Home décor e-tailer Wayfair does really well. "The Boston-based company sold $600 million worth of home décor products last year, and CEO Niraj Shah says that revenues are growing at 40% quarter-over-quarter," wrote Forbes' J.J. Colao (July 22).
But as Colao explains in his article, 99% of Wayfair's web visitors don't buy anything. Many of these people come to the site for "webrooming": looking up products listed by an online vendor, only to buy them in-store nearby (i.e. the opposite of showrooming).
Webrooming is essentially the opposite of showrooming.
Wayfair, you see, is fine with this. So much so, they're encouraging the practice -- inviting local home décor retailers to advertise on their website with its "Get It Near Me" program.
Interestingly, Wayfair A/B tested the conversion rates of website pages displaying the ads and others that didn't. "It turns out that the advertisements made absolutely no difference in purchasing patterns," Colao wrote. "Customers bought just as often on pages with the ads. Cannibalization was a myth."
Wayfair believes advertising for brick-and-mortar competitors doesn't hurt its online sales.
Wayfair, however, remains tight-lipped on Get It Near Me's sales figures, which means it's safe to assume the company isn't getting rich off the program just yet (Colao reports the program currently has 170 advertisers on board, handled by two salespeople). But the business model is an interesting one.
Doesn't make a whole lot of sense to advertise for competitors, but Wayfair argues doing so doesn't affect its online sales anyway. And as the number of advertisers continues to go up, well Wayfair is more than happy to take the cream off the top. This, of course, assumes that as the advertiser pool grows Wayfair's online sales do not suffer.