Boston, Massachusetts-based e-commerce brand Wayfair has laid off 870 people, amounting to 5% of its global workforce. As per the various media sources, the major reason is the non-fruition of growth targets which were anticipated this year.
In a filing with the US Securities and Exchange Commission (SEC), the twenty-year-old company announced the workforce reduction involving its previously announced plans to manage operating expenses and realign investment priorities. Wayfair saw about a 15 per cent loss in net revenue compared to its earnings in 2021 in the second quarter results.
Along with the layoffs, the company also said that it is in the process of making substantial reductions in its third-party labour costs.
CEO Niraj Shah, in a memo, said that the company was “seeing the tailwinds of the pandemic that accelerated the adoption of e-commerce shopping, and I personally pushed hard to hire a strong team to support that growth. Yet, this year, that growth hasn’t materialised as we had anticipated. Our team is too large for the environment we are now in, and unfortunately, we need to adjust.”
CNN reported that Wayfair had prospered during the early stages of COVID-19 at a time of ‘furniture boom’ i.e people started shopping for interior decor and furniture. However, two years later, their situation changed with the rise in competition and inflation.
The company is also providing its US employees with a minimum of 10 weeks' severance with the cost of the employees' severance and benefits reported to be between $30 million and $40 million.
In early May 2022, Wayfair announced a hiring freeze which lasted for 90 days.