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However, the Wayfair team struggled to get inventory into CastleGate because of costs from the customer side. Customers had to pay storage fees, and inventory got locked into Wayfair. If it was within supplier warehouses, they could sell through other channels, not just Wayfair, like Amazon and Walmart. Issues started to arise, such as inventory aging in CastleGate. That's when they considered offering multi-channel options to suppliers and began piloting it. I joined Wayfair around that time. One of my peers started the multi-channel pilot, and we encountered many technical issues, particularly with workflows and order processing from suppliers. It was chaotic at that time.
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Another impetus was the low penetration of CastleGate, which was at a multi-year low. Walking into a warehouse, you could see a small portion with activity, while the rest was empty. Empty conveyor belts highlighted the cost. They explored ways to improve penetration, including multi-channel, enabling multi-box products in CastleGate, reducing storage fees, and removing pick-pack and shipping fees. Multi-channel seemed to have the potential for the biggest impact on CastleGate penetration. This made it more relevant for leadership to focus on bringing this offering on par with others.
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