8th up in the "10k in 10 tweets" series is Wayfair!
[THREAD]
[THREAD]
1/ Unbelievably, the stock is nearly a 10-bagger in the last 4 months.
2/ Wayfair is a home-goods e-commerce company.
It buys furniture, decor, houseware, etc. from 12,000 suppliers and sells it to 20 million active customers.
It buys furniture, decor, houseware, etc. from 12,000 suppliers and sells it to 20 million active customers.
3/ The company has focused on its logistics operations as a differentiator.
Furniture is obviously bulky and it offers a "low value to weight ratio" which means the economics aren't enticing for competitors.
Furniture is obviously bulky and it offers a "low value to weight ratio" which means the economics aren't enticing for competitors.
4/ The home-goods category is mostly unbranded which leads to a strong aggregator position.
A key input of an aggregator is to commoditize suppliers, therefore, any specific one doesn't have leverage.
A key input of an aggregator is to commoditize suppliers, therefore, any specific one doesn't have leverage.
5/ The company operates a few different sites but Wayfair makes up the majority of revenue.
The founders started out with toys but gradually branched out to a lot of other things before deciding to focus on home goods.
The founders started out with toys but gradually branched out to a lot of other things before deciding to focus on home goods.
6/ You can see that the biggest driver of growth is "active customers."
The company is targeting ~ 70 million US households & it thinks it can double that market through international expansion.
By those standards, the company is about 15% penetrated, but more-so in the US.
The company is targeting ~ 70 million US households & it thinks it can double that market through international expansion.
By those standards, the company is about 15% penetrated, but more-so in the US.
7/ A few revenue recognition things. Just showing you that Wayfair takes control of the inventory.
Similar model to Fulfillment By Amazon, through CastleGate.
Similar model to Fulfillment By Amazon, through CastleGate.
8/ Some more insight into the logistics network. More and more suppliers are utilizing CastleGate and the Wayfair Delivery Network.
9/ The company estimates nearly a $300 billion market in the US and early in the e-commerce adoption lifecycle.
International revenue now makes up 15% of sales and is growing faster than US revenue.
International revenue now makes up 15% of sales and is growing faster than US revenue.
10/ Wayfair seems to fulfill a nice niche in between Amazon and something like Restoration Hardware. Not super high end but not the low end either.
It's in a unique market. Furniture logistics are hard to replicate and suppliers are mostly undifferentiated.
It's in a unique market. Furniture logistics are hard to replicate and suppliers are mostly undifferentiated.
