Wayfair outlines opportunistic 2025 strategy in letter to shareholders
In its three-part plan for 2025, Wayfair's top management is focused on growing the business, financial health and investing in brand basics.
BOSTON — Wayfair’s top management said it is putting the COVID-era behind it and taking a forward-looking approach instead in what remains a “particularly volatile” market.
In a letter to shareholders, CEO Niraj Shah and Steve Conine, co-founders and co-chairmen of Wayfair, offered a three-part plan for the year, beginning with a focus on tight execution to drive profitable growth through taking market share in a still challenging category.
The steps to do this first piece, according to their plan, involves:
- Enhancing the core recipe with competitive pricing through logistic cost gains, adding convenience-oriented home delivery services and working with suppliers for in-stock availability of curated programs.
- Going after low-hanging fruit, which they identified as efforts that can be executed to produce an outsized return, including modernizing the merchandising platform, overhauling the B2B salesforce for better service and developing more nuanced promotions using tech resources.
- Pursuing and accelerating some high ROI efforts such as Wayfair Verified, its merchant-led, quality-focused product program; and Wayfair Rewards, its customer benefit program.
The second part of the plan — continue improving the financial position and strengthen the business — builds on the focus shared last year about optimizing for adjusted EBITDA, but not solely focusing on that.
“We are now in a solid financial position where we can settle debts with cash as they come due, and we are set to see earnings rise quickly as we return to growth,” they wrote. “We intend to keep working to make our operation more efficient while we pursue growth in tandem. We expect we will make adjusted EBITDA, net income and FCF (free cash flow) all grow over time.
“We now have $12 billion in annual revenue, a streamlined cost base due to removing $2 billion-plus of various costs and a plan to grow revenue while growing profits.”
The third focus is to continue to invest in the five long-term moats of the business, four of which are carryovers from 2024. “These explain why Wayfair can be a big winner in home,” they wrote, “all while competing with very large retailers who at their core are general merchandisers or home improvement-focused stores.”
The five moats focus on brand, delivery, curated product discovery, omnichannel retail and, the newest, partnering with suppliers.
In summarizing their goals, Shah and Conine wrote: “Our opportunity to be the big winner in home is intact, and our ability to organize around it and win through execution has never been better.”
What needs to be done, they said, includes prioritizing what the customer wants, focusing on what is in their control, ensuring plans drive profitable growth, leveraging tech strength, making sure every dollar is worth spending and executing with rigor and speed.
“The plan is not hard, but executing it is not easy,” they wrote.
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