1/n Thread on unit economics of Wayfair. This is a purely accounting point of view, I have no strong view on W's business or valuation
2/n I believe the way presents its unit economics is highly misleading
3/n Up to 2016, was disclosing (1) Merchandising, marketing and sales and (2) Operations, technology, general and administrative expenses as separate items in its P&L 
4/n These 2 items were combined in 2017, creating a Selling, operations, technology, general and administrative item in P&L
5/n In its 2016 10-K disclosed that Merchandising, Marketing and Sales were "primarily driven by investments to grow and retain our customer base". Sounds like it should be included into the calculation of customer acquisition cost? Yet, does not do that.
6/n This is how calculates CAC:
7/n Essentially, CAC as reported by is just a fraction of "underlying CAC" paymotion.com/ecommerce-blog…
CAC goes up by almost 50% if calculated appropriately. This is still before coupons/discounts/promotions which are recognized as contra revenue.
New language in accounting policy on Advertising: does not expect ad cost leverage anymore
