Wayfair, the furniture and home goods eCommerce brand, has seen its fair share of challenges over the years. These include reduced consumer spending and some struggles in the international market.

However, its journey toward becoming a sustainable digital retail powerhouse offers retail leaders some important insights about scaling eCommerce strategies. Q2 2025 marked the company's first quarterly profit since 2021, delivering $15 million in net income on $3.3 billion in revenue. This represented 5% of year-over-year growth.

This turnaround was the result of three interconnected strategies: comprehensive technology transformation, strategic physical retail expansion, and relentless customer-centricity backed by data.

Building a World-Class Technology Platform to Support eCommerce Goals

At the heart of Wayfair's resurgence lies a fundamental reimagining of its technology infrastructure.

"Everything we do with the tech platform has been custom-built to enable our end-to-end customer journey,” said Chief Technology Officer Fiona Tan in a report by Constellation Research. "Our tech transformation encompasses both organization and technology improvements, and we want to make sure that we're going to be able to build a world-class platform while creating an environment where our teams can do their best work.”

This custom-built approach, supported by more than 2,000 technology-focused employees out of a total workforce exceeding 13,000, has become Wayfair's competitive differentiator.

Microservices on Google Cloud

The company's infrastructure began with monolithic architecture, later evolving to cloud-native microservices on Google Cloud. This transition led to the strategic enablement of speed, flexibility, and scalability.

By breaking down legacy systems into modular components, Wayfair achieved faster deployment cycles, easier maintenance, and the ability to adapt rapidly to market demands.

AI Experiences in the Customer Journey

Artificial intelligence and machine learning now permeate every stage of the customer journey.

Wayfair's AI-powered tools, like Decorify and Muse, allow customers to visualize home designs and personalize their shopping experience. This directly addresses one of eCommerce's most persistent pain points: the inability to try or experience a product before buying it.

Meanwhile, the company's Discover and Image Search features empower customers to discover products more organically.

When used in the Wayfair app, Discover opens a dedicated tab where shoppers can use an AI-powered experience. There, they can browse recommendations presented to them using advanced visual search technology.

Wayfair’s Image Search feature allows customers to upload photos of items they like to look for similar products. This makes it much easier to browse based on style without having to identify specific keywords or design names.

Aanan Contractor, vice president of customer technology at Wayfair, said the following about the features, according to a report by Digital Commerce 360: "Whether you’re snapping a photo to find a product or browsing curated imagery in Discover to find inspiration, these innovations are designed to simplify the journey and bring your home vision to life — seamlessly and intuitively.”

Optimization with Machine Learning

Behind the scenes, machine learning optimizes forecasting, marketing, pricing, and user experience.

Wayfair's proprietary attribution platform, Themis, leverages more than 4,000 machine learning models built over five years of investment [PDF]. This infrastructure enables supplier-side automation for pricing, inventory management, and merchandising, creating efficiencies that benefit the entire ecosystem.

The Strategic Power of Physical Retail

While many digital-native brands approach physical retail cautiously, Wayfair has embraced it as a growth accelerator rather than a necessary evil.

Showroom in Wilmette, Illinois

The company's first standalone location in Wilmette, Illinois, was a 150,000-square-foot showroom. It attracted over 720,000 visitors in its first year, according to a report by HBSDealer. More impressively, more than 50% of these store customers had never shopped with Wayfair before, demonstrating the store's effectiveness as a customer acquisition channel.

The impact extends well beyond foot traffic. A year after opening, Wayfair's growth rate in Illinois ran 15% higher than its national average. This created what Vice President of Curation, Brands, and Stores Liza Lefkowski called a "sales halo” effect.

"We are a national brand, so our customers are all over the country,” Lefkowski said. "Our aspiration is to be able to serve all of them, to some degree, in that physical space. Home is a very emotional category and a highly considered category, and people want to experience the products before they buy.”

In the Chicago area specifically, the company saw a more than 50% increase in lower-ticket impulse purchases like kitchen accessories and a more than 35% increase in higher-consideration purchases such as bathroom renovations.

Additional Large-Format Stores Planned

This success has fueled an ambitious expansion strategy with three additional large-format stores planned:

• Atlanta (early 2026)
• Denver (late 2026)
• Yonkers, New York (2027)

Each location represents an opportunity for experimentation and learning.

Lefkowski explained the approach: "With every new store we're opening, we're trying to learn something.”

Markets are selected based on strong existing customer bases, favorable real estate opportunities, and the chance to test different retail formats.

Creating Omnichannel Purchase Journeys

Wayfair's stores don't simply replicate online experiences in physical form. Instead, they create complex, omnichannel purchase journeys. For example, customers might measure furniture in-store, browse the full catalog via in-store WiFi on the Wayfair app, and complete their purchase online for home delivery.

Electronic shelf labels provide extended product information. Local customization also connects each location to its community. Stores may feature exterior murals by local artists and merchandise tailored to regional climate and preferences.

Wayfair's Strategy Aligns with eTail Insights Research

Wayfair's transformative approach to scaling eCommerce isn’t happening in a vacuum. According to recent research by eTail Insights and presentations at eTail events, Wayfair is representative of an industry moving in a new direction.

Embedding AI to Expand Service Capabilities

The emphasis on custom-built technology platforms and AI resonates throughout the industry.

As one retail leader noted in a panel about AI transformation in retail at eTail Boston 2025, "The technology and the AI component[s] [are] at the center of our service, and we're committed to staying ahead.”

Most retailers had either already implemented AI-driven eCommerce personalization at the start of 2025 or were in the process of doing so. The technology is now critical in creating more targeted customer experiences.

Omnichannel Excellence as a Differentiator

eTail Insights’ 2025 Future Customer Journeys Report revealed that 55% of retailers rate themselves as only "somewhat effective" at creating positive omnichannel pre-purchase experiences. Wayfair's physical retail expansion directly addresses this gap.

That report features a quote from Sandy Gilsenan, Chief Retail & Customer Experience Officer at Warby Parker, who articulated the unified commerce imperative at eTail Boston 2024:

"We want to meet customers where they are. Whether they are shopping online or in-store, we value their choice and aim to provide a tailored experience.”

Wayfair's ability to drive growth with physical stores, combined with a "sales halo: effect, validates this integrated approach.​

Data Utilization and First-Party Relationships

Industry research consistently highlights challenges with data utilization. According to eTail Insights’ 2025 Future Customer Journeys Report, 71% of retailers report being only "somewhat satisfied” with their ability to leverage customer data.

Wayfair's 85 million contact database and direct customer communication strategy exemplifies best practices.

At eTail Boston 2024, one market research leader suggested retailers should "shift focus from personas to profiles,” using granular customer data points to create truly relevant marketing. Wayfair's approach of understanding that customers make approximately two purchases per year for specific projects demonstrates this profile-based thinking in action.​

Key Lessons for Retail and eCommerce Leaders

Wayfair's transformation offers several actionable insights for retail leaders navigating their own scaling challenges.

Technology as a Foundation

Technology must be treated as a foundation rather than a feature. Custom-built platforms create differentiation and flexibility that off-the-shelf solutions cannot match, but they require substantial investment and commitment.

Accelerating Growth Through Physical and Omnichannel

Next, physical retail can accelerate digital growth when approached strategically.

Wayfair's stores don't cannibalize online sales. Instead, they amplify them through halo effects and new customer acquisition.

The key is maintaining an experimentation mindset that allows continuous optimization rather than betting everything on a single store format.

Data-Driven Decision Making

Finally, data-driven decision-making at scale requires infrastructure investments that may not show immediate returns.

Wayfair's five-year investment in building Themis demonstrates the long-term thinking necessary to create sustainable competitive advantages. First-party data becomes increasingly valuable as third-party tracking diminishes, making customer relationships more important than ever.

Moving Forward

Wayfair's return to profitability demonstrates that scaling eCommerce successfully requires balancing technology innovation, strategic physical presence, and unwavering customer focus. The company continues to push forward with generative AI initiatives, store expansion plans, and supply chain optimization even as broader economic headwinds persist.

Sustainable growth comes not from choosing between digital and physical, or between technology and service, but from integrating them into a coherent strategy that puts customer needs first.