Hundreds of Wayfair employees in Boston were laid off on Friday.
In a letter to employees, Wayfair co-founder and CEO Niraj Shah said nearly 900 employees were being laid off because the company overestimated sales growth and had an employee base that was “too large for the environment we are now in.” The company confirmed to GBH News that figure includes 400 employees in Boston.
"We’ve grown Wayfair significantly to keep pace with the ecommerce growth in the home category. We were seeing the tailwinds of the pandemic accelerate the adoption of ecommerce shopping, and I personally pushed hard to hire a strong team to support that growth. This year, that growth has not materialized as we had anticipated," Shah wrote in the letter.
With more than 18,000 employees in North America and Europe, Wayfair’s layoffs represent a 5% cut. The company has corporate headquarters in Boston and Berlin.
This isn’t the first time Wayfair has announced major layoffs. In February 2020, they cut 550 employees, including 350 in Boston, as previously reported by GBH News.
Second quarter financial highlights, released earlier this month, show that Wayfair had a total net revenue of $3.3 billion, down nearly 15% year over year. The number of active customers, 23.6 million, was down 24%.
The company’s stock took a dive on Friday, opening the day at $65.79 and quickly dipping to around $57 by the early afternoon.
But Wayfair represents an outlier in the broader retail industry, according to Ken Morris, founder of Cambridge Retail Partners. Morris said, while there might be a dip in ecommerce, most large brick-and-mortar retailers are struggling to find good employees to hire rather than making layoffs. He noted that the company staffed up during the pandemic when online-shopping demand exploded — without realizing that it wouldn’t last forever.
Morris said Wayfair likely has a stable future ahead despite the layoffs. “This isn't a fatal flaw, this is just a bump in the road and they'll have to pull it in a little bit,” he said.
For the retail space in general, Morris said consumers could be in for some good deals in the coming months. He explained that the majority of supply chain issues have resolved and there’s lots of merchandise out there, meaning stores will offer discounts to clear out inventory.
Wayfair’s Boston employees and others in the United States will get severance equalling at least 10 weeks’ pay, Shah wrote in his letter to employees.
He said the company will focus on three areas of change: thinning out management layers, aligning work with strategic priorities and fixing areas that have grown faster than they can support.
