July 15, 2022
(press release)
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Wayfair is the only player in a ranking of the top 10 ecommerce companies by revenue to report a decline in both revenue and net earnings in 2021 versus 2020, according to GlobalData. The leading data and analytics company notes that the decline has been exacerbated by the shift back to physical shopping. According to GlobalData’s Filing Analytics database, Wayfair reported 3.1% decline in year-on-year revenue and and 171% decline in YoY net profit due to a 12.9% decline in active customer count. Further, order frequency also decreased, with LTM orders per active customer decreasing 3.6% in 2021 over the previous year. Site expansion and equipment purchases, technological developments, improvements on leased warehouses, and other investments on its operational platform led to a decline in Wayfair’s net earnings. Neil Saunders, US Consulting Director at GlobalData, comments: “There is a fundamental weakness in Wayfair’s business model: it needs considerably larger volumes and many more regular customers to attain profitability. It managed this briefly during the pandemic, but now demand is normalizing, Wayfair is back to making eye-watering losses. In Q1 2022, for example, both operating and net losses were over $300 million. In other words, every dollar in sales cost it almost a dollar and eleven cents.” Research using GlobalData’s Companies Database has revealed that an incredible 90% of the top ten publicly traded global ecommerce retailers reported more than 15% year-on-year (YoY) growth in revenue while 70% saw 20% growth. Divya Vootkuru, Business Fundamentals Analyst at GlobalData, comments: “These high results were achieved due to changes in consumer behavior during, and following, the COVID-19 pandemic. Ecommerce companies were able to increase their customer networks on online platforms, resulting in expansion of business operations.” Among the top performers were Amazon, Alibaba Group, JD.com, Zalando, Coupang, Pinduoduo and Vipshop Holdings. With 22% revenue growth, leader Amazon was supported by significant increase in user activity and 12.5% growth in online store sales. Vootkuru identifies some of the key players below, noting some of the reasons for their success: GlobalData notes that, while revenues typically saw positive growth, the same cannot be said for profits, with six of the top ten companies experiencing a fall in net profit growth. A standout loss in profit was Coupang Deokpyeong, at -233% YoY. The company’s fulfillment center was damaged due to a fire, which resulted in a loss of inventory, equipment, and other assets. Top Chinese online retailers, Alibaba and JD.com net earnings are highly affected due to increased spending on warehouses and delivery stations. Change in PRC regulations also affected both the companies to face severe penalties.
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