On a quarterly earnings call with investors, Wayfair executives shared how the retailer is approaching artificial intelligence broadly and agentic AI specifically.
Cofounder and CEO Niraj Shah said one side of Wayfair’s entry into the agentic AI space is through advertising. Wayfair has been an early partner with Meta, Google and Pinterest in developing ad units, he said. It is still working on betas with those companies, he added.
Kate Gulliver, chief financial officer and chief administrative officer, said Wayfair is also using AI with the goal of improving customer experience. In addition to off-site shopping through recent retail integrations with platforms such as ChatGPT, Wayfair is also taking a first-party approach to AI, Gulliver said.
That includes leveraging AI to improve how Wayfair merchandises its products, according to Gulliver. She also noted that Wayfair’s software engineers have been using “various forms of machine learning for years.” They use AI to “accelerate” how the consumer discovers and engages with the retailer’s website, she stated.
Wayfair ranks No. 11 in the Top 2000 Database, Digital Commerce 360’s ranking of North American online retailers by annual ecommerce sales. Wayfair is also the highest-ranking Housewares & Home Furnishings retailer in the Top 2000.
How is Wayfair using AI in-house?
Shah said Wayfair has deployed generative and agentic AI for different use cases.
“We’re not just experimenting with AI, we’re actively using it to widen our competitive moat,” he said. “In Canada, localization is critical, particularly for our French-speaking customers in Quebec.”
He said translating and merchandising a catalog with millions of items was historically “a monumental, highly manual task.” It requires nuance and interior design context. Now, Wayfair is leveraging AI capabilities for merchandising and product detail page (PDP) translations.
Wayfair is also using AI to speed up the time it takes to launch new products on its site, he said. In the U.K., specifically, it’s using agentic AI to enrich its catalog data — a functionality it initially built for its U.S. business. Wayfair’s AI agents automatically enrich and correct product attribute details across tens of thousands of products, he added.
CEO: Wayfair wants to shape agentic AI
“We want to be everywhere,” Shah said. “We want to be there early, and we want to help shape the direction. That’s the way we think about agentic commerce.”
Similar to its AI-based advertising approach, Wayfair has been an early partner with technology companies on agentic commerce.
“We’re early in partnering with them all,” he said.
He specifically mentioned Perplexity, OpenAI and Google. With Google, Wayfair has begun using Gemini, which includes using it for shopping via the Universal Commerce Protocol (UCP).
Google and Shopify co-developed the UCP. It determines how agentic AI and ecommerce platforms can interact. In late March, Shopify made its brands shoppable inside ChatGPT.
Shah noted that the traffic levels surrounding agentic AI platforms are still minimal.
“They’re very small,” Shah said. “A lot of people talk about the growth rate of that traffic with a high percentage, but that is a little bit misleading because you have to put a high percentage on a very low number.”
Wayfair’s view toward agentic commerce
Shah said he expects agentic commerce to primarily impact three categories of goods:
- Items that AI agents can easily replenish for users. He gave examples of paper towels and dish soap.
- Commodities like phone chargers. He said consumers would use AI agents to find inexpensive yet high-quality products.
- Technical items. He gave the example of finding a premium television. Consumers might tap their AI agents to find the best one based on their budget, especially when they’re agnostic to the brand and seek only the best value and quality.
On the other hand, Shah noted that categories like fashion, beauty and home are where consumers learn through the process of shopping.
“There’s a lot of emotion there, and consumers actually don’t want to own the same items as each other,” Shah said.
He also noted that consumers might use agentic commerce platforms for inexpensive furnishings, giving the example of seating. In addition to Wayfair, he said, consumers could shop for barstools from Amazon, Walmart, Target, Temu and TikTok Shop.
But there’s no margin in that volume, he said. And that volume is not where retailers differentiate themselves, he added.
“It’s hard for folks to move up-market or down-market if that’s not what they’re known for and not what they specialize in, if that’s not where their supplier base is, and that’s not the type of goods that they know how to merchandise and sell,” Shah said. “So I don’t know that agentic enables that movement.”
Using agentic AI as a value proposition
An analyst on the earnings call inquired about whether Wayfair sees a scenario in which importers and wholesalers go directly to customers, using agentic AI platforms to reach them. He also asked if Wayfair’s expanding loyalty program factors into such a situation.
Shah said that, in addition to growing spending from customers, loyalty from the retailer’s perspective is also about not repeatedly paying advertising costs. Rewards programs are a way for the retailer to “give the value to the customer,” he explained. That incentivizes the customers to return directly to retailers.
“So that’s the trade there,” he said. “In terms of suppliers wanting to go direct to customers, there’s basically a few big problems with that notion. And they’re obviously welcome to do that. But the problem they find is that it’s expensive to reach the customers.”
He said suppliers can have “a relatively narrow catalog in the context of how customers want to shop the category overall.” But the biggest issue, he said, is customer service and logistics. He said it’s difficult to deliver home furnishings economically and in a way that avoids damage.
That’s why suppliers in the home furnishings category don’t typically sell directly to consumers, he said. That differs from apparel, where the delivery and returns are logistically simpler — fairly trivial, according to Shah.
“And so that’s a big hurdle for these folks,” Shah said. “So I don’t think anything around agentic would change how the supply chain would operate.”
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