Logistics Is Very Important For Wayfair Long Term
Wayfair reported Q1 2021 results. They are not a typical company, and this is not a typical category. This is generally net negative for the long-term stock.
1 - Advertising should be a huge moneymaker. There are 3 major headwinds to this for Wayfair relative to other media businesses like Amazon, Walmart, Instacart, etc.
Buyer behavior in home is browse-based vs search, which greatly decreases their ad surface area.
The vast majority of supplier base in the home category is unbranded. Which decreases the addressable market of their advertising business.
House brands up to to 77% of sales and accelerating. This is another net negative for the ad business.
All these are not good news for those looking for Wayfair to become "increasingly net profitable". It will not. Profit dollars, yes. But not on a % basis. They will constantly be counting their pennies which is a difficult business to run.
2 - I view Logistics as the largest single opportunity for the company long-term. Their international supply chain services (ISC) which includes ocean and freight brokerage are getting high adoption.
Their offerings here are extremely differentiated and despite the capital investments required, I think they are early in their category opportunity.
