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Business Operations Business Models

How Does Wayfair Make Money (Business and Revenue Model)

The Wayfair business model

How Does Wayfair Make Money?
Here’s what you should know:
  • What is Wayfair, and how does Wayfair work?
  • How does Wayfair make money?
  • Product Sales
  • Wayfair’s Subsidiaries, Acquisitions, and Exits
  • Wayfair’s profit and revenue
  • What is the Wayfair business and revenue model?
  • Wayfair’s funding and market cap

How does Wayfair make money? Here is a full breakdown of their main revenue stream, as well as the Wayfair business model, their year-over-year revenue, and how Wayfair works.

What is Wayfair, and how does Wayfair work?

Wayfair is an e-commerce marketplace that sells furniture and home goods.

Founded in 2002 by Niraj Shah and Steve Conine, Wayfair now has more than 22 million products available for their 31+ million active customers across its five (5) branded websites that they operate and sell through.

How Wayfair works is: Users must create an account to shop on Wayfair. Once an account is created, customers will receive free shipping on all orders over $35 and incur a $4.99 flat fee on all orders under $35.

Some of Wayfair’s competitors include Overstock, IKEA, Amazon, and other marketplaces that sell furniture and home goods.

Wayfair App in Apple App Store | Wayfair Business Model | How Does Wayfair Make Money?
Source: Apple App Store | Wayfair

How does Wayfair make money?

According to Wayfair’s partner page, they sell products from over 16,000 partnering suppliers and sold to more than 31.2 million active customers, and fulfilled 55+ million orders placed in 2020. So how does Wayfair make money off of all those customers, orders, and suppliers?

Below is a breakdown of how much money Wayfair makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here is how Wayfair makes money (in 2021):

Wayfair has a revenue model that makes money in just one (1) way – product sales.

#1. Product Sales

Wayfair makes all of its money through the more than 22 million products they sell across the five branded sites that they own. These sites, aside from wayfair.com, are jossandmain.com (Joss & Main), allmodern.com (AllModern), birchlane.com (Birch Lane), and perigold.com (Perigold).

Through these five sites, Wayfair does not take a commission fee from the buyers on the products sold. So how do they make money through the sales made on their marketplace? By operating as a drop shipper.

According to Wayfair’s partner page, Wayfair operates “on the wholesale cost model, meaning we pay our partners the wholesale cost of their items, and we set the retail price.” In short, Wayfair buys it cheap from suppliers, then sells it for more on their marketplace.

Wayfair Online Stores | Wayfair Business Model | How Does Wayfair Make Money?
Source: Form 10-K | Wayfair

Note: Wayfair uses a dropshipping business model.

Wayfair’s Subsidiaries, Acquisitions, and Exits

To date, Wayfair Inc. has made a total of 4 acquisitions.

Wayfair Acquisitions
Source: Crunchbase

Wayfair’s profit and revenue

In 2020, Wayfair reported $14.145 billion in revenue.

Note: Because Wayfair Inc. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Wayfair’s publicly released financial reports, including annual reports, through Wayfair’s investor section on their website.

What is the Wayfair business and revenue model?

Wayfair makes money through a few revenue models that they combine within their company, they are:

  • Dropshipping business model
  • B2B2C (partnerships) business model
  • Mergers & acquisitions (M&A) business model

Wayfair’s funding and market cap

According to Wayfair’s Crunchbase profile, Wayfair has raised $1.7 billion over 4 rounds and has a market cap of $29.17 billion as of September 2021.