Wayfair Missteps in Employee Walkout
By Joshua Smyser-DeLeon
Summary of the Wayfair Walkout
Wayfair is a Boston-based e-commerce website that sells furniture and other home decor. They use a drop ship model to get their products into the hands of customers. A drop ship model is when a retailer buys a product, ordered by a customer, from its suppliers and has that product shipped to the customer that placed the order. For example, when you buy a lamp from Wayfair, Wayfair will buy that lamp from a supplier and have it shipped to you for the price you agreed to pay via their website. This means they never physically have the products they sell. With this model, Wayfair is able to sell over 14 million items. It has 11,000 suppliers as well as five additional websites Joss & Main, AllModern, Perigold, and Birch Lane. In 2018 alone, it made $1.5 billion in gross profit (Wischhover, 2019).
In mid-June 2019, Wayfair employees discovered that the Baptist Child and Family Services (BCFS), a detention center operator, placed a $200,000 bedroom furniture order. This bedroom furniture was for a migrant detention center housing children in Carrizo Springs, Texas (Bhattarai, 2019). In reaction, on June 21st around 540 Wayfair employees signed and sent a letter to executives challenging the ethics of the current and future B2B sales (Mabud, 2019). Executives responded with their own internal letter acknowledging the concerns of their employees, but that the order would still be fulfilled. In response, over 500 employees staged a “Wayfair Walkout” to protest the company’s business conduct on June 26th.
A Twitter account, @wayfairwalkout, was also created and the following demands were tweeted on the day of the walkout.
commitment to requests made in employee letter
donate profits of sales from BCFS and similar contractors to the Refugee and Immigrant Center for Education and Legal Services (RAICES)
stop doing business with BCFS and similar contractors
create a code of ethics for B2B sales
It is worth noting that these were not disgruntled employees. Organizers were quoted as saying, “We love Wayfair & working there. We don’t want to smear the CEOs. We just want to be able to feel proud of the work we do there.” (Matsakis, 2019). After the walkout, Wayfair still continued with the sale. Steve Conine and Niraj Shah, co-founders of Wayfair, announced a donation of $100,000 to the American Red Cross, not RAICES, in another letter to employees (Klar, 2019).
Reaction to the Wayfair Walkout
The “Page Principles” of telling the truth, proving it with action, and conducting public relations as if the whole enterprise depends on it could have all helped Wayfair navigate this situation (The Page Principles, n.d.). Let’s start with telling the truth.
Tell the Truth: On social media, the walkout gained attention. Unfortunately, Wayfair did not acknowledge the walkout or B2B sale on any of their social media channels. However, users expressed their displeasure with the sale in the comments section of the company’s Facebook, Instagram and Twitter pages. Protest organizers created a Twitter account the day before the walkout with the handle @wayfairwalkout. It had 22,000 followers by the day of the protest (Bhattarai, 2019). Elected officials, such as Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Sen. Elizabeth Warren (D-Mass.), added their voices to the discussion as well.
The employees that took part in this protest may have only represented 10 percent of the Wayfair workforce, but they were able to bring national attention to the ethical dilemma corporations may face when doing business with government contractors, especially as it relates to and reflects their stated company values.
In this case, Wayfair missed an opportunity to share why this sale reflected its values to its employees as well as to the public via their social media channels. In its mission statement, the company states that they “partner with organizations that play a meaningful role in creating safe and comfortable living spaces” and that they want to "make home a reality for more of the many people in need of safe shelter and basic household items that help make a home" (Social Responsibility, 2019). The connection could have been made that they are fulfilling this sale because they believe in creating as comfortable a living space as possible for detained migrants due to their belief in it being a basic human need and a foundation for a person’s well-being.
Prove It with Action: Words can only take a company so far. Instead of articulating the connection between the sale to BCFS with their values, Niraj Shah, Wayfair’s CEO, took a defensive stance and stated "it is standard practice to fulfill orders for all customers” and that they “sell to any customer who is acting within the laws of the countries within which we operate." They also intentionally ignored the request of their employees to donate to RAICES and instead donated to the Red Cross, which was half of what they earned from their BCFS sale. Both the words and actions of Wayfair showed a total disregard for their employees’ requests and desired outcomes.
Conduct Public Relations as if the Whole Enterprise Depends on It: They did not consider how the optics of their B2B sales with migrant detention center government contractors may seem to consumers and employees. Due to this, Wayfair opened itself up to criticism. Dedicating attention to consumer and societal trends could have helped avoid this situation to begin with. A 2018 Edelmen Earned Brand Study showed “that nearly two-thirds (64 percent) of consumers around the world now buy on belief” (Earned Brand 2018, 2019). This is up from 2017.
As a company based in the U.S., they would have benefited from educating themselves on the fact that a majority of Americans (62 percent) disapprove of the way migrants are treated at the border (Agiesta, 2019). This potentially translates into nearly 6 out of 10 people in their workforce having strong opinions on anything related to migrant treatment at the border. As of now, the financial effect this may have on Wayfair’s bottomline is yet to be determined. Brand loyalty may be a factor in the company's reported 40 percent more sales compared to last year. However, the company also reported a larger loss compared to last year. A year ago, they had a $100.7 million loss compared to $181.9 million this year (Thomas, 2019). With all the public attention on the company after the walkout, there may be a sense of urgency to invest more money into public-facing communications such as customer service and advertising. Time will tell if this strategy proves effective.
Sources
Agiesta, Jennifer. (2019, 2 July). CNN Poll: Three-quarters of Americans say there's a crisis at the border. CNN. Retrieved from https://www.cnn.com/2019/07/02/politics/cnn-poll-immigration-border-crisis/index.html
Bhattarai, Abha. (2019, 26 June). ‘A cage is not a home’: Hundreds of Wayfair employees walk out to protest sales to migrant detention center. The Washington Post. Retrieved from https://www.washingtonpost.com/business/2019/06/26/cage-is-not-home-hundreds-wayfair-employees-walk-out-protest-sales-migrant-detention-center
Earned Brand 2018. (2018, 2 October). Edelman. Retrieved from https://www.edelman.com/earned-brand
Klar, Rebecca. (2019, 26 June). Wayfair to donate $100,000 to Red Cross after employee protest over furnishing border facilities. The Hill. Retrieved from https://thehill.com/latino/450493-wayfair-to-donate-100000-to-red-cross-after-employee-protest-over-furnishing-border
Mabud, Rakeen. (2019, 12 July). Two Lessons From The Wayfair Walkout. Forbes. Retrieved from https://www.forbes.com/sites/rakeenmabud/2019/07/12/two-lessons-from-the-wayfair-walkout/#28c925cf3a88
Matsakis, Louise. (2019, 26 June). Wayfair Employees Are Walking Out. Here's Why. Wired. Retrieved from https://www.wired.com/story/wayfair-walking-out-border-detention
Social Responsibility. (n.d.). Wayfair. Retrieved from https://www.wayfair.com/v/about/social_responsibility
The Page Principles. (n.d.). Arthur W. Page Society. Retrieved from https://page.org/site/the-page-principles
Thomas, Lauren. (2019, 1 August). Wayfair shares whipsaw as costs build up and loss widens. CNBC. Retrieved from https://www.cnbc.com/2019/08/01/wayfair-reports-fiscal-q2-2019-earnings.html
Wischhover, Cheryl. (2019, 28 August). Wayfair, the internet’s massive online furniture store, explained. Vox. Retrieved from https://www.vox.com/2019/8/28/20833645/wayfair-many-brands-websites