> It’s a moment of reckoning for Wayfair, which has been on such a hiring blitz over the past several years that its employees often wait in line for the escalators up to its offices in the Copley Place mall. The company, which expanded into a second office building last summer, now employs 17,000 people worldwide selling furniture and home decor.<p>> Yet Wayfair has still failed to turn a profit. Its executives have long argued that despite a long track record of losses, the company has been in growth mode, investing heavily in its supply chain infrastructure and European expansion efforts. More often than not, its board members and leadership team will point to Amazon as their model, which for years funneled its revenues back into growth and failed to turn a profit.<p>That model worked for Amazon because there was no Amazon to compete with. Why anyone would want to invest in a profitless Amazon competitor is beyond me. The effort seems like a cargo cult.
I went to a tech conference at Wayfair HQ. I had never been to an office where there was a several minute wait just to go up the escalators. So many people.<p>The conference itself was pretty great, but I remember walking around the floor, looking at hundreds and hundreds of engineers packed into the office, and couldn't help but wondering if they really needed all of those people.
Amazon is indeed an existential threat to Wayfair. However, while Amazon is an incredible company, it might become a victim of the future as much as it is the winner of the present. Self-driving trucks, advanced robotics, and automated, turnkey warehouses will trivialize supply chain superiority. In that version of the world, shared warehouses (enabled by automation) will be even more cost-effective than Amazon's proprietary warehouses. Logistics will be disintermediated, and the value of Amazon.com will be reduced to that of its front-end interface and first-party products.<p>We don't just visit Amazon because it's a one-stop shop. Humans aren't <i>that</i> lazy. We visit it for the whole package:<p>- fast shipping<p>- reliable pricing<p>- Prime lock-in (I paid $100 for this, I better use it)<p>- habit<p>- and variety.<p>Habit and variety are redundant. We have the habit of visiting Amazon because of the first three factors that I mentioned. The variety is present because the first three factors attract/retain customers, who in turn have the habit of shopping on Amazon, who in turn attract third party vendors. Amazon can get away with a lot (rising prices, first-party substitution, sub-optimal interface) because of logistical barriers to entry and the current necessity for a vertically integrated intermediary. When those factors disappear, Prime will be commoditized. Warehouses and delivery networks will be commoditized. Amazon's moat in third-party online shopping will diminish.<p>Amazon must continue to grow away from its core platform business. Whole Foods was a smart acquisition, Amazon Go is the future of low/mid-end retail, and AWS is a profitable act of genius (high margin, uncorrelated with the rest of the business). That will not change the fact that specialty websites will become more serious competitors in the future. In 10-15 years, there will be plenty of room for focused retail sites like Wayfair.com. The question is: can they survive until then? Probably, but it will be a rough ride.
Wayfair is not and has never been your typical tech startup. The founders didn't even take VC or give out much equity until soon before their IPO. Given their conservative behavior, I'm not surprised they looked at the diminishing returns of hiring more engineers to work on AR/VR/whatever flavor of the moment and decided to cut costs. Because at Wayfair, engineering is just another cost center.<p>Having 350 more engineers on the market is only a good thing. Salaries in Boston have gotten to the point where an engineer with no experience just out of a middling CS education can demand $120-150k and often get it. Where does that leave most (non-startup) companies here? With inexperienced and understaffed teams.
How many of these employees that were laid off took part in the protests against the company last summer?<p><a href="https://www.wbur.org/bostonomix/2019/06/26/wayfair-walkout-immigration-border-detention-center-demonstration" rel="nofollow">https://www.wbur.org/bostonomix/2019/06/26/wayfair-walkout-i...</a>
It's not just Wayfair - if and <i>when</i> there is a recession there's going to be a complete annihilation of most of these overvalued, unprofitable companies. Most of this behavior is only possible because of dirt cheap money.
I keep getting paywalls, but this amp link works for me:<p><a href="https://www.google.com/amp/s/www.bostonglobe.com/2020/02/13/business/layoffs-underway-wayfair/%3FoutputType%3Damp" rel="nofollow">https://www.google.com/amp/s/www.bostonglobe.com/2020/02/13/...</a>