With existing-home sales rising in October for the second straight month, many Americans are looking to furnish their new homes. According to the National Association of Realtors, total existing home sales increased 1.5 percent to a seasonably adjusted annual rate of 5.26 million in October.
A relatively new option for homebuyers to furnish their homes is to utilize Wayfair Inc., an online home furnishings and décor company based in Boston, Massachusetts. The company is based entirely on an e-commerce business model and is reported to have a compelling merchandise line, great product discovery and competitive pricing.
Wayfair was started by two friends who met while in high school at a summer program at Cornell University, which they both went on to attend. Steve Conine and Niraj Shah both took an entrepreneurism class their senior year at Cornell where they developed a business plan that turned into the foundation for their first company. The two entrepreneurs later founded the company in 2002 in a spare bedroom in Steve’s house when they recognized the opportunity to sell stereo racks and stands online. In 2011, the firm moved all their e-commerce sites into one “mega destination” for the home and named it Wayfair.
In 2013, Wayfair exceeded $900 million in annual revenue and offered more than seven million products from over 7,000 suppliers. Inc. Magazine named the firm to its 2013 Hire Power Awards list for creating 516 jobs to bring their total employment to 1,347. The firm was also named by Forbes as one of America’s Most Promising Companies in 2013.
Wayfair has experienced growth in terms of the number of orders as well as total sales. Its 2014 3rd quarter results included:
- Net revenues of $336.2 million, up 41.7% year-over-year;
- Active customers within the Direct Retail business reached 2.9 million as of end-September, up 61.0% year over year;
- Orders per customer improved to 1.65 from 1.55 a year ago; and
- Orders delivered totaled 1.3 million, an increase of 48.6%.
The strong growth led to the decision to take the company public and on October 7, 2014 Wayfair announced the closing of its $366.9 million Initial Public Offering (IPO).
The decision to take the firm public will allow Wayfair to increase its visibility in the marketplace and will allow the firm to obtain additional capital to continue to grow the company.
Wayfair plans to use some of the net proceeds from the IPO for working capital and other general corporate purposes. They may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses that compliment their business.
The IPO will help the company move forward by increasing growth from acquiring new customers and increasing repeat purchases from existing customers by investing in their brands and the customer experience through improved site experiences, product offerings and logistics.
An IPO is a significant stage in the growth of many businesses, as it provides access to the public capital market, provides additional resources to grow and also increases their credibility and exposure. The overall number of U.S. IPOs increased by 38.4 percent in the first three quarters of 2014 and the total value more than doubled to $80.6 billion compared to the first three quarters of 2013.
By accessing the capital markets, Wayfair will be able to expand its business, continue to add employees and customers, and continue providing high quality home furnishings that consumers can easily purchase without having to leave their homes. All they need to do is click a mouse.