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However, as the company has grown, losses have widened. This is symptomatic of its rising marketing costs and thinning margins. Wayfairs drop-shipping model once made it an efficient growth machine but only if marketing costs remained steady. In a recent edition of Retail Dive, Caroline Jansen reported on the recent layoffs of nearly 550 front office employees, 350 of these employees worked in the headquarters of the Boston retailer. In addition to the aforementioned negative trends, Wayfairs current restructuring coincides with mounting debt, a figure that will exceed $1.4 billion.

What makes these figures spectacular is Wayfairs market position. Wayfair is the leading online retailer for furniture, a shift from 2018 when Amazon owned 31.1% of the online retail market for furniture. Today, Wayfair owns 33.4% of the market after growing sales 34.1% YoY vs. Amazons category growth of 8%. Only Wayfair and Macys.com grew their market share between 2018 and 2019.

Despite its longevity, there is little that is appealing or intuitive about marketplace retailers as its industry matures. However, there are a number of brand retailers that are appealing to consumers in ways that align with the best practices of today. These include: Serena & Lily, Joybird, Article, and Burrow. The top ten vendors, however, remain more marketplace in functionality. They are are as follows: Wayfair, Macys, Walmart, West Elm, CostCo, Home Depot, Amazon, Pottery Barn, Target, Ikea, and Overstock.

A number of logistics companies have embraced brand management strategies and vice versa. This, in addition to the current industry standard: timely delivery, efficient sourcing, or even a digitally-native approach to sales and growth. A number of freight-reliant brands have mastered supply chain to this extent. To an earlier point, this includes brands like Peloton and Rogue

Wayfairs recent struggles are another example of the dangers of a marketplace strategy that is reliant on the pricing and availability of third-party products. Though the inconveniences of freight shipping may serve as a consumer-facing frustration, internally, Wayfairs longevity will come down to economies of scale and margin maintenance.

What the analysis found: Wayfairs lack of verticality will continue to widen losses, even as the company makes progress in lowering costs. Though Shah and Conine have scaled an extraordinary eCommerce business, its decidedly different than the thriving DTC marketplaces of today an ecosystem that includes Amazon, Walmart, Target, Home Depot. Its possible that Wayfairs early-mover advantage has diminished.

The industry has grown skeptical of Wayfairs brand agnostic, drop-shipping model a method that once relied on marketing methods that are no longer available in excess. Todays second-wave of eCommerce retailers are digitally-natives, ones focused on brand equity, customer experience, and availability. The furniture industry is not worse than every product category. However, Wayfairs model is. Shah and Conine must adopt the practices of its contemporaries, modern competitors that have more in common with premium fitness brands than furniture resellers. Or, theyll have to acquire the brands for their own sake.