The following is excerpted from the question-and-answer section of the transcript.
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Question: Steven Paul Forbes - Guggenheim Securities, LLC, Research Division - Analyst
: Niraj, I wanted to start with the supplier base, right? You mentioned how the suppliers are using more of Wayfair services offering. But maybe if
you could just expand on how they are engaging. What's different today than last year, whether they're competing for certain services via lower
wholesale cost? Just any additional color that helps us better understand how the supplier community is viewing Wayfair today?
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AUGUST 04, 2022 / 12:00PM, W.N - Q2 2022 Wayfair Inc Earnings Call
Niraj S. Shah - Wayfair Inc. - Co-Founder, Co-Chairman, President & CEO
Yes. Great. Thanks, Steve. Yes. So what I would say is if you think about our platform business model, one of the things we mentioned a couple of
quarters ago is generally is an advantaged model. The only time it's disadvantage would have been the example in the back half of last year when
there's too little inventory relative to demand, which basically almost never happens. What's common is that there's roughly a balance of the two
or in these kind of tougher macro scenarios where there's far more inventory than demand.
Well, that's actually the scenario we're in now. So suppliers basically have too much inventory. And so what we're seeing happen is our inventory
availability levels have gone up. Suppliers have too much and they want to sell that inventory. So what do we see them do? We see them using
some of the pricing tools we have on our platform to basically allow them to control their price to be aggressive where they want to move inventory,
that creates value for the end customer, drives up conversion. We're seeing them become increasingly large adopters of CastleGate.
CastleGate basically facilitates them getting high-speed badging, which drives up conversion. It also facilitates lower retail prices because the
outbound ship cost drops, which also drives up our conversion. As an example there, our 2-day speed badging is up about 10 percentage points.
And so we're seeing them lean in on aspects of the model.
Another piece of the model that's still pretty small for us relative to others is advertising. And that's something that has been growing over time.
But frankly, we're seeing a lot of growth and interest there, too, as we're adding sophistication to the product, but frankly, as suppliers are in a
position where they want to sell more goods. So these are kind of the types of things that are happening. There are advantages we have relative
to others. And frankly, it's why we -- it's kind of the inherent strength of the business model.
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