Wayfair bills itself as the online shop for everything home-related, from couches to chicken coops, reaching more than 8.3 million active customers last year, and economic policy makers are taking notice. This year, Wayfair cofounder Niraj Shah, 42, earned a seat on the Federal Reserve Bank of Boston’s board of directors, a group dominated by many of the area’s more traditional industries, including health care, construction, banking, and restaurants. Shah spoke with the Globe’s Deirdre Fernandes about the Fed’s role, Wayfair’s future, and his family’s connections to the company.
1. As an online retailer that sells a broad range of home goods, from luxury rugs to throw pillows, at various price points, Wayfair has a perspective on the US economy and consumers that can help the Boston Fed, Shah says. The company can tell when consumers are optimistic and willing to splurge and when they’re feeling financially pinched and are spending on just the necessities, he says. That insight, along with an understanding of how technology is changing the economy, can help policymakers, Shah said.
“We get a real feel for the consumer. Right now, we’re seeing pretty good growth everywhere.”
2. Shah started what would become Wayfair with his Cornell classmate, Steve Conine, in 2002, just after the dot-com bust. The future of e-commerce seemed uncertain, but the two believed they could find success selling online. The key was finding niches where traditional retailers were absent, Shah said. Their first website was racksandstands.com, selling television stands and entertainment centers, a market that was underserved even though they were among the most searched household goods online.
“Places like Best Buy that sell TVs have a few TV stands off in the corner. Furniture stores tend to focus on bedroom furniture, dining room furniture. You had to pick categories that weren’t the main categories of the national retailers.”
3. Shah’s parents emigrated from India and settled in Pittsfield, where he grew up. Even as a child, he was business-minded. He had a paper route, and as a teenager he ran a lawn-mowing business in his neighborhood. That entrepreneurial spirit, along with that interest in home goods, might run in the family. Shah says his grandfather operated a steel manufacturing business in India, making pots and pans. He says this about his early business ventures:
“It was something I enjoyed. But I was also very commercially motivated.”
4. Shah says the Back Bay home where he lives with his wife and two children is “100 percent” Wayfair furnished. Even as Wayfair has grown to more than 5,600 employees, a few key people from the early years remain with the company, including Shah’s father. His dad, a mechanical engineer who retired from General Electric, joined Wayfair early, helping Shah and Conine manage finances. Although the company prides itself on a young, hip environment, where workers are known on a first-name basis:
“[Shah’s father is] the only person here who’s a ‘mister.’ ”
5. While Wayfair’s revenue and customers are growing, the company has yet to post a profit since going public in October 2014. Losses continue to grow, raising questions about how long investors will remain patient with the company. Shah likes to point out that Wayfair was profitable for its first nine years as a privately held company. But some analysts have questioned whether the business model will prove successful long term. Shah dismisses critics and said the company is on the trajectory it set out to follow. The company is investing in a handful of overseas markets, as well as in building out its delivery network, to make sure items get to customers faster and with fewer dings or dents, helping to ensure repeat business.
“There were a lot of folks famously who planned out when Google went public that they wouldn’t survive. And I think they’ve done quite well. There are a lot of folks out there who like to be skeptical. I don’t think spending a lot of time on that group is worth it.”Deirdre Fernandes can be reached at firstname.lastname@example.org. Follow her on Twitter @fernandesglobe.