Wayfair has increased discounts on items like furniture and decor without hurting profit margins, thanks to a strategy that shifts promotional costs to suppliers, Wayfair CFO Kate Gulliver told WSJ. The online home retailer’s approach allows for frequent sales, with about 70% of revenue during promotions coming from full-price items as customers continue shopping beyond discounted products.
This model, which has pushed Wayfair’s gross margin above 30% in 2023, relies on its 20,000 suppliers to fund the markdowns. Unlike traditional retailers, Wayfair doesn’t hold inventory, sparing it from pressures to clear stock, which Gulliver says enables more promotions without financial strain.
Despite an overall 5.1% drop in home-goods sales this year due to a sluggish housing market, Wayfair has managed to grow market share. The company has also expanded with a new store in Illinois and a loyalty program, aiming to sustain sales momentum with major discount events like "Way Day" and "Black Friday in July."
