It looks like another 'retailer' is about to be 'Amazon'-ed. Wayfair - the retail household goods seller - is tumbling this morning after Amazon reportedly pitches a new furniture seller program. Additionally, not helping the stocks, Citron's Andrew Left goes negative on the stock, comparing the company's controls to Madoff.
Speaking to about 40 retailer members of the Furniture Marketing Group buying group here, Amazon representatives in the furniture category said the e-commerce giant hopes to launch the new “Unified Delivery with Services” change to its platform late in the third quarter.
Under the plan, furniture sellers, such as stores, won’t be required to sell nationwide. The retailers will set their own pricing that can change with the services an Amazon customer chooses. White glove delivery (to a dry room) is the bare minimum service requirement — no drop-off at the door — but retailers can offer additional services, including delivery to the customers’ “room of choice,” set-up and haul away.
And the cost: Amazon is asking for a $39.99 monthly fee for an unlimited number of listings as well as 15% on the product sale and 20% on the services, according to Brett Hobson, Amazon business development representative in the furniture category. He added that retailers can choose to roll their services into the product price and offer just one price to customers for that 15% fee. However, in that case, Amazon shoppers wouldn’t see a menu of service options.
The result is not good...
And was not helped by Citron's Andrew Left comparing the company to a ponzi scheme...
Wayfair may have buyers excited about rock-bottom prices for home goods, but its business model is unsustainable, Citron Research analyst Andrew Left says.
"The accounts payable, the cash flow, the business model – it's stupid," Left said in a phone interview with Real Money. "They'll never make money."
Left, a notable short seller, says shareholders should be alarmed that a company of Wayfair's size, with more than 10,000 suppliers, uses manual internal controls, or does accounting by hand instead of automation. He compared the process to that used by convicted Ponzi? schemer Bernie Madoff, who personally supervised his company's manual process.
In other areas of concern to Citron, Boston-based Wayfair’s accounts payable comprises 50 percent of its total assets and are 10 percent more than its revenue. Its accounts payable is also more than its $100 million cash on hand, Left says in an unpublished report obtained by Real Money.