After reporting sales gains and reaching profitability during the early days of the pandemic, Wayfair has taken a hit.
The online home retailer was the only company among the top 10 e-commerce retailers to report revenue and profit declines in 2021, according to recent research from GlobalData emailed to Retail Dive. The rankings were determined by revenue.
Wayfair in February reported fiscal 2021 net revenue fell 3.1% year over year to $13.7 billion, while its U.S. revenue fell 5.5% to $11.2 billion. The retailer’s operating loss widened to $94 million, while its net loss reached $131 million. Active customers fell by more than 12% during the period. The company, as GlobalData’s research highlights, points to a shift back to physical retail as playing a role in its poor results.
Yet, other top e-commerce companies — including Amazon, eBay and Zalando — all reported increases to both revenue and profits in 2021, according to GlobalData.
The firm found that 90% of the top 10 publicly traded global e-commerce retailers saw more than 15% year-over-year revenue growth in 2021, while 70% of companies saw 20% growth.
“These high results were achieved due to changes in consumer behavior during, and following, the COVID-19 pandemic,” Divya Vootkuru, business fundamentals analyst at GlobalData, said in a statement. “E-commerce companies were able to increase their customer networks on online platforms, resulting in expansion of business operations.”
Wayfair received a boost in the early days of the pandemic from selling both online and in a category in high demand. Wayfair was able to move from a high default risk to a low default risk by the end of 2020, according to data from RapidRatings. But by the end of 2021, the retailer was back in the high risk category.
After briefly reaching profitability during 2020, Wayfair is back to reporting losses.
In its most recent quarter, the retailer reported net revenue fell nearly 14% from last year to $3 billion, while U.S. revenue fell about 10% to $2.5 billion. Wayfair posted a net loss of $319 million from a profit of $18 million in the year-ago period.
“There is a fundamental weakness in Wayfair’s business model: It needs considerably larger volumes and many more regular customers to attain profitability,” GlobalData U.S. Consulting Director Neil Saunders said in a statement. “Now [that] demand is normalizing, Wayfair is back to making eye-watering losses.”