Wayfair CastleGate: The Value to Suppliers
Vice President of E-commerce and Strategic Accounts at a Wayfair Supplier
inpractise.com/articles/wayfair-castlegate-operations
Vice President of E-commerce and Strategic Accounts at a Wayfair Supplier
Interview Transcript
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Could you explain in more detail what you mean by pricing policy? How does Amazon violate it, and why doesn't Wayfair, for example?
Wayfair adopts a white-label approach for the products in our active assortment. We allow them to white label, and within our white label policies, there is pricing flexibility. Amazon does not white label, so they are required to adhere to our minimum advertised price. They consistently fail to do so. We aim to limit anything sensitive in our assortment from Amazon to prevent them from breaking our pricing rules, which would cause upheaval in the rest of the channels. Wayfair is the only one that has deeply implemented their white label strategy, giving them more pricing flexibility with our core assortment without potentially violating our MAP policy.
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Why is the number of SKUs you place in CastleGate so low?
We need to be selective about what we put into CastleGate because if demand doesn't meet expectations, we incur penalties in terms of cost. We own the inventory in the CastleGate network and are assessed storage fees. If we have distressed inventory, for example, if we have too much quantity of something, we start to pay more in terms of additional storage fees and costs associated with the program. If we have aging inventory stuck in their network, it becomes a sizable expense for us.
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How do you decide which products to place where?
However, we don't have any control or visibility into where they (Wayfair) decide to place our products in their overall network. Once they take it into a singular facility, whether it's coming from Asia consolidation or from our domestic warehouses, they exclusively decide how to disseminate that product across their warehouse network. We don't have a say in that. This is one area where we, as a manufacturer, would like to have more visibility and input, but it is completely controlled by them based on their data on how they want to redistribute the product throughout their network.
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