Can a company pull together hundreds of little niche businesses and create a single retail powerhouse?
Wayfair of Boston showed that was indeed possible by 2012, when the company finished consolidating its army of small Internet retail sites under one name. The Wayfair site turned out to be a busy e-commerce tent.
Last year, business boomed for the online retail leader in home furnishings and decor. Wayfair’s revenues soared by 55 percent to $915 million, and the company added 600 full-time jobs.
Now Wayfair offers more than 7 million household items from 12,000 brands and is by far Boston’s most successful Web-only retailer.
Wayfair was created more than a decade ago by Cornell graduates Niraj Shah and Steve Conine. The founders started small by identifying products that people often searched for on the Internet but had a hard time buying online.
They began to operate a series of e-commerce sites with simple names that matched the terms people used in Google searches. For example, in 2002 they founded their first e-commerce site, racksandstands.com, which sold stands for television and stereo equipment.
Over time, the company grew to offer about 250 e-commerce sites that specialized in underserved categories in the digital marketplace, such as children’s furniture and bar stools.
“They were able to grow and be very profitable for about 10 years without having to spend much on advertising or branding,” said Mary Cronin, a Boston College business professor who teaches e-commerce courses. “The bad news is that nobody actually knew that all those stores were the same company.”
Wayfair started to ditch the specialized sites in 2011 and aggregated products on Wayfair.com. Today the company has five distinct brands: Wayfair.com, AllModern, Birch Lane, Joss & Main, and DwellStudio.
Wayfair has succeeded in a difficult online furniture business by fine-tuning the logistics and infrastructure of its supply chain. The e-tailer integrates its own sophisticated software with the systems used by its suppliers. The technology provides real-time inventory data from most of the 7,000 companies whose products are sold by Wayfair.
The system allows the e-commerce giant to drop-ship nearly all its orders to customers in the United States, Canada, Germany, and Britain. So products ordered on the website are sent directly from the suppliers and never pass through a Wayfair warehouse.
But the company stores popular products at its own warehouses in Utah and Kentucky, so it can provide two-day shipping on goods in high demand. Lights, rugs, bar stools, and sofas are among the big sellers.
Wayfair is often called the largest company many consumers have never heard of. But Cronin believes that will change if Wayfair becomes a publicly traded company soon, as many people expect.
“They’re still not a household brand, but they are getting better known, and the public offering will put them on another level and allow them to continue to grow the brand,” Cronin said.