The research group Interactive Media in Retail Group (IMRG) predicts that global business-to-consumer (B2C) e-commerce sales will be worth $1.25 trillion by next year. In 2011, global B2C e-commerce sales were estimated to have grown 20% over the year to $961 billion. Growth will be driven a continuous increase in the number of Internet users, which is predicted to rise from 2.2 billion by the end of last year to 3.5 billion by 2013. The U.S. is the largest e-commerce market worldwide, with growth predicted to continue at 10%-15% annually over the coming years.
Boston-based Wayfair Inc. is a privately held organization that focuses on the online retail market for home furnishings and other goods. Wayfair was founded in 2002 by entrepreneurs Niraj Shah and Steve Conine out of Conine’s nursery. The company, initially known as CSN, was launched with the site racksandstands.com to sell home storage furniture online. During the first year, it generated revenues of more than $450,000 from its list of just under 1,670 customers. As business grew, Wayfair added more home décor categories such as patio & garden furniture and accessories, lighting, kitchen and dining to become the 51st biggest Internet retailer according to the Inc 500 list. Today, it has also diversified into other categories such as jewelry and shoes.
Wayfair sells its products through three main web properties. Wayfair.com sells home goods at multiple price points and caters to a varied customer segment. Higher-end branded products are sold through their site allmodern.com. To keep in line with the emerging market trends, the company also launched a flash sales site, Joss & Main, focused on the flash sales of designer home products. Analysts estimate that since its launch nearly a year ago, Joss & Main is operating at an annual revenue run rate of over $100 million, with more than three million members.
Wayfair has a catalog of more than 4.5 million items from more than 5,000 brads. Last year more than 6.2 million customers bought goods from its websites. Wayfair earned revenues of more than $500 million in 2011, compared with revenues of $380 million a year ago. The company aims for revenues of more than $600 million this year.
Wayfair has been largely venture funded, with investments of $201 million received from Battery Ventures, Spark Capital, HarbourVest Partners, and Great Hill Partners. Its latest round of funding of $36 million from existing investors closed earlier this month.
The U.S. home goods market is estimated to be worth $500 billion, of which a mere 6% is catered to online. However, the online market segment of $30 billion is growing 12%-15% annually. Wayfair is a leader in the online segment, and it sees the opportunity for growth. The market may be speculating about an IPO for Wayfair, but for now, management has said there are no immediate plans.