Wayfair Inc Q4 2020 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Steven Paul Forbes - Guggenheim Securities, LLC, Research Division - Analyst : Niraj, after reading the letter this morning, I know you guys talked about the cohorts, and I appreciate that update. But really just wondering if you could provide some qualitative comments on how you believe, right, the investments that you've made over the years here has changed the first experience for the customer? And then sort of what you think that means, right, for stability, right, or less churn in the active customer base in '21 and beyond? Niraj S. Shah - Wayfair Inc. - Co-Founder, Co-Chairman, President & CEO Yes. Sure, Steve. So what I would say there is if you think about the improvements we've made, the improvements we've made are really across the board, meaning fast delivery. It's convenient delivery, high-quality merchandising, better product discovery. There's kind of like -- we've been making improvements in every area of the experience. Where we see it manifest then is we see it manifest in customer repeat rates. And so you can see how the repeat order growth continues to grow at a rate faster than the total business. And that's just a function of -- last quarter, repeat orders grew 55%, new orders grew 30%, which is customers basically value the experience, and so they come back. And so we're up to like 72% of orders are from repeat customers. And so what we've been able to see is we have early indicators to that, right, which is whether people stay engaged with us. Are they downloading the app, are they visiting the site. And what we're finding is that we're continuing to be able to drive that up. And in truth, we still have a relatively low share of loss. So there's a lot of opportunity with the existing base. If you look at our average revenue per customer, it's something like $450. So it's relatively low compared to their annual spend and so as we merchandise each category more, as we keep adding value propositions for the customer, as our brand that's better understood is not just being furniture decor, but it really spans all of home. So it covers the 50% of home improvement that are the finished items, it covers housewares, it covers large appliances. These are big opportunities for customers to keep diverting more and more spend to us. And that's effectively the engine that powers the growth. And so these are the things we continue to invest in. When we talk about thousands of people working for things for the future, it's these types of things and these types of things, keep unlocking gains. And so we're basically creating a better and better experience for our suppliers and a better and better experience for our customers, and that's what drives the flywheel.