Millennials and social media are completely changing how people shop for their homes
Wayfair (W), the online furniture and home decor retailer, is anticipating a massive shift to online retail for home goods from brick and mortar as more millennials shop for their home from their home using their smartphones and other devices.
“There’s a bunch of things we notice in our trends. The use of our app, for example, is growing. The mobile traffic has outpaced all other forms of traffic, and it’s growing very fast,” says CEO Niraj Shah in a new Yahoo Finance podcast.
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That growth is coming largely from the millennial generation. There are 70 million millennials aged 21 to 34 in the U.S., and many are entering the stage in life where they’re getting married, buying a house, and starting a family, which is the beginning of the core 20 years of furnishing a home. That process will be done increasingly via online shopping, according to Shah.
Home goods have become one of the fastest-growing segments of e-commerce. It’s still in the early innings. Last year, Shah noted that only 9% of the total $270 billion home goods category in the U.S. was sold online. He added that the category has seen growth at approximately 15% in recent years and if that growth continues for the next ten years that places approximately $80 billion of consumer spending “up for grabs” as more folks furnish their homes online.
“A lot of what’s happening in terms of the trends in technology I think will actually make online shopping incredibly popular with millennials as they get older and older,” says Shah. “Because the idea of going to a store, driving there, having to spend two hours in one store, two hours in another store, sales folks, not really have good access to selection, not know as much product information as you want, it just doesn’t seem very appealing.”
A company like Wayfair — whose brands Joss & Main, Birch Lane, and All Modern — can also benefit in a world of social media as young consumers scroll their feeds and streams for new inspiration and post ideas of their own.
“Social media is very powerful in terms of not just us being able to reach consumers, but consumers being able to share their opinions and thoughts with others,” says Shah. “And we’ve certainly benefited as the world’s become increasingly transparent whether that be Google, whether it be social media, whether that be things we can do or things that our customers do. And I think that’s been a great force.”
In fact, visualization is a critical part of Wayfair’s business, especially as it strives to compete in a world of e-commerce giants.
“I also think that visualization, if you think about our category, it’s one of the few categories, it’s really home, and it’s fashion that’s visual, it’s emotive, it’s all about the look you want to achieve,” says Shah. “You actually don’t want the same exact items as everyone else. But if you’re looking for paper towels or batteries, you’re looking for the same exact things as everyone else. And so, because we focus on that, I think it’s what makes us different than the same categories that Wal-Mart (WMT) and Amazon (AMZN) and Target (TGT) need to battle it out over. We’re instead focused on these categories which are really much more a personal choice, a personal style.”
Shah and his Cornell classmate, Steve Conine, co-founded started the business back in 2002 following the dot-com bubble burst as a series of niche websites for furniture such as racksandstands.com. Today, Wayfair is a multi-billion online furniture business, offering a catalog of 10 million products and serving 11 million active customers.
This story is a part of Yahoo Finance Presents: The Retail Revolution , March 5-9, 2018.
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Listen to the Yahoo Finance Presents podcast here or on Apple Podcasts, Google Play or Stitcher.
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.
