Wayfair, an online store that sells furniture, announced on Friday that it was letting go of 1,650 employees, or 13% of its global staff. The layoffs are the third time in 18 months that Wayfair has cut staff to try to cut costs and get the company back to making money.
Wayfair’s CEO Niraj Shah said that the layoffs would help the company focus on running its business more efficiently by “cutting out layers of management” and getting rid of “too many great people.” He thought that Wayfair could save as much as $280 million a year with the cuts. On Friday morning, employees were told if they were losing their jobs.
The Boston-based company said that employees who are being let go will get retirement pay and help finding new jobs. But the sudden loss of the job right before the holidays caused a lot of anger very quickly. A lot of the soon-to-be-former workers were upset about when and how many jobs were being cut.
“I woke up this morning with a job and health insurance.” One anonymous worker wrote on thelayoff.com, “Tonight I will go to bed without a job or health insurance, which also means I will go to bed scared about how to deal with a disease I have been diagnosed with.”
For Wayfair’s needs right now, Shah said that getting rid of management layers and having “too many great people is worse than having too few” are both important.
During the pandemic, people bought a lot of home goods, which helped the store grow quickly. But growth has slowed down in 2023 because people are spending less because of high inflation and worry about the economy.
It sold $12.6 billion worth of goods over the last four quarters. That is less than the $14.1 billion that was spent the year before. Its operating losses also got worse, reaching almost $650 million in the most recent quarter.
Shah said that the company’s main goal is to make money even though it has a “lower revenue base.” Wayfair can “build a profitable business faster” by cutting costs even more by letting people go.
Other tech and e-commerce companies that hired too many people during the pandemic have also been laying off workers to save money.
Wayfair fired about 1,750 workers in January of last year. At the time, that was 10% of its global staff. In August 2022, it cut 870 jobs. In 2020, it cut 550 jobs.
The large number of job cuts shows how quickly Wayfair needs to start making money. Still, some experts say that even bigger drops could happen if the drop in demand lasts.
In August, Zachary Fadem, an expert at Wells Fargo, said that Wayfair might have to lay off up to 30% of its staff. The cuts announced on Friday show that the company is on track to meet that goal, even if weaker consumer spending keeps hurting growth and profits next year.
At least for now, Wayfair is sticking to its plan to cut costs. Company wants to offer better prices and service to customers by cutting down on management levels and focusing on its best employees. Eventually, when customers feel more sure about spending again, the company hopes to turn things around and show stronger revenue and profit trends.