While walking down the halls of Copley Place, a high-end shopping center in Boston, it’s hard not to feel like a high roller. If the allure of Jimmy Choo or Louis Vuitton doesn’t catch your eye, the sparkle of Tiffany & Co. surely will.
This is what the walk looks like to the headquarters of Wayfair, the ecommerce site for all things furniture and home-goods. Founded in 2002 with the sole purpose of selling stereo racks and stands online, the company has since skyrocketed in popularity. Wayfair generated $9.1 billion in net revenue in 2019, selling more than 18 million products across five brands.
In fact, while much of the country remains indoors due to stay-at-home advisories, the company has continued to experience growth. For the first quarter of 2020, Wayfair saw revenues grow 19.8 percent. Not surprisingly, sales of home office furniture, playroom items, and recreation products have been strong amidst the pandemic.
Despite being a relatively young tech company, the organization is well aware of the role their culture of innovation has played in the company’s success.
“There’s not a specific team that works on innovation,” says Steve Conine, Co-founder of Wayfair. “We really look at it as, if you’re doing it right, you have a culture of innovation. … Innovation really comes about when you have an environment that people can run experiments in.”
From opening a brick and mortar store to exploring the capabilities of augmented and virtual reality, Wayfair is no stranger to experimenting and taking risks. According to Conine, one of the organization’s biggest risks was actually in launching the Wayfair brand itself.
Creating the Wayfair Brand
Before Wayfair became the one-stop-shop for home-goods it is today, the company was 250 different microsites under the name CSN Stores. The focus of these sites was still on home-goods, but for super niche audiences, like AllSwivelBarstools.com and EveryGrandfatherClock.com.
When the time came for Conine and his co-founder Niraj Shah to make the strategic decision to merge the brands, Conine says they felt like they were really “plotting the unknown.”
“We’d never had any experience building a brand before,” says Conine. “We hadn’t really worked on consolidating these sites much over time, and so when we embarked on that, it was quite an interesting undertaking. … We believed that if we could do it right, we could create a really fun experience for customers that they would remember a lot better than this myriad of microsites we had.”
They started experimenting with merging the sites, going about the process very methodically. They would shut down one of the sites, redirect the traffic, get it on the new Wayfair site, and observe how their customers reacted.
Conine says there were definitely challenges along the way, from confused customers, to lower Google rankings, to a lack of brand recognition.
“As we did these transitions, they kept getting worse,” says Conine. “And we expected them to get better at some point. We would see the sites turn around, but the duration that took kept stretching out. We got about six months in the middle of this, and I remember it being a very interesting debate. Do we slow the pace? Do we speed the pace? How are we feeling about the transition? We really just watched closely, tested, and monitored. … Obviously, today, we’re out the other side, the brand has worked, that transition has worked, but it was interesting part of our history.”
Shining Light into Dark Corners
This concept of “plotting the unknown” has followed the company throughout its history, and Conine says that making sure the organization is focused on what’s next is an important part of the company’s culture.
“The majority of our team is building things that they can see,” says Conine. “They’re clearing the cloud right around them. They’re figuring out, what’s the next innovation I can do that is meaningful today, that can have an impact on our customers in the near future? The concern with doing purely that is that there are new areas where you should be sticking your head up in the clouds and trying to figure out, are there opportunities here? In a very operational, execution-focused business, that can get overlooked.”
To avoid that fate, Wayfair has created a group called Wayfair Next with the mission of “shining light into dark corners to see if there’s things we haven’t looked at before.”
When the group first came into existence, they were focused mainly on augmented and virtual reality. Wayfair started looking at new opportunities with 3D modeling, AR, and VR around four years ago, focusing on a partnership with Magic Leap. Magic Leap creates wearables that overlay 3D computer-generated imagery over real world spaces.
“It became clear that ecommerce…was one of the core categories that there was a very strong use case for giving people the ability to visualize a product in their space before they buy it,” says Conine.
The organization spun out a team called Wayfair Spaces to work on developing an app with Magic Leap to demonstrate the potential of that technology. But it isn’t typical for Wayfair Next to spin out dedicated teams for new ideas. Usually, new ideas that are scalable will be prototyped by the Wayfair Next team and handed off to the appropriate business unit or corresponding team.
Innovation really comes about when you have an environment that people can run experiments in…
“A far future R&D group [like Wayfair Next] will at times research things that go nowhere, and you learn something, you put it on the shelf, and now you have it if it comes around again,” says Conine. “But occasionally, they do things that are much more near term, and you say, ‘There’s opportunity here, we need to actually scale this up.’ That team can scale it up to some extent, and we do expect them to actually be able to take things off the workbench and get it to where it’s a functioning prototype or oftentimes even into production. But at some point, it becomes a larger opportunity and it needs to move into more of a full-time team and have a full-time focus.”
Conine says they have a deliberate handoff process for projects where the Wayfair Next team works in conjunction with the team taking on the new idea or project. And of course, with that comes its own challenges.
“If you have a team that sees themselves as researching for our future, they can be at times reluctant to jump over and do near-term things,” says Conine. “The team needs to be thoughtful about how they manage those transitions.”
Another project originally developed on the Wayfair Next team is the “3D Room Planner” tool. They began creating this capability in conjunction with Wayfair Spaces, but quickly found a use for it in other parts of the business as well. Consumers can use the tool on Wayfair.com to place true-to-size furniture in digital rooms to plan out their home.
Data as a Measurement of Truth
Not all of Wayfair’s innovations have been highly technical. Wayfair opened its first brick and mortar store in Natick, Mass. in 2019 in order to test the impact of using physical presence to get in front of customers.
In testing this not-so-technical innovation, Conine says the company is relying on its roots in data analytics to inform decision making.
“We try to be very data-centric,” says Conine. “I think on the one side, emotion plays a role in innovation and creativity plays a role in innovation. … It helps a lot with brainstorming and coming up with what you want to work on and where you think the innovative opportunities are. As you get into building things, it is very easy to fall in love with your own creation. … I think data in innovation is one of the tools you have to really be honest about how your innovation is doing. … Data is the one easy measurement of truth.”
For their physical store, Conine says the company started by tracking more traditional metrics like revenue and sales numbers. He says that as the store becomes more robust, they’ll be looking at more complicated data like: “If you take a 30-mile radius around the store, do we feel like we can measure an influential lift that the store is having on those customers?… What is it doing for people who haven’t walked into the store?… Maybe they’ve had a friend tell them about it?”
“As the store evolves, we will continue to try different things,” says Conine. “And we’ll focus our data collecting in different areas to really try to understand, do we believe what’s happening? Do we see an opportunity to change what we’re doing? How do we get to where we’ve proved something works very well, and we can then scale up and take advantage of it?”
Ten Years From Now…
Despite opening a brick and mortar store, Conine still believes the future of retail is in ecommerce: “I think 10 years from now, the majority of retail will be done online. I don’t believe that is yet the case.”
Conine anticipates that the world of ecommerce, and especially the mechanics of home delivery, will become drastically more efficient over the next several years. He also believes AR and VR are going to become even more influential in the next decade.
“As spatial computing takes off, and augmented and virtual reality devices become more ubiquitous and in the world, there are probably experiences that move to within those,” says Conine. “Can you envision a world where physical TV sets go away, and you really start consuming media through these devices? I think 10 years from now, that’s really likely to be the case. That’ll have an interesting impact on the retail landscape and how retail distribution and different device distribution happens.”
Conine says Wayfair will continue to push the envelope on helping customers visualize products in their own spaces utilizing this technology. And in general, the future of retail and innovation at Wayfair is very customer-focused.
“The other big areas that we are innovating on…have a lot to do with transportation logistics and how we move products around the country,” says Conine. “We have a very large initiative right now of really becoming the best in class furniture…and providing the best home delivery experience that’s available. The innovations we’re [working on] there will have a meaningful impact in the way consumers…think about shopping for home, online.”
Clearing the Cloud Right Around You
According to Conine, this level of experimentation would not be possible without the culture of innovation Wayfair has worked to build since the company’s creation.
“Innovation really comes about when you have an environment that people can run experiments in,” says Conine. “We have tried to build this company in a way where we have a culture that’s accepting of risk. We let people try things out, have an idea, figure out what the appropriate experiments are to run. … And so whether we are innovating in augmented or virtual reality, or whether we are trying to improve the put away process at our warehouses, or whether we’re trying to improve the routing for transit of the products that we sell. Those are all spaces where if you have a smart team that’s willing to do that and is enabled to run experiments, they can innovate and uncover opportunity.”
Conine says a big part of creating a culture of innovation is finding the right blend of employees with the drive to innovate, a high risk tolerance, and an acceptance of failure.
“Companies can easily fall into a culture where they’re not very risk tolerant,” says Conine. “They move slower or they try to offload the risk on to others. Classic example in retail would be purchasing software. A lot of our competition buys software to run their core ecommerce purchasing or shopping platform systems. [That] offloads the risk of producing the systems onto someone else. The downside of that is, you’re never going to push the risk tolerance of that quite as aggressively as someone who can actually take control of it, innovate, and drive that themselves.”
Conine’s final piece of advice for organizations trying to build a culture of innovation: “Keep plugging away. … As you get into something new, there’s a funny overwhelming feeling of, ‘Oh my gosh, I’m never going to figure this out.’ When you stick your head up in the clouds, you don’t know if you’re in a little town or major city, and to understand the scope of what you’re embarking on can be daunting. Try to not worry about that. Just try to clear the cloud right around you and understand what you can see. And before you know it, you will start to uncover things that are very exciting.”
Photo by JJBers.