By Craig Giammona
FORTUNE -- Wayfair.com could have gone public by now. Some might say should. The Boston-based online retailer generated $600 million in revenue in 2012 and an IPO would create liquidity for Wayfair's 1,300 employees, not to mention boost the company's position in the online home furnishings market.
But the company's co-founder and CEO Niraj Shah is not ready to pull the trigger quite yet. "It's certainly something we think is in our future," Shah says. "There are a few more things we want to accomplish while we're private first."
Specifically, Shah wants to do more to develop Wayfair's brand to generate customer loyalty. The company, which started as dozens of virtually anonymous websites that were consolidated under the Wayfair name in 2011, is not quite a year into a major television advertising campaign. Shah is also pushing the company to develop more custom products. "We've dipped our toe into that market and want to start aggressively doing more over the next six months," Shah says.
Wayfair continues to grow and carve out a space in the online furniture and home décor market, estimated at about $20 billion a year in the United States. Revenue was up 40% over last year in the first quarter of 2013, and Shah says Wayfair could end 2013 with revenue in the neighborhood of $1 billion. (The company is profitable.) Based on that growth and its recent press offensive, Forrester Research analyst Sucharita Mulpuru believes an IPO is coming sooner rather than later. "They've never been as open and transparent as they are right now," says Mulpuru. "There's always an ulterior motive."
Part of that motive would be profit: Four private equity firms injected $165 million into Wayfair in 2011, the first time Shah and his co-founder Steve Conine raised funds from investors after bootstrapping with no VC money for the first nine years.
Wayfair investors agree with Shah that's there's no rush to go public. "Clearly, it's a company that could be public if we wanted," says Michael Kumin, a managing partner at Great Hill Partners, one of the four Boston firms that invested in Wayfair. "The business is well capitalized, it doesn't need to be public. We're making a lot of investments in the future, and we continue to assess whether it makes sense, and when. We certainly don't feel any urgency."
Ian Lane, of HabourVest Partners, another firm with money in Wayfair, said the ball is in Wayfair's court when it comes to a potential IPO. "We think Wayfair can be a publicly traded company at a time of its choosing," he said. "The company has always benefited from maintaining a long-term perspective, and we view a public offering as just another stage in Wayfair's growth story."
Shah wants Wayfair to become a household name in the market for home products, the eventual first stop for a 45-year-old housewife in Atlanta looking to buy a new table or update her accent pillows. As part of this drive, Wayfair has ramped up its hiring of in-house designers to work on custom brands that will be manufactured specially for sale on the site. The company is currently selling goods under the brand Castleton Homes, and plans to expand its custom offerings over the next few months, Shah says.
There's also the issue of getting the company's name out there. After years of growing its business in virtual obscurity -- customers were using a number of different websites run by Shah and Conine but couldn't identify their company -- Wayfair is seeing more repeat shoppers. It spent $1 million on advertising in the fourth quarter of 2012, and that number continues to grow. Still, it can be tough to build a home décor brand without a celebrity endorsement -- think Kathy Ireland or Martha Stewart.
Wayfair, which began as CSN Stores in 2002 -- Shah admits the name conjured a "faceless corporate holding company" -- has never had to be sexy in the past. The products it sells are, for the most part, functional. It is a site that thrives by offering good selection and reliable customer service. Wal-Mart (WMT), Target (TGT), and Amazon (AMZN) are big players in the online market, but they don't focus on furniture, perhaps leaving the door open for Wayfair. "The big names in this space haven't really taken a crack at it," Mulpuru says. "With the home, it's aesthetics and inspiration."
Shah acknowledges that certain home products are difficult to sell online -- couches for example, because people want to sit on them before making a purchase. But he thinks online furniture shopping will continue to grow as millennials age into the home market. Currently, an estimated 8% of furniture and home décor sales occur online. Shah sees that number potentially hitting 20% in the near future.
But research from NPD Group shows only a slight uptick in the online market for home items over the last year. In the category "kitchen and dining," NPD found that 11% of purchases were online from June 2012 to May 2013, compared to 7% over that same time period a year ago. In the "bed" and "bath" categories, the gains were even more modest -- 1% and 2% increases, respectively. "Heavy durable goods, items where it's a risk getting it into the house, are going to be one of the last categories," says analyst Mulpuru. That's why furniture is a challenge for the web."
Mulpuru sees Wayfair's biggest potential for growth in wedding registries, a major driver of home purchases online. "They're well-positioned to do a lot of things," she says. "The biggest one is the brand -- nobody knows who the heck they are."
"Nobody" is probably a stretch, but it does take time for a brand to grab the public's attention, and Wayfair didn't grab much name recognition in its many years as a network of sites run under the umbrella of CSN Stores. Kumin, the Wayfair investor, estimates it could take $60 million to $100 million in "mass market" advertising over a period of three years to truly establish Wayfair as a distinct brand. An IPO would probably grab some headlines too.
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