Wayfair Shifts Logistics and Fulfillment Model to Deliver Products Faster

August 11, 2016  by in Delivery, Industry   

The company operates five separate brand sites — including Wayfair, Joss & Main, and Birch Lane — all of which sell home goods and furnishings. Wayfair's strong digital presence is being driven by overall growth in the online furniture market, despite potential difficulties in delivery logistics for large items.

Aiming to drive customer retention and satisfaction by altering its logistics and ‘capital light,’ delivery model, Wayfair doesn’t buy most of its merchandise and store it in its company-owned warehouses. Instead, it buys inventory only after a customer makes a purchase and operates a drop-ship model, where its suppliers typically handle the delivery and fulfillment.

Now, Wayfair is housing some of their suppliers highest-volume products in its own warehouses to speed up delivery time.

“We can ship these products from our warehouses directly to the customer, often with a next-day or two-day delivery guarantee,” CEO and Co-Founder Niraj Shah said according to a transcript on Wayfair’s website. With this program, called CastleGate, Wayfair still doesn’t take ownership of the inventory and instead receives fees from suppliers for inventory management and fulfillment services, Shah said.

“There is a meaningful conversion-rate lift when we promised fast delivery on these larger bulkier items,” Shah said. Products eligible for fast delivery such as sofas and bedroom groups, are a small portion of the e-retailer’s total inventory and represent a “high single-digit percentage” of revenue, he added.

Additionally, Wayfair added a feature on its site enabling customers to schedule when their orders are delivered on select large items.

“Rather than placing an order, receiving an estimated ship date and then subsequently receiving an email to schedule the delivery date a week or so later when the order is in transit, we allow customers to select their delivery date and time window right on the site as they complete their purchases,” said Steven Conine, Wayfair’s Co-Chairman and Co-Founder.

The retailer is working on a mobile app to track delivery trucks from Wayfair’s facilities in real time.