Investor Presentation August 2017
Safe Harbor This presentation contains forward-looking statements. All statements other than statements of historical fact contained in this presentation, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions. Forward-looking statements are based on current expectations of future events. We cannot guarantee that any forward-looking statement will be accurate, although we believe that we have been reasonable in our expectations and assumptions. Investors should realize that if underlying assumptions prove inaccurate or that known or unknown risks or uncertainties materialize, actual results could vary materially from the Company’s expectations and projections. Investors are therefore cautioned not to place undue reliance on any forward-looking statements. These forward-looking statements speak only as of the date of this presentation and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise. Factors that could cause or contribute to differences in our future results include, but are not limited to: economic factors, such as interest rates and currency exchange fluctuations; our ability to acquire new customers and retain existing customers; our ability to sustain and/or manage our growth; our ability to increase our net revenue per active customer; and our ability to build and maintain strong brands. A further list and description of these risks, uncertainties and other factors can be found under Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and the Company’s subsequent filings with the Securities and Exchange Commission. We qualify all of our forward - looking statements by these cautionary statements. 2
Our Mission To o tr tran ansf sfor orm m th the w e way pe ay peop ople le sho shop p for or th their eir ho homes mes 3
A Clear Online Leader in Home Goods $3,930 MAS ASSIVE VE O ONLI LINE CA CATAL ALOG with over 8,000,000 home products • INVE VENTORY-LI LIGHT MODE DEL L partnering with ~10,000 suppliers • $3,380 FOUNDE FO DER-LED LED since inception; co-founders own significant equity • $3.93 BILLI $3.93 BI LLION of LTM net revenue with minimal inventory • 46% 46% Q2 Y 2 YoY oY GROWT WTH in direct retail, 43% total growth • $2,250 $1,319 $916 $601 $517 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q2'17 LTM 240+ Niche Websites; Wayfair Brand Brand Platform Development Launched Building Direct Retail Other 4
Large, Highly Fragmented Market Moving Online Significant Upside in US Home Market Growth by Channel Online Penetration Estimated Online Penetration of CAGR Selected Verticals ‘16 - ’20 ‘20 -25 35% 4.1% 4.1% 20% $386 9% $316 $96 15.0 % 15.0% Home Goods Apparel Consumer ($US in Billions) Electronics $269 $48 $27 Millennials Beginning to Enter Our Target Demo $291 2.6 % 1.7% Illustrative Distribution of Home Goods $268 $242 Customers by Age Millennials Age 21 - 34 2016 2020 2025 Age 65 Online Offline Age 35 Source: Euromonitor for market size and penetration, Wayfair estimates for growth 2015-2025 5
Home Is Largely Browsed … 6
…And Not Searched Mos ost ecommer t ecommerce s ce shopping hopping is is done v done via ia br branded anded sear earch This is not possible in home where brands are not known… Leading Furniture and Home Décor Brands …And consumers can’t describe what they are looking for 7
Unlike Other Retail Categories, Home Shoppers Desire Uniqueness CPG Category Example: Home Category Example: Paper Towels Lighting VS. VS. 8
Wayfair Is Focused on Mass Market and Is Well-Positioned vs. Other Retailers Our typical customer: 35 35 to to 65 65 y year ear old old w wom oman an with annual household income of $50k to $50k to $250k; $250k; comScore median hous median household income ehold income of of $82k $82k High End Design Centers ($175K+) Mass Market ($60K-$175K) Low End ($60K) 9
Five Distinct Home Sites Each with Unique Brand Identity Est. 2006 Est. 2011 Est. 2011 Est. 2014 Acq. 2013 An online destination Where beautiful Your home for affordable A collection of classic A design house with a for all things home furniture and finds meet modern design furnishings and timeless decidedly modern vibe irresistible savings home décor 10
Brand Awareness Has Grown to 81% Since Wayfair Brand Launch in 2011 US Aided Brand Awareness 81% All TV buying moved in-house Began Ramping TV Ads Launched first magazine partnership with First HGTV integration Coastal Living launched with “Brother vs. Brother” Tested TV Ads February 2012 July 2017 Source: Qualtrics and Hanover Research 11
Investing in Advertising Across Multiple Channels • Three broad advertising channels - Online, TV and Direct Mail • Online is the largest channel followed by TV and Direct Mail • Strict adherence to channel derived ROIs • Proprietary advertising technology stack Online TV • • • Display Social Transactional Direct Mail 12
Award-Winning, In-House Customer Service Organization • Over 1,500 customer service employees located in the US and Europe • Winner of multiple awards for best retail customer service • Specialists with deeper expertise and training for select areas of the catalog, such as lighting, flooring and upholstery Customer Service Locations 13
Proprietary Software Powers Key Parts of Our Business • Company culture deeply rooted in technology and data • Over 1,100 engineers and data scientists • Becoming employer of choice for engineering and developer talent in Boston Examples of Proprietary Technology Ad Tech Stack Business Operations Storefront Keyword Search and Product Stability and Warehouse Transportation Retargeting Bidding Discovery Performance Mgmt Desktop and Product Campaign Management Personalization Pricing Mobile Catalog Product Measurement and Analytics Conversion Infrastructure Order Mgmt Globalization 14
Growing Our House Brands in Partnership with Suppliers • House brand penetration of Wayfair.com revenue is growing rapidly • Partnering with suppliers to develop over 40 proprietary brands with exclusive products and no inventory • Products are photographed and merchandized by Wayfair to create a curated brand experience across multiple styles and price points, enabling customers to more easily discover the products they are looking for 15
Investing in New Categories to Grow Share of Wallet Home Improvement Wedding Registry & Housewares • • ~$45 billion US addressable market ~$5 billion US wedding registry market and • Focused on the finished areas of plumbing, $25 billion US housewares market • lighting, flooring that our customer chooses Opportunity to capture millennials as they enter herself key age for buying home goods Key Competitors Key Competitors • Other category investment areas include mattresses, seasonal décor, and decorative accents 16
Large Incremental Addressable Markets in Canada, UK & Germany • Europe total addressable market approximately equal to North America • Localized Wayfair sites currently live in Canada, the United Kingdom and Germany • Fragmented markets with no real online market leader; competitive landscape similar to US Addressable Market for Home Goods by Region ~$50B Europe USA $300B (~$270B) & Canada ~$75B (~$20B) 17
3D Models Enable Visual Imagery and Exciting Future A/R Applications • 3D images allow for inspiring visual imagery without the expense of product samples and physical photo studios • Experimenting with augmented reality applications using Wayfair app on Tango enabled smartphones Image Rendered from 3D Models Wayfair App on Tango Device 18
Search with Photo: See it Anywhere, Buy it on Wayfair • Search with Photo capability enables shoppers to conveniently find the product they are looking for on Wayfair • Wayfair shoppers are able to simply take a photo, or upload an image, of a product they like and Wayfair will leverage artificial intelligence and deep learning to find similar items from our selection of more than 8 million products Tap. Snap . Results. Exact Match! 19
Home Category Characterized by Heavy, Bulky, and Damage-Prone Items Average Wayfair Small Average Wayfair Large Parcel Item Parcel Item • • ~30 pounds ~80 pounds • • ~3 cubic feet ~22 cubic feet 20
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