‘SSUP!’s team 53°N interviewed Philipp von Falkenhausen (right), Associate Director Marketing EU, and Konrad Schade (left), Associate Director Category Management at Wayfair EU – a hyper fast growing American e-commerce platform for furniture.
“This is not a start-up anymore!”, was our first thought when we entered Wayfair’s Germany headquarters in Berlin… naive as we were after ~50 interviews with considerably small disruptors. Nevertheless, Wayfair did not disappoint! Phillipp and Konrad, both ex-consultants at BCG and McKinsey respectively, showed us around their impressive office. From virtual imaging of a chair in your own room to super smart marketing engines, Wayfair completely changes your normal furniture shopping experience with a strong tech touch.
In-store experience with the benefits of online
Wayfair was founded in 2002 by Niraj Shah and Steve Conine. “Both are typical tech guys and are still very much into the numbers and nitty-gritty detail, even now that the company has IPO’ed and is a multi-billion-dollar business. They are still 100% committed to the company. This is a perfect example of the culture we have at Wayfair,” Philipp explained. Shah and Conine’s original idea was to have a separate website for each home product. Until 2010 they built a set of over 200 niche websites, but figured out that the strength of e-commerce lies in cross-selling opportunities. They relaunched with Wayfair as the new brand in 2011 and went public in the US in 2014. This is also where the majority of their revenue is coming from today, but the rest of the world is quickly catching up (e.g. over 50% growth in Europe now, where they are operational in Germany and the UK).
Wayfair has employed more than 1,900 engineers and data scientists, which is an impressive part of the total labor force… this is unseen in the furniture industry and forms a large base for their success, where technology is always at the center of innovation. This technology-driven mindset can be seen in each and every element of the business. One obvious application is in the backbone, where e.g. marketing is fully optimized through extensive data analytics and algorithms. Another one is their strong search engine: “Let the customer decide what they want. Although we offer easily four times more products in each product category than our competitors, we make sure that the customer finds what he/she wants within two clicks only. This is where the technology really kicks in,“ Philipp and Konrad explained.
But for us – and probably for you as well – the cool features Wayfair has developed over time spark one’s imagination most. The possibility to see your favorite furniture in your home before you buy it via Wayfair’s “View in Room” feature on the app is not just fun but also extremely useful. Other features include the possibility to pair different products within the same style (based on their image categorization algorithms) and search options for entire rooms instead of singular products. These features bring in all the advantages of the off-line brick and mortar shopping experience but without the need to go out.
A very lean business model
Part of the success of Wayfair can be explained by that exact difference in dropship business model to keep the value chain lean. But how do you have zero stock and still sell the products yourself with super-fast delivery? The short answer is by putting logistics and tech at the forefront of strategy. Wayfair has distribution centers where carriers transport goods directly to the customer. The amount of stock in these warehouses is based on complex forecasting algorithms to allow them to be as efficient as possible.
Working for Wayfair
Both Philipp and Konrad stayed within their consulting jobs for several years… at the end looking for the right exit. With typical beta backgrounds (physics and math) and extensive project experience in for instance pricing and industrial goods, Wayfair seemed to be the right next step in their careers. “It is easy to spend a lot of money in this industry. The trick is to do it better and smarter than your competitors. With millions of products online, this is a data-heavy challenge that I very much like to take,” Philipp explained.
“We are a test-and-try and data-driven company. If you have a good idea, the immediate next step is testing it by doing, which is very different from a typical corporate environment,” according to Konrad. In that sense, the culture at Wayfair is much closer to that of a start-up than to a corporation. Answering our question on how to keep the start-up spirit alive when growing towards 10,000 employees, Philipp answered: “Mainly by hiring people with the right attitude. Here at Wayfair, if people ask for your help you would help them immediately instead of waiting for days or weeks. Moreover, we are a company with a lot of entrepreneurial and dynamic people and the organization is constantly changing, which is a very exciting environment to work in.”
And finally, our two wacky questions…
… If Wayfair was an animal, what would it be? “A Chimera, which is half Lion (the head), half horse (body and tail). It symbolizes Wayfair as an ambitious player who is willing to conquer the European market and has the horsepower to actually deliver on its promises.”
… And if you can hire anyone in the world for Wayfair who would it be? “It’s not about any particular person. We always look for people who naturally set a high bar for themselves and the people around them, who are inspiring in the things they do (at work and outside of work) and who want to inspire others. It’s the mindset that you bring to the table that matters.”