 TAM >$1T 2023 TAM ~$800B Wayfair LTM $12B Source: Wayfair Estimates, Euromonitor, US Census Bureau, US Bureau of Labor Statistics 6
Slide 7: Wayfair is a platform focused exclusively on the home goods market
Wayfair is a platform focused exclusively on the home goods market >21 Million >20 Thousand ~13 Thousand ~2 Thousand Active Customers Suppliers Employees Engineers Strong brand Purpose-built Co-founders recognition Fragmented Proprietary Focused on technology lead the in North and largely end-to-end
Slide 8: Key takeaways
Key takeaways: The core recipe is We have We have major We’ve made strong the strongest it’s category-defining initiatives underway progress on our ever been, and we capabilities at each that will unlock profitability goals, and are consistently stage of the customer significant growth our business mod
Slide 9: Core Business Deep Dives
Core Business Deep Dives 9
Slide 10: The Customer Journey / Technology
The Customer Journey Technology 10
Slide 11: Marketing
Core Business Deep Dive Marketing Paul Toms, Chief Marketing Officer 11
Slide 12: Our customer base is diverse, representing all backgrounds and walks of life
Marketing THE WAYFAIR CUSTOMER Our customer base is diverse, representing all backgrounds and walks of life Our target Wayfair customer is between 25-54 years old and skews female Average Household income is $80k They live everywhere: single family homes, condos, town homes, mobile homes, duplexes,
Slide 13: Our brand promise
OUR BRAND PROMISE: Marketing To give everyone the power to create spaces that are just right for them. Unparalleled Seamless Tangible Selection Experience Value Every Style. Every Space. Convenient Shopping For Every. Budget Everybody. ● Easy to find products ● Free shipping ● Home Inspiration ● Fast
Slide 14: We target customers across key life stages and aim to connect early to maximize CLV
Marketing We target customers across key life stages and aim to connect early to maximize CLV 14
Slide 15: We communicate our brand promise to customers where they are
Marketing We communicate our brand promise to customers where they are, through a broad portfolio of free and paid channels Illustrative example of new customer journey Awareness e.g., TV, Online Video, Direct Mail Consideration Your home. There's no e.g., Display/Social place like it. Prospecting &
Slide 16: We have achieved significant scale and Wayfair has become a household name
Marketing We have achieved significant scale and Wayfair has become a household name in North America >85M Substantial customer file to drive repeat Customer customer activity by leveraging our File first-party data set 2012 New Customers LTM Q2’23 ~140B ~3B >80% impressions site / app visits aided bra
Slide 17: Our ad spend is broadly grouped into three buckets
Marketing Our ad spend is broadly grouped into three buckets: Performance, Brand, and R&D Examples Description Mature, tightly measured with high confidence in Performance Search, PLA, ROI; channels are run to maximize long-term profit Retargeting dollars TV, Catalog, Highly measured, but with a wider
Slide 18: Investments in proprietary ad technology enable us to grow Search faster
1. PERFORMANCE Investments in proprietary ad technology and deep partnerships enable us to grow Search faster than the market Wayfair’s share of “Home & Garden” search Share gains come from the work of our traffic has increased +50% …. and held team of Data Scientists, ML and Martech post-pandemic En
Slide 19: We've continued to build strong diversification in our marketing mix
2. BRAND We’ve continued to build strong diversification in our marketing mix with brand-building channels Kelly Clarkson TV Ad Influencer Marketing 19
Slide 20: We consistently reserve a portion of our ad spend for R&D
3. R&D We consistently reserve a portion of our ad spend for R&D, incubating emerging capabilities such as original content and short form video Original Entertainment on YouTube Emerging Social Formats We are building an audience on YouTube through We are in the early stages of diversifying story-l
Slide 21: Themis is our proprietary attribution and measurement platform
Marketing Themis is our proprietary attribution and measurement platform honed over 5+ years of investment >4K ML models underpinning Themis Customer history (accounts for loyalty) >90% $ Of ad spend covered Themis Attribution Allocates incremental … revenue to each >5 touchpoint Years of continuous
Slide 22: An illustrative example of how Themis attributes revenue
Marketing An illustrative example of how Themis dynamically attributes revenue to marketing touchpoints Customer history (e.g. prior orders) 0.3 $30 Catalog 0.1 $10 Customer activity leading to current order PLA 0.2 $20 (online & offline) Email 0.4 $40 $ 1.0 Order shares for a given $100 order always
Slide 23: Merchandising
Core Business Deep Dive Merchandising Liza Lefkowski, VP of Curated Merchandising, Brands and Store 23
Slide 24: We manage our catalog in three distinct segments
Merchandising We manage our catalog in three distinct segments Today’s focus is primarily on Differentiated Branded Differentiated Commodity Highly visual shopping Style is key Few known brands 24
Slide 25: The home category has unique opportunities
Merchandising The home category has unique opportunities – particularly in Differentiated ● Highly visual, deeply personal: consumers want their home to reflect their style and taste, while also functioning well for how they live ● Fun, but not easy: consumers enjoy home projects, but have trouble fin
Slide 26: We curate our best Differentiated products into our premium brands
Merchandising We curate our best Differentiated products into our premium Flagship and Specialty Retail Brands $$$ ● Composed of the best products on-site ● Best-in-class merchandising PRICE ● Compelling and cohesive lifestyle imagery ● Curated by style $ and price point Traditional Lodge Country Co
Slide 27: Our proprietary brands uniquely support Wayfair customers
Merchandising Our proprietary brands uniquely support Wayfair customers in creating their ‘just right’ space Find the ● Ensure strong value-for-money on key items perfect product ● Show our best products first for each customer’s need ● Provide customers with visible signals of quality Have the confid
Slide 28: We have a tailored strategy for Commodities
Merchandising We have a tailored strategy for Commodities Objectives and principles are similar to Flagship Brands – but without the style element Coming Soon Basics at the best Affordable Custom for every Elevated essentials value mattresses budget 28
Slide 29: Everything starts with perfect SKUs
Merchandising Well Reviewed Everything starts Sharp Price with “perfect Fast Shipping SKUs” ● Competitively priced High-quality lead image ● Available and in-stock ● Fast delivery promise ● Compelling imagery Full Imagery Tray In-stock Consumer Services ● High review count Offered ● Strong average r
Slide 30: Our best items fuel the premium brand flywheel
Merchandising Our best items - the winners of today and tomorrow - fuel the premium brand flywheel Identify the highest potential SKUs Tomorrow’s winners Prominently show Merchandise them across key them exceptionally customer touchpoints well Sort, on-site, marketing, Great on their own, even promos
Slide 31: Together with suppliers, we focus resources on our best items
Merchandising Together with our supplier partners, we focus resources on ensuring our best items succeed Identify the highest Merchandise them Prominently show them potential SKUs exceptionally well across customer touch points # of images vs. non-FSB 3x 5x visits per SKU 6x vs. # of reviews non-FSB
Slide 32: These items come to life in the context of our brands
Merchandising These items come to life in the context of our brands through seasonal storytelling 32
Slide 33: Vignettes feature brand-curated looks
Merchandising Vignettes feature brand-curated looks alongside class destinations in our store Early peek from our physical retail lab 33
Slide 34: New on-site features use our brands to guide discovery
Merchandising New on-site features use our brands to guide discovery and basket-building 34
Slide 35: Celebrity/influencer partnerships lend credibility
Merchandising Celebrity/influencer partnerships lend credibility and accelerate equity growth of our brands 35
Slide 36: Strong returns for suppliers in our brands
Merchandising It all adds-up to strong returns for suppliers in our brands New FSB SKUs ramp faster than others and have more long-term success First 9 Month Sales Ramp: FSB SKU vs Non-FSB SKU 8x More likely to go on to become a bestseller 36
Slide 37: This experience enhances customer lifetime value
Merchandising Incremental Sales vs. Non-FSB Items Most importantly, (90 days post-1st FSB order) this experience enhances customer +13% lifetime value Our current program is already +12% +12% driving higher customer +11% lifetime value, indicated by incremental sales following a customer’s first orde
Slide 38: Pricing
Core Business Deep Dive Pricing Corey Gilbertson, VP of Pricing, Competitive Intelligence and Trends 38
Slide 39: Our pricing approach solves for customers, suppliers and Wayfair
Our pricing approach solves for customers, Pricing suppliers and Wayfair; ultimately getting us to the prices we want at the margins we want Suppliers Customers Wayfair ● Deliver strong unit economics ● Offer a fair, transparent and ● Offer great value and sharp pricing while maximizing long term st
Slide 40: Our approach is tailored to three types of products
Pricing Our approach is tailored to three types of products Branded Differentiated Commodity ~25% of revenue ~70% of revenue ~5% of revenue Price-Matching Cost-Plus, using “Flat Take Rates” 40
Slide 41: Cost markup model for Differentiated and Commodity
Pricing For Differentiated and Commodity, Wayfair operates a cost markup model enabling suppliers to influence retail prices via costs Costs Included in Pricing Product Outbound Shipping Variable Incidence Wayfair Retail Costs Margin Price Merchant Fees Customer Service 41
Slide 42: Similar items are priced using the same markup
Pricing Similar items are priced using the same markup to ensure a level playing field Illustrative We price competing products to the Example same markup as one another Lowest Cost / Most Efficient Item level cost changes translate to Total Cost $230 $210 $250 retail changes simply and predictably Ma
Slide 43: Optimal margins are measured via testing and modeling
Optimal margins are measured via testing and modeling; Pricing price levels are then set to balance short and long-term outcomes Demand Profit Retention We set prices below % of “lost” the profit maximizing orders retained point to account for long term benefits of on W lower prices Revenue Our pricing
Slide 44: Our approach is tailored to three types of products
Pricing Our approach is tailored to three types of products Branded Differentiated Commodity ~25% of revenue ~70% of revenue ~5% of revenue Price-Matching Cost-Plus, using “Flat Take Rates” 44
Slide 45: A strong Branded offering is grounded in competitive prices
Pricing A strong Branded offering is grounded in competitive prices with healthy unit economics We concentrate customers on products that are… Consistently a Great Competitive on Price At Good Economics Experience Prices reflect what Delivery speeds are Unit Economics are customers can find via quick,
Slide 46: Branded products are priced to match market retails
Pricing Branded products are priced to match market retails and exposure is tied to relative unit economics Retails are set to competitive Illustrative price-points informed by credible, Example cross-shoppable retailers Poor Relative Unit Economics Exposure (sort rank, promotional Competitive shelf
Slide 47: This system hinges on quality match data and exposure incentives
Pricing This system hinges on quality match data and exposure incentives that matter Matches Enable Us to be Strong Unit Economics Result in Competitive on Price Visibility and Sales Google Competitor Shopping monitoring crawling SHOPPING SESSIONS Visibility drops off preciptiously from page Matchin
Slide 48: Supply Chain
Core Business Deep Dive Supply Chain Thomas Netzer, Chief Operating Officer 48
Slide 49: Operations is the integrated management of key elements
Supply Chain Operations is the integrated management of 6 key elements covering the end-to-end supply chain as well as Supplier and Customer Service Reverse Inbound Fulfillment Delivery Logistics Supplier Service Customer Service 49
Slide 50: Breadth and depth of end-to-end supply chain capabilities
Supply Chain We require a breadth and depth of end-to-end supply chain capabilities that go far beyond a 'regular' eCommerce setup What we are enabling … Big and Fragile and Unique customer delivery bulky items damage-prone products experience requirements Global sourcing High variance in Inventory-
Slide 51: Purpose-built, tech-enabled proprietary capabilities
Supply Chain We address our unique challenges with purpose-built, tech-enabled proprietary capabilities Challenges Wayfair’s proprietary Supply Chain capabilities Inhouse Partnership Information Logistics Management Management i Technology-enabled & Purpose-built 51
Slide 52: Example Flow
Supply Chain We address our unique challenges with purpose-built, tech-enabled proprietary capabilities EXAMPLE FLOW Example Flow: Large Parcel Fulfillment transportation & delivery Consolidation Ocean Multi-box solutions at source forwarding operations Forward positioning CUSTOMER Incident mgmt. Pac
Slide 53: Five key levers enable a superior supply chain
Supply Chain Five key levers enable us to create a superior supply chain and a high-value offering to our supplier and customers We enable Cost-Efficient Perfect Orders At Scale through … Volume Capacity Footprint Management Technology … in addition to product-specific expertise (people) and processes
Slide 54: Supply Chain capabilities offer superior value
Supply Chain Our Supply Chain capabilities allow us to offer superior value to our customers and suppliers Cost-Efficient Perfect Orders At Scale Customers Suppliers ▪ High availability of goods leveraging forecasting expertise ▪ Fast delivery due to positioning of inventory in customer proximity and
Slide 55: Supply Chain capabilities offer superior value
Supply Chain Our Supply Chain capabilities allow us to offer superior value to our customers and suppliers Cost-Efficient Perfect Orders At Scale Customers Suppliers ▪ Ease of doing business as low involvement is needed once supply chain management is adopted ▪ Enabling competitive cost through favor
Slide 56: Supply Chain drives measurable cost and revenue impact
Supply Chain Wayfair’s Supply Chain capabilities drive measurable cost & revenue impact, and are critical for our commercial success Wayfair proprietary benefits (selection, May 2023 data) First-class Favorable Fast & reliable transportation CastleGate Cost order-to-delivery management services Lower
Slide 57: We operate an end-to-end, global Supply Chain
Supply Chain We operate an end-to-end, global Supply Chain along which we continue to drive innovation for our customers and suppliers Reverse Inbound Fulfillment Delivery Logistics 2022 >50 Countries 17 Fulfillment >450 Full-truckloads 9 Return centers network sourced from centers daily in 4 countrie
Slide 58: Strong progress across physical and information flow
Supply Chain Based on supplier and customer feedback we made strong progress across the physical and information flow of our supply chain Selection of key improvements over the past 12 months Container Rates Container and Inventory Visibility Forward Positioning Inbound Speed Forecast accuracy Invoic
Slide 59: Supply Chain can continue to unlock significant value
Supply Chain Supply Chain can continue to unlock significant value through multiple distinct levers Service offerings Profit-aware Scale, tech and and execution sort expertise enabled quality efficiency … increase customer … creates more … enables lower repeat rate as well as CastleGate demand CastleGa
Slide 60: Sales & Service
Core Business Deep Dive Sales & Service Sanjeev Sahni, VP of Global Sales & Service 60
Slide 61: We help customers
Sales & Service We help customers: Guide them to the best item for their home Consumer Sales This a complex category Set up items stress free that every customer shops Assembly, Installation, and White Glove Delivery in a unique way Protect their purchase for years to come Purchases are emotive Prot
Slide 62: Guiding customers to the best items using Sales experts
SALES Sales & Service We help guide customers toward the best items for their home using Sales experts We connect customers Powered by with tech-enabled Sales language, experts to answer geography, questions and give device, and confidence in their product Customer Feedback selection category “Shauna
Slide 63: Best expertise in every category
SALES Sales & Service Specialized product experts give our customers the confidence to buy technical products Our vision is to provide the best expertise in every category we carry. 63
Slide 64: Assembly, installation, and delivery services
ASSEMBLY, INSTALLATION and WHITE GLOVE DELIVERY Sales & Service We help set up items stress free with assembly, installation, and delivery services Assembly Installation Installation White Glove Delivery "Adrian arrived on time and was “Service was awesome. An “The Wayfair delivery team were polite
Slide 65: Protection plans
PROTECTION PLANS Sales & Service We help protect their purchase for years to come with comprehensive protection plans Appliances and Furniture and Rugs Electrics Outdoor "Our manufacturers warranty ran out a month ago. Thanks to the “It truly gives you peace of mind. The “...stained my rug. I was pl
Slide 66: Design services through custom projects
DESIGN SERVICES Sales & Service We help curate their spaces through custom projects to create a cohesive, finished look Before After Project Request: furnishing a Incorporated 12 different Customer NPS: 10/10 multi-room condo categories into design “My Wayfair designer listened, understood my vision
Slide 67: Service creates a competitive edge
CUSTOMER SERVICE Sales & Service Service creates a competitive edge by over-delivering on performance, proactiveness and personalization Wayfair Wayfair “knows me” Wayfair “cares about me” “makes it right for me” ▪ Expansive set of ▪ Customer engagement ▪ Customer - Agent channels ▪ Proactive resolu
Slide 68: Service speed and quality beating benchmarks
Sales & Service Our service speed and quality is beating benchmarks and won Newsweek’s 2023 Best Customer Service award Speed-Response Time Quality Efficiency Phone Pickup Time Perfect CSAT Average Time on Phone (seconds) (% of 5/5 Scores) (seconds) 57 90 93 510 468 43 Benchmark Wayfair Benchmark Way
Slide 69: Machine learning and AI drive customer service journey
Sales & Service Machine learning and AI drive every step of the customer service journey Customer Customer seeks assistance Customer engages with a live Agent Returns to WF Optimal Routing contact to IntentIntent identification Agent Agent matching Agent tooling Resolution Customer channel optimal ch
Slide 70: Machine learning and AI drive customer service journey
Sales & Service Machine learning and AI drive every step of the customer service journey Customer Customer seeks assistance Customer engages with a live Agent Returns to WF IntentIntent identification Optimal Routing contact to Agent Agent matching Agent tooling Resolution Customer optimal channel ch
Slide 71: Machine learning and AI drive customer service journey
Sales & Service Machine learning and AI drive every step of the customer service journey Customer Customer seeks assistance Customer engages with a live Agent Returns to WF Optimal Routing contact to Agent Agent tooling IntentIntent identification Agent Agent matching tooling Resolution Customer chan
Slide 72: Machine learning and AI drive customer service journey
Sales & Service Machine learning and AI drive every step of the customer service journey Customer Customer seeks assistance Customer engages with a live Agent Returns to WF Optimal Routing contact to Resolution IntentIntent identification Agent Agent matching Agent tooling Customer channel optimal ch
Slide 73: Efficient customer retention and reacquisition
Sales & Service We promote efficient customer retention and reacquisition by understanding our customer using explicit and implicit data signals “Listening intently” across moments of truth… …drives key outcomes. Shopping Explicit ● Holistic collection ● NPS Score of customer ● Free Text Responses fe
Slide 74: Machine learning and AI drive customer service journey
Sales & Service Machine learning and AI drive every step of the customer service journey Customer Customer seeks assistance Customer engages with a live Agent Returns to WF Optimal Routing contact to IntentIntent identification Agent Agent matching Agent tooling Resolution Customer channel optimal ch
Slide 75: We share customer feedback with broader Wayfair
CUSTOMER SERVICE Sales & Service We share customer feedback with broader Wayfair to ultimately prevent any customer issues Service solicits customers’ feedback to ultimately prevent customer issues: Share product specific feedback with Product experience supplier and Wayfair teams Improve site experi
Slide 76: Technology
Core Business Deep Dive Technology Fiona Tan, Chief Technology Officer 76
Slide 77: Building a flexible, dynamic platform is critical
Technology Building a flexible, dynamic platform is critical to achieving the velocity and scale needed to grow market share in the home category and remain the top destination for all things home 77
Slide 78: Our Tech Transformation allows us to scale our platform
Technology Our Tech Transformation allows us to scale our platform more quickly, cost effectively, and reliably TECHNICAL ORGANIZATIONAL MONOLITH CLOUD NATIVE MICRO- SERVICES $10B $100B 78
Slide 79: Machine learning and AI for the last decade
Technology We’ve been applying sophisticated machine learning and AI to core challenges for the last decade Technology 79
Slide 80: Machine Learning to personalize experiences
Technology Customers We leverage Machine Learning to personalize experiences for our shoppers 80
Slide 81: ML/AI models within our technology stack
Technology Suppliers We invest in ML/AI models within our technology stack to enable valuable capabilities across our Partner Home platform Catalog Pre-order Post-order Management Logistics Service Conversational AI Future Winners Customer Promise Intent-based Experimenting Routing with Duplicate De
Slide 82: Investing in cutting edge technology
Technology We are investing in cutting edge technology Testing generative AI to create new content, code, imagery, simulations and videos - all designed to drive best-in-class experiences with humans in the loop Proof of Concepts Generative AI Experience Service Re-envisioning the Sales ● Digital Ch
Slide 83: Technology
Technology wayfair 83
Slide 84: Uniquely positioned to win using Generative AI
Technology Uniquely positioned to win using Generative AI We have multiple distinct advantages that set Wayfair apart from peers First-Party Data Proprietary dataset used to train large language models for tailored outcomes Expertise Cost Efficiency Rapid Adoption Over a decade of experience Utilizin
Slide 85: Break
Break 85
Slide 86: Supplier Fireside
Supplier Fireside Adam Sinoway, VP Global Category Management Bruce Greenberg, President, Aeon Furniture Dave Barry, Executive Vice President & Chief Financial Officer, Fortune Brands Innovation Satya Tiwari, Owner & President, Surya 86
Slide 87: Growth Drivers Deep Dive
Growth Drivers Deep Dive Niraj Shah, CEO, Co-Founder, Co-Chairman Jon Blotner, Incoming Chief Commercial Officer 87
Slide 88: The market we operate in
GROWTH DRIVERS DEEP DIVE 2030 TAM The market we operate in >$1T We split our ~$800 billion TAM across the following vectors: 2023 TAM 1. Brands (Luxury, Specialty, Mass) ~$800B 2. Geography (US, International) 3. Consumer vs Professional 4. Online vs Offline Wayfair 2022 $12B + Supplier Advertising 8
Slide 89: Brands
Growth Drivers Deep Dive Brands 89
Slide 90: Our Specialty Brands & Perigold
GROWTH DRIVERS DEEP DIVE 2023 TAM ~$800B Our Specialty Brands & Perigold Mass: Our mass Wayfair business drives ~$500-600B ~2% market penetration today Across Specialty and Luxury, Wayfair is less than 0.5% penetrated Specialty: today - we expect to drive above ~$100B average topline growth as penet
Slide 91: Our portfolio of brands addresses specific customers' styles & segments
WHO WE ARE Our portfolio of brands addresses specific customers’ styles & segments Est. 2017 Luxury Est. 2006 All of modern, made simple. An undiscovered world of luxury design. ($175K+ Omni-channel household income) Est. 2014 Classic style for joyful living. Mass ($60K – $175K household income) Est.
Slide 92: Why we will win
Why we will win Specialty Retail Brands: Perigold: ● Same specialty quality and curated ● Filling a gap in luxury home offering - assortment vs. competition but at a previously difficult for high-end better value consumer to access the best design brands ● Leverage Wayfair.com to showcase Specialty R
Slide 93: All styles of modern, made simple
All styles of modern, made simple. How We Do It Authority in Modern Design We partner with trusted suppliers to create a destination for all things modern. Inclusivity We democratize modern design by sourcing premium quality styles at accessible price points. Ease Powered by Wayfair, we offer fast +
Slide 94: Classic Style for Joyful Living
Classic Style for Joyful Living CORE STYLES BRAND PILLARS + New Traditional Timeless Anchors We curate thoughtfully + Contemporary Classic handpicked timeless designs that blend + Farmhouse classic style and quality, minus the markups. + Rustic + Coastal Collaborative Spirit Our easy shopping experi
Slide 95: Our brand differentiators
FALL / RUSTIC X MODERN X TRADITIONAL SUMMER / MODERN X TRADITIONAL X COASTAL Our brand differentiators are: Relevant and Edited: We have a unique and edited point of view on a wide range of styles and trends. Art of the Mix: We are all about empowering our customers to create a mix that’s all their
Slide 96: Perigold
PERIGOLD The destination for luxury home furnishings. BRAND PURPOSE To inspire extraordinary living. BRAND PILLARS Quality Uncompromising quality, with unmatched access to the world’s best design brands. Selection Unprecedented selection of unique, expertly curated pieces for every style and space.
Slide 97: Perigold leverages the Wayfair platform to drive scale and growth
Perigold leverages the Wayfair platform to drive scale and growth as we take share in the >$100B luxury market 2-3x 4M >150K 40% Wayfair AOV Monthly Visits LTM New Customers 4Y Order CAGR 97
Slide 98: International
Growth Drivers Deep Dive International 98
Slide 99: International
GROWTH DRIVERS DEEP DIVE 2023 TAM ~$800B International US: ~$400-450B Why we are excited about International ● Customers shop the Canada: category in the same ~$30-50B manner ● Fragmented market where scale Europe: advantages matter ~$320-350B ● Executing on a proven US playbook We cover nearly half
Slide 100: Canada
GROWTH DRIVERS DEEP DIVE Canada Enabling our suppliers through: ● Localized marketing & promotional events ● Cross-border fulfillment and domestic CastleGate network ● French language shopping experience Our investments are paying off: ● More than 80% aided customer awareness with market share in lin
Slide 101: Europe
GROWTH DRIVERS DEEP DIVE Europe We are driving toward a recovery after a challenging post-pandemic environment ● Nailing the basics: ○ Page views with 3-day speed badging up high single digits versus Q3’22 ● Driving customer and supplier loyalty: ○ Order share from domestic suppliers in Germany up m
Slide 102: Wayfair Professional
Growth Drivers Deep Dive Wayfair Professional 102
Slide 103: Wayfair Professional
GROWTH DRIVERS DEEP DIVE 2023 TAM ~$800B Wayfair Professional Consumer: ~$600B Our professional business is >$2 billion of revenue today but still ~1% penetrated across the Professional: opportunity ~$200B 103 Source: Wayfair Estimates, Euromonitor, US Census Bureau, US Bureau of Labor Statistics
Slide 104: Our Pros
Our Pros Built just for Pros. Mr. Perkins We give professionals the Educator, CS Magnet Academy power to create just the Loretta Lynch Principal Designer, Salt Bay Studios right spaces, in just the right way. Megan Walters Susan & Paul Kadilak Realtor, Walters Realty Office Design Build, Kadilak Hom
Slide 105: A one-stop shop for our pros
A one-stop shop for our pros Our platform and approach attract and retain customers across key industries. Contractor Interior Design Office Accommodations Food Service Education Property Management 105
Slide 106: A specialized site experience
A specialized site experience Our gated site offers a fully customized experience, tailored to our Pros’ specific vertical and sourcing needs. INTERIOR DESIGN EXPERIENCE 106
Slide 107: Industry-tailored services
Industry-tailored services Financing Bulk Pricing Flexible payment options with A value add to help our Pros 60-day terms product. take their budgets further. Business Solutions Consolidated Team Delivery Support for large projects Simplified delivery with our with in-house designers, all-inclusive
Slide 108: Wayfair Professional by the numbers
Wayfair Professional by the numbers We are a multi-billion dollar business with over 1M active customers. Professional customers generally spend more per order and shop more frequently than the average consumer. Valued at $20K+ (+20% YoY) These top 1% of our Pros = ¼ of our GRS 3X Spend B2B vs. B2C
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Slide 110: Physical Retail
Growth Drivers Deep Dive Physical Retail 110
Slide 111: Physical retail
GROWTH DRIVERS DEEP DIVE Physical retail 2023 TAM ~$800B Future State Offline Offline Online Online Even as online penetration in our category grows, in a mature state we estimate that approximately half of the addressable opportunity will still be offline 111 Source: Wayfair Estimates, Euromonitor, US
Slide 112: We aspire to be the first & favorite destination for anything home
GROWTH DRIVERS DEEP DIVE We aspire to be the first & favorite destination for anything home We already have the major investment We see physical retail as addressing a areas in place to be a successful physical previously untapped part of the TAM, retailer: while also having broad uplift benefits: ● W
Slide 113: AllModern
AllModern 113
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Slide 115: Joss & Main
Joss & Main es: ees
Slide 116: Joss & Main
Joss & Main 116
Slide 117: The Retail Lab
The Retail Lab wayfair
Slide 118: Our first Wayfair store Spring 2024
Our first Wayfair store PHYSICAL RETAIL Spring 2024 118
Slide 119: Market Square
Market Square 119
Slide 120: Appliances
Appliances WAYFAIR AT Picking the right wall oven
Slide 121: Design studio
Design studio 121
Slide 122: Coming Soon!
PHYSICAL RETAIL Coming Soon! 122
Slide 123: Supplier Advertising
Growth Drivers Deep Dive Supplier Advertising 123
Slide 124: Full-funnel advertising offering
Wayfair has continued to build a full-funnel advertising offering; reaching shoppers throughout their journey DISCOVERY EVENT SPONSORSHIP Build recognition and become top of mind as shoppers browse DISPLAY ADVERTISING CONSIDERATION NEW Inspire and SPONSORED EMAIL influence shoppers SPONSORED SHOPS CO
Slide 125: Advertising solutions enable suppliers to supercharge exposure
Our advertising solutions increasingly enable suppliers to supercharge exposure for their brands and products Event Sponsorships Sponsored Products Display Ads Sponsored Shops Offsite Advertising (e.g. Sponsored Email) 125
Slide 126: Proprietary first-party data powers targeted ads
Proprietary first-party data powers highly personalized, targeted ads Product Retargeting In-Market Shoppers & Prospects Serve ads to shoppers who have viewed Reach consumers who have recently products and/or abandoned cart but are still browsed within a class, or have shown in the consideration cycl
Slide 127: The advertising business is growing quickly
The advertising business is growing quickly - though it's still in the early stages of maturity “Historically, I’ve spent about 5x more on Ads relative to sales on competitors vs. Wayfair… the Future Target recent changes you’ve made on footprint Grown revenue at a 3-4% of Revenue expansion are lett
Slide 128: Bringing It All Together
Growth Drivers Deep Dive Bringing It All Together 128
Slide 129: Growth Algorithm
Annual category growth: Low single digit % Online penetration expansion per year: Low single digit % Growth Wayfair incremental share capture: Mid teens to high 20% Algorithm Key drivers of share capture: ➔ Continuously Improving Core Recipe ➔ Category Expansion ➔ Specialty and Luxury Brand Growth ➔
Slide 130: Financials Deep Dive
Financials Deep Dive Kate Gulliver, Chief Financial Officer 130
Slide 131: One of the largest competitors in the home category
Financials Now one of the largest competitors in the home category with a 32% net revenue CAGR since IPO $14.1B $13.7B U.S. Net Revenue $12.2B International Net Revenue $9.1B $6.8B $4.7B R $3.4B 2 % CAG 3 $2.2B $1.3B 2014 2015 2016 2017 2018 2019 2020 2021 2022 131
Slide 132: Improving profitability as we structurally expand gross margins
Improving profitability as we structurally expand gross Financials margins through logistics, supplier services, wholesale economics and merchandising mix Gross Profit Gross Margin 29.1% 29.6% 28.4% 28.8% 28.0% 31.1% 29.0% 28.8% 29.6% 24.0% 23.9% 23.6% 23.7% 23.4% 23.5% 2014 2015 2016 2017 2018 2019 2
Slide 133: Strong margin expansion after customer service, merchant fees and advertising
Financials Strong margin expansion after considering customer service & merchant fees + advertising spend Gross Profit Less CS&M, Advertising1 Gross Margin Less CS&M, Advertising1 15.5% 15.4% 14.1% 12.8% 12.5% 10.4% 11.1% 10.7% 8.1% 8.0% 8.5% 8.2% 7.6% 4.9% 2014 2015 2016 2017 2018 2019 2020 2021 202
Slide 134: Path forward - how we started 2023
Financials Path forward - how we started 2023 We are building momentum towards our profitability goals Step 1 Step 2 Step 3 Breakeven Mid-Single Digit >10% Adjusted Adjusted Adjusted EBITDA EBITDA Margin1 & EBITDA1 Margin1 & Positive FCF1 Sustained Strong FCF1 Driving to achieve Intended future Long
Slide 135: Path forward - where we are today
Financials Path forward - where we are today We are building momentum towards our profitability goals Step 1 Step 2 Step 3 Breakeven Mid-Single Digit >10% Adjusted Adjusted Adjusted EBITDA EBITDA Margin1 & EBITDA1 Margin1 & Positive FCF1 Sustained Strong FCF1 Q2 adjusted EBITDA Making Rapid Progress
Slide 136: Run rate mid-single digit Adjusted EBITDA margins
Step 2 Financials Run rate mid-single digit Adjusted EBITDA margins1 Q3’23 2 Financial Metric Q2 LTM Guidance Path to Mid-Single Digit Run Rate Midpoint Gross Margin 29.7% 30.0% Further Ops Cost Savings CS&M 4.8% 4.5% Streamlined Following Cost Action Advertising 12.1% 12.0% Driving Further Efficienc
Slide 137: How do we get to 10%+ Adjusted EBITDA margins?
Step 3 Financials How do we get to 10%+ Adjusted EBITDA1 margins? SOTG&A 2-4% What does the Advertising path look like? Other 1-2% Logistics 1-2% Across our range Supplier Advertising 1-2% of growth 2-3% scenarios, we anticipate margin expansion annually on the path to 10%+ Mid Single Digit Adjusted
Slide 138: Where does this take us on Free Cash Flow?
Step 3 Financials Where does this take us on Free Cash Flow1? Working Capital Capex 1-2% (2-4%) 2-4% 10%+ Adjusted EBITDA Operating Cash Free Cash Margin1 Flow Margin Flow Margin1 1 138 See Appendix at the end of this presentation for definitions and uses of Non-GAAP measures and reconciliations to
Slide 139: Key takeaways
Key takeaways: The core recipe is We have We have major We’ve made strong the strongest it’s category-defining initiatives underway progress on our ever been, and we capabilities at each that will unlock profitability goals, and are consistently stage of the customer significant growth our business mod
Slide 140: Q&A
Q&A 140
Slide 141: Meet Our Panel
Meet Our Panel Niraj Shah Steve Conine Kate Gulliver Thomas Netzer Fiona Tan Jon Blotner CEO, Co-Founder and Co-Founder and Chief Financial and Chief Operating Chief Technology Incoming Chief Co-Chairman Co-Chairman Administrative Officer Officer Officer Commercial Officer Adam Sinoway Liza Lefkowski Co
Slide 142: Reception
Reception 142
Slide 143: Appendix: Reconciliation of Financial Measures
Appendix Reconciliation of Financial Measures 143
Slide 144: Reconciliation of Financial Measures
APPENDIX Reconciliation of Financial Measures 144
Slide 145: Reconciliation of Financial Measures
APPENDIX Reconciliation of Financial Measures 145
Slide 146: Non-GAAP Financial Measures
To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), this presentation contains certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Free Cash Flow Margin. We use these
Slide 147: Reconciliation of Non-GAAP Financial Measures
APPENDIX Reconciliation of Non-GAAP Financial Measures 147
Slide 148: Reconciliation of Non-GAAP Financial Measures
APPENDIX Reconciliation of Non-GAAP Financial Measures 148
Slide 149: Reconciliation of Non-GAAP Financial Measures
APPENDIX Reconciliation of Non-GAAP Financial Measures 149
Slide 150: eswaytair
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