Wayfair's cofounder explains why furniture delivery is still so slowand when it will return to normal

<p><img src="https://static4.businessinsider.com/image/60396254d9208800185924c2-2400/GettyImages-1146666464 (1).jpg" border="0" alt="Wayfair logo on mobile phone with purple background" data-mce-source="SOPA Images/Getty Images"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Wayfair had a blockbuster year in 2020 as <a href="https://www.businessinsider.com/wayfair-sales-soar-as-shoppers-online-furniture-2020-8">consumers shopped to better equip and adorn the homes</a> in which they suddenly found themselves stuck. Net revenue for 2020 was up 45% year-over-year, but executives at the company know that some of the shoppers that drove that growth are still waiting for their packages to arrive.&nbsp;</p><p>"Customers are having to remain patient when it comes to lead times on certain products," said Wayfair cofounder Steven Conine on a Thursday earnings call, according to a transcript from Sentieo.&nbsp;</p><p>Conine said the company saw its maximum out-of-stock levels in mid-2020, and the situation continues to improve. But persisting wait times are a sign that the supply chain disruptions of 2020 have not yet abated.</p><p>Orders that usually take weeks to deliver now take months, according to <a href="https://www.nytimes.com/2021/01/01/realestate/pandemic-home-furnishings.html">interviews with interior designers conducted by the New York Times,</a> who said they'd never seen delays like the those of the last year.&nbsp;</p><p>Originally launched in 2002 with a drop-shipping model, Wayfair has built a vast logistics empire, transporting a greater share of the goods sold through the platform every year. That infrastructure has helped with low stock levels and long lead times to an extent, Conine said, but there are some problems all the logistics might in the world can't fix.&nbsp;</p><p>Global manufacturing has been challenged for the past year, initially by COVID-19-related shutdowns, and then by altered operating procedures needed to keep workers safe.&nbsp;</p><p><a href="https://www.spglobal.com/platts/en/market-insights/latest-news/shipping/010621-fewer-blank-sailings-in-early-2021-on-year-amid-strong-containerized-trade-demand-eesea">Ocean carriers cancelled sailings at record rates</a> since the pandemic began in order to cut costs and maintain their rates.&nbsp;</p><p>When business came back after an initial drop, retailers attempting to restock created a <a href="https://www.businessinsider.com/southern-california-ports-hit-record-level-of-ship-congestion-2021-1">massive bottleneck at the Ports of Los Angeles and Long Beach</a>the US's busiest port complex. Some ships have been <a href="https://www.supplychaindive.com/news/california-port-congestion-los-angeles-long-beach-data/594715/">waiting up to two weeks just to dock and containers sit in the port</a>&nbsp;for days longer than usual.&nbsp;</p><p>This time of year, China's Lunar New Year celebration brings about a slowdown in manufacturing and supply chain movement that retailers didn't have an adequate chance to prepare for due to the turmoil of the last year and the existing difficulty in restocking.&nbsp;</p><p>Freight capacity is strapped on land, air, and sea, but for Wayfair, ocean freight is of particular concern since even in a pinch, furniture sellers are unlikely to go by air, due to the cost.&nbsp;</p><p>The nearly year-long cascade of disruption is an industry-wide problem. Gary Friedman, CEO of Restoration Hardware's parent company, said on a December earnings call that backorders were higher than they'd been in 20 years. La-Z-Boy CEO Kurt Darrow called the five- to nine-month lead times his customers are currently waiting unprecedented on an earnings call earlier this month.&nbsp;</p><p>La-Z-Boy does much of its production in the US, but components and materials come from abroad and the virus itself has slowed production output. Darrow said the manufacturing and freight delays of 2020 may have cost the company $30 million in sales.&nbsp;</p><p>And La-Z-Boy is a manufacturer. As a retailer, Wayfair has fewer cards to play to get goods to customers faster, which is part of why it has been building out logistics services that come with customer insights vendors can use to better predict demand. Wayfair's hope is that the lure of this information will entice vendors to sell more through their site than competitorsimproving in-stock status and combating some of the uniformity of furniture offerings among the major online sellers like Amazon and Walmart.&nbsp;</p><p>The number of Wayfair suppliers using the company's logistics services grew 60% year over year in 2020, according to Conine.&nbsp;&nbsp;</p><p>"Production has ramped, and carrier networks are expanding capacity, just as we have with our large parcel dedicated Wayfair delivery network," Conine said, adding he expects the company to return to normal stock levels sometime this summer.&nbsp;</p><p><a href="https://www.businessinsider.com/wayfair-supply-chain-furniture-order-delays-2021-2#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/what-its-like-make-beer-with-picobrew-c-home-brew-2020-3">We tested a machine that brews beer at the push of a button</a></p>
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