Earlier this year, Wayfair, one of the largest online retail companies specializing in home goods like furniture and decor, made a shocking announcement of its decision to cut down 13% of its workforce. The decision resultant of a restructuring plan is likely to leave approximately 1650 employees jobless, a concerning consequence not just for the individuals affected but also potentially for the overall business scenario of Wayfair.
Significantly, this announcement came as a surprise jump from a previously announced small lay-off, thereby placing the e-commerce’s internal scenarios under scrutiny by many industry experts. In the past, the company had drastically thrived, growing from a small two-person operation to a publicly-traded company with a global presence and 16,200 employees.
Primarily, budget and finance issues are considered the main culprits for this unexpected move. During its fourth-quarter earnings call, Wayfair reported enormous net losses, signifying a financial crumble the company was experiencing ambiguously. The decision seems in line with the company’s strategy to achieve profitability by reducing costs. The burgeoning losses that the company reportedly suffered stood at around $330 million as compared to $143 million for the corresponding period in the prior year. This considerable increase in losses raised multiple questions on Wayfair’s sustainability following its current growth strategy.
Moreover, the decision also appeared connected to the backlash Wayfair was receiving over its business practices. Employees at Boston, the company headquarters, protested against sales of Wayfair’s products to contractors furnishing border camps, impacting its public image considerably. While the company decided to maintain its agreements despite the controversy, the negative image was inevitably harming its overall business standing.
On a more personal level, the layoff decision has inflicted a harsh blow to those directly affected: the employees. The reported 1650 layoffs are not limited to one geographical area but are likely to occur company-wide. As a result, the decision has instigated concerns about job security, workplace culture, and the overall employment scenario at Wayfair.
Within the global context, this move heralds possible challenges for the e-commerce industry as a whole. If not handled sensitively, the image of the booming e-commerce industry could also face severe backlash as they brand themselves on the promise of generating employment opportunities.
Regrettably, the job layoffs decision by Wayfair has triggered speculations regarding the long-term success and sustainability of this e-commerce behemoth. In its quest for profitability, the company’s unexpected firing spree has cast doubt on its success model.