IRC PREVIEW Interview with Joel Stevenson of Wayfair
Ahead of the annual Internet Retailing Conference (IRC 2013) we’re running a series of previews of the event, focusing on the highlights of the one-day conference and featuring interviews with speakers. Today we speak to Joel Stevenson, UK managing director of US homewares pureplay Wayfair.Internet Retailing: At Internet Retailing Conference 2013 you're going to be talking about collaboration between online and offline retailers, through Wayfair's Get It Near Me programme. How has Wayfair evolved this idea and why?Joel Stevenson, managing director, UK, Wayfair:
We looked at the traffic coming to our website. Most ecommerce retailers tend to be reasonably happy with a conversion rate of between 1 and 3%. We looked at that and thought what happens to the other 99%? Some might buy from someone else but we though there's a decent number of people ultimately buying in a showroom or from a retailer [with stores]. Furniture isn't the sort of thing you typically browse for fun - generally speaking if you're on a site like ours looking for home goods it's because you want to buy. We felt we were pretty deep down in the purchase funnel for our category and we wanted to provide a service for all those visitors turning up to our site to do primary research, so that we could say here are some options, and if you do want to sit on the sofa before buying, here are some partners that you can go to in your local area that will have some of these products. We benefit because it is simply an advertising method similar to Google. We'll show a text ad and if a user clicks on it, the retailer will pay us commission, which varies according to how competitive the market they are in is.
After that we don't know what happens to it but the good news is that the vast majority of retailers who have started the programme are still on it, so our belief in testimonials suggests it's been quite successful for quite a number of retailer.IR: And you benefit if people go to the showroom to see it and then buy online?JS:
That's right, or they may say this is a good site for research and they directed me to this other store because I bought a sofa, but I'm now in the market for clocks and I'm comfortable buying that online because it's not a very high dollar expenditure.IR: Will you introduce it in the UK?JS:
It's on our radar, but we're still building the brand in the UK to get it to the point it is in the US. We're still early in that process.
It tends to be a relatively intensive sales process where we're calling retailers and convincing them to sign up. The brick and mortar furniture industry is relatively fragmented, and whereas DFS might get it immediately it might take longer with an independent retailer. Balancing the sales activity versus the amount of commissions we might derive it's probably not quite in balance yet, but hopefully it will be soon. IR: What's the one biggest challenge that came up during the course of that initiative, and how did you solve it? Similarly, was there an unexpected benefit that appeared as a result of the work?JS:
In the US most of the independent furniture retailers and even some of the multiples didn't particularly like Wayfair - we were one of the first online only companies to achieve any sort of scale in the furniture industry so they largely saw us as the enemy. The reality is it's a pretty big market and we're largely skimming off a part of the market that want to buy online anyway.
The showrooming concept gets a lot of publicity but it's a little bit more difficult in home goods because they tend to be less brand-driven and less model number-driven. Private labels are very extensively used in the furniture industry, so even though we may have the same product as a high street retailer it's not always possible for a consumer to figure out what the product is and then go price compare on our site and purchase it. It does happen, but i don't think it does as much as the high street retailer fears. What they haven't had as good visibility into is the traffic coming to them from the internet side. Getting over the initial mistrust and having a dialogue that says we're not trying to trick you, this could be a really good deal for you, especially in the early days when we didn't have a lot of furniture retailers willing to vouch of the quality of visitors we were sending. That was really the tough part and continues to be.
What's been interesting is that we've developed a close relationship with our vendors. They know they have to be online because they know that's the way the market is moving, with people researching there. They know that the internet is the top of many people's purchasing funnel. But most of the time most of their business is transacted through bricks and mortar retailers, so many of them struggle with how they can have an effective presence online while not alienating their bricks and mortar retailers. Vendors have struggled with that but now they embrace the fact that we can send their individual retailers traffic. Now some vendors have become much more active in pitching our programme to individual retailers because they can see the benefit in it. That takes away the channel conflict.IR: How do you see these type of collaborations developing in the future?JS:
We hope that over time we'll be able to become more and more precise for the customer shopping on our site. Today retailers have a variety of ways they can advertise on our site and they might say I'm a higher-end sofa retailer so I'm going to advertise a variety of these brands on Wayfair that I perceive to be higher-end. They may or may not have that product but they feel if they have someone looking they can sell them something comparable when they come in the store. It's a little bit of a leap of faith for the customer when they visit these retailers.
Our next step would be to provide some specificity with regards to the actual inventory the retailer has available. If someone looks at a bar stool on Wayfair, we might be able to tell them that retailer x has this in stock five miles from you, click to be sent over to them.IR: More generally, how do you think retail will have developed in five years' time, and how? Will there still be tensions between online and offline?JS:
Our view is that things are going to continue to blend together. I think you'll probably see the tension go away in terms of it's going to be harder to distinguish between online and offline retailers. The people who don't embrace multicahnnel or omnichannel retail are largely going to be left behind, if you look at the large cohort of 20-somethings getting to the point where they're moving into their own apartment, buying their own homes.
For the brick and mortars thinking about their online strategy and how these things fit together, I think that's going to be difficult for them. But for the online retailers, many of us are looking at how we can get more impact in the offline world. An example of that in the UK is someone like Oakfurnitureland that started selling furniture on eBay and has now moved into store expansion. Are they an online retailer that's doing offline, or are they offline? That's a strategy that's worked for them. Made.com has a showroom in their office space so people can go and look at their furniture. We acquired a company called Dwell Studios in the states that has a flagship location in Soho.
I think in five years time it's going to be less of an issue for vendors to try to figure out. It's going to be more a matter of how effective can you be in tying the whole thing together. Then we're just all retailers. Joel Stevenson, managing director, UK, at Wayfair, will be speaking at the Internet Retailing Conference 2013, in The Customer stream at 12.30pm. The event takes place on October 16 at the Novotel in Hammersmith, London.