Why it matters:
- Wayfair is one of the top furniture and home retailers in the United States, with over $10 billion in U.S. sales.
- It had 21 million active customers in 2024 and a global network of more than 20,000 furniture suppliers offering over 30 million products.
- New artificial intelligence (AI) search enhancements are driving customer engagement, with the company recently reporting its highest growth rate since 2021.
Online home-goods retailer Wayfair has been an early adopter of AI and machine learning since its founding, when it used those tools for customer acquisition and to track, ship, and market the millions of products it offers.
Now, the online furniture and home retailer is poised to leverage more powerful AI tools to fast-forward its product discovery and search capabilities.
The advances in AI in recent years have the potential to be game-changing for Wayfair and other retailers, Fiona Tan, Chief Technology Officer at Wayfair, told CO—.
“You can go from a very static ‘here’s a search bar: type in three words,’ to much more immersive experiences that honestly you couldn’t do easily before,” Tan said.
Because Wayfair sells furniture, a category where online customers typically don’t look for specific brands but search for items such as “a green sofa” or “medium wooden coffee table,” Wayfair invested in AI early on to help scan thousands of inventory items and present various “green sofa” options, for example, to its customers.
It also had to be able to take product images supplied by its thousands of vendors and give them a uniform presentation online.
As a result, it was using early versions of AI vision models and text models before the current AI boom was sparked by the release of ChatGPT in November 2022.
Now, because “there are so many more capabilities that are available that we can leverage, what you are seeing are even better customer experiences, because we can take advantage of the latest advancements,” Tan said.
[Read more: Key Solutions Retailers Are Focusing on to Drive Growth This Year]
The advances in AI in recent years have the potential to be game-changing for Wayfair ... “You can go from a very static ‘here’s a search bar: type in three words,’ to much more immersive experiences that honestly you couldn’t do easily before.”Fiona Tan, Chief Technology Officer at Wayfair
New tools let customers get inspiration and turn ideas into purchases
This year, Wayfair has added three new ways for customers to search for products and find inspiration for their homes.
It has added two features to its app, Discover and Image Search, and created a customer engagement tool called Muse.
The new Discover tab on the Wayfair app links shoppers to a personalized selection of AI-generated images of decorated rooms, seasonal styles, or design trends. Customers can drive further engagement by tapping on an image to find product listings of visually similar items.
For example, Tan said, a customer can ask Discover, “‘I want to see a mid-century modern room in green,’ and it will start showing you those.” If a customer likes how one of the AI images looks, Wayfair “can show you what products actually will allow you to create the room,” she said.
The Image Search feature lets shoppers take a picture with their phone or upload one from their camera roll and then see a listing of up to 30 of the most visually similar items available for sale on Wayfair.
[Read more: 5 Consumer Trends Shaping Spending Patterns in 2025]
AI-enhanced product discovery: Muse feature shows hundreds of design styles—from Dreamy French Country to Coastal Vibe
The Muse application allows customers to browse hundreds of generative AI created images of decorated rooms and home spaces, grouped according to design styles such as Dreamy French Country or Jewel-toned Eclectic Maximalist. Customers can type in their own inspiration search request, such as “dining with a coastal vibe.”
Each Muse image can be saved for later browsing or used to buy Wayfair recommended items that match the style of the Muse design. After saving a Muse image, users can upload a photo of the room they want to decorate, to see how the selected styles work there.
AI driving higher conversion rates
The number of customers using the Discover tab, which launched in June, is increasing steadily, Tan said. “What we’re finding that’s very encouraging is that the users that engage with [the] Discover experience are much more productive, meaning they convert a lot higher. They spend a lot more time on Wayfair and the conversion [purchase] rate is higher,” she said.
Wayfair was born out of an online store Co-founders Niraj Shah and Steve Conine launched in 2002. That grew into a collected of 250 online sites called CSN Stores, which became Wayfair in 2011. The company went public in 2014.
In terms of furniture and bedding sales alone, trade publication Home News Now ranked Wayfair as the second-largest U.S. retailer in 2024, just behind Ashley Furniture and ahead of third place Amazon.
That ranking doesn’t include other home décor items, but when those are added in, Wayfair rang up $10 billion in U.S. sales in 2024.
Wayfair reports best quarter since pandemic-era boom, as AI-powered features target ‘home retail’s biggest friction points’
Wayfair’s sales boomed during the pandemic year, as online shopping surged across all categories, but it has struggled in recent years as the pace of sales declined.
But in its most recent earnings report, the second-quarter figures released in July, Wayfair posted the best results since the pandemic boom, signaling a return to growth.
Revenue was up 6% year-over-year, the highest growth rate since early 2021.
“From a performance standpoint, Wayfair’s second quarter 2025 results—its strongest top-line growth and profitability since early 2021—demonstrate that these AI-driven improvements are contributing as a pillar to both revenue and margin expansion,” Coresight Research Analyst Madhav Pitaliya told CO—.
Pitaliya noted that Wayfair executives cited AI-initiatives as contributing to “accelerating [market] share capture” in a flat-to-declining home goods market.
Wayfair’s Muse AI-led feature, for one, “allows users to explore imagery, search for various styles, and organize or apply styles to create personalized collections using conversational searches,” and then buy what they find, Pitaliya said.
“By transforming vague style preferences into tangible, purchasable designs, Muse addresses one of home retail’s biggest friction points—shoppers often know the look they want but can’t translate it into product searches,” he said.
Pitaliya also noted that Wayfair has been using AI with its CastleGate logistics network to enable faster fulfillment and better forecast demand.
A challenge facing Wayfair, Pitaliya said, is that “rivals such as Amazon and physical-first retailers like Target and HomeGoods are also investing in AI-enhanced search, fulfillment speed and price competitiveness.”
Wayfair’s Tan said she expects the retailer to roll out additional enhancements to product search in the coming years.
“We now have the world’s smartest companies putting all their energies into building these amazing models that we get to leverage. From a retail perspective we’re going to be benefitting from all the work—the OpenAIs, the Googles, and various other companies are doing,” she said.
“And then leverage it, and use that to really solve what we are trying to do, and help our customers discover and buy things for their home.”
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