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Frank Alfieri

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  • Posted on: 08/02/2018

    Wayfair to open its first brick & mortar store

    I don't think the furniture category applies to omnichannel retail as in the same way it applies to other industries and categories. The reverse supply chain logistics and financial burden is very high in home goods. I don't think Wayfair is looking to augment sales and or margins with this move. What they are doing (as this 20k square foot showroom is located in a distribution center) is looking to minimize the costs associated with the reverse logistics supply chain. When an element gets returned to the center, it will hit the showroom floor first, in an attempt to move it "as-is" at a discounted rate to an eventual buyer. This will reduce the costs associated with moving an item through the reverse supply chain and restocking after product verification and repair (if damaged). The chances of damage increase every time an item moves. This is not a profit move by Wayfair. It is a cost cutting move. After all, that $500 (at cost) sofa that retails for $1399 becomes a $800 first cost sofa once it gets returned. By dumping it on a retail floor space and selling it as-is, they are reducing the loss incurred.
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