Will V-Commerce Replace E-Commerce at Wayfair?
What Wayfair needs to compete in the new age of V-Commerce
Please watch these two short videos:
https://www.youtube.com/watch?v=8uLAgK4IHYs
Wayfair is an e-commerce platform with one of the widest selections of home furnishings, décor, and goods with over 7million products from 7,000 suppliers. The company provides an easy to use visual browsing experience and attractive prices to connect suppliers with consumers. The company primarily serves as a platform and connection portal and does not hold much inventory.
The firm adds value to consumers by providing a vast selection, personalized and mobile shopping, and a superior service experience to help match customers with the furniture items they seek at prices they can afford. For suppliers, Wayfair provides access to its large customer base, logistic capabilities, and access to its data analytics platform.[1]
A key element of the Wayfair operating model is its ability to provide suppliers with real time data analytics to help sell their products. In e-commerce, simply providing access to customers is no longer a competitive advantage. Wayfair has adapted to the changing technological environment by partnering with suppliers and allowing them access to real time demand and inventory needs on the platform. This helps their suppliers tailor their production and sales efforts to better serve customers and not only allows suppliers to increase sales volume but also reinforces the suppliers’ connection with the Wayfair platform.[2]
To further strengthen their partnership with suppliers, Wayfair’s logistics infrastructure allows suppliers to ship directly to customers. Suppliers plug into the Wayfair ecosystem of integrated technology and operations systems because Wayfair is able to deliver a more seamless and tailored experience to consumers. Further, the supplier direct fulfillment network allows the company to hold very little inventory. For suppliers who end up getting stuck with inventory, Wayfair compensates by providing data analytics capabilities on consumer trends, popular products, and best sellers.[3]
Personalization and mobile shopping provide opportunities for Wayfair to grow its business. By leveraging technology, Wayfair is able to customize searches based on a consumer’s browsing history which allows them to provide ease of use and inspiration. Relative to big-box competitors this is a great advantage. Imagine, for example, you spend an afternoon shopping for furniture and visit five stores. At the fifth store, the salesperson that greets you at the door has no idea what you have been looking for and you have to run through the same process of explaining your search. By connecting to browsing history Wayfair can not only tailor searches to your tastes and preferences but also present advertisements tailor to your purchases and history to help drive incremental business.
In spite of these advantages Wayfair should overhaul its technology platform and upgrade to the cloud. The technology infrastructure that the company currently runs on is the same as the original version built in 2002: a collocated cage in a data center. Chief Architect of Engineering Ben Clark in a blog post from July 27, 2016 wrote, “if we were to build Wayfair today we would do it on public cloud infrastructure…” and continues to suggest that “it’s kind of ironic that we’re moving too fast to be bothered with moving to the cloud.”[4] This oversight does not suggest that Wayfair is investing for long term sustainability and an ability to maintain a competitive moat around its core business. While the current setup seems warranted due to lack of extreme traffic spikes the company should consider upgrading its infrastructure if it wants to compete long term. Customer experience is an essential value proposition to Wayfair and any interruption to the customer experience could cause long term damage to their brand and weaken their relationships with consumers and suppliers.
Cloud based infrastructure will allow the company to continue to innovate their customer search process by digitizing their catalogue using 3-D scanning. Wayfair’s ability to deliver a 3-D or augmented reality product catalogue will be a competitive advantage in the future.[5] Currently, in order for a consumer to make a furniture purchase they need to either go to a physical store or spend time browsing on the web. “Wayfairview” is their attempt to solve the problem of measuring furniture and checking to see if certain products match others in a room. With an augmented reality app Wayfair will be able to replace the big box retailer by providing a tailored and realistic trial experience for consumers in their own home. Using Google’s Tango technology, the company hopes to put its full suite of products into the hands (and living rooms) of consumers. Wayfair’s ability to successfully transition to this new media will determine whether they will be the furniture company of the future or another fossil of a once relevant company. [6]
(790 Words)
[1] United States. SEC. Washington, DC. SEC.gov. By Niraj Shah. WAYFAIR INC. FORM S-1, 15 Aug. 2014. Web. 18 Nov. 2016.
https://www.sec.gov/Archives/edgar/data/1616707/000104746914007027/a2220999zs-1.htm
[2] http://www.cnbc.com/2016/03/01/wayfair-ceo-to-cramer-why-we-are-different.html
[3] United States. SEC. Washington, DC. SEC.gov. By Niraj Shah. WAYFAIR INC. FORM S-1, 15 Aug. 2014. Web. 18 Nov. 2016.
https://www.sec.gov/Archives/edgar/data/1616707/000104746914007027/a2220999zs-1.htm
[4] http://engineering.wayfair.com/
[5] http://engineering.wayfair.com/
[6] https://play.google.com/store/apps/details?id=com.wayfair.wayfairview
Very cool article! The user experience in those videos is awesome. I remember the process of buying furniture and it was incredibly painful – measuring, trying to use what little imagination I have to picture a piece of furniture in a room, and hoping it works out. Barring the technical complications of this application of tech, what barriers are in the way of rolling this out to consumers? This value proposition seems to be crystal clear, and if I’m right why has no one successfully done this yet?
Also, do you think there are any other reasons WF isn’t on a public cloud? Is it possible they see some sort of advantage to building and maintaining their own infrastructure?
Super interesting – and also proof that virtual augmented reality is useful beyond video games! I actually attended the HBS AR/VR fair at the iLab some weeks ago, and got to try both of Wayfair applications showed in the videos above, I was so impressed! Especially the Project Tango (AR) project, because it allows you to place virtual furniture in your actual physical spaces. This is very convenient because it reduces the uncertainty of buying furniture online without going to a physical store, and I assume will reduce the amount of returns dramatically. It also provides an excellent opportunity for upselling, because through the app Wayfair will have information of the actual living spaces that consumers have. So if you are trying out a couch for an SFP one bedroom apartment, they could show you other things that are convenient for this kind of space, or that other customers have bought – and you can actually try them one next to the other!