#prad564

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

Antoinette Iacullo 

SUMMARY OF THE BRAND

New York-based ecommerce beauty startup, Glossier, launched online in 2014 with just four products. It has since expanded to a full line of skincare, makeup, body & fragrance products.  It closed a Series C round of funding earlier this year, raising $52 million, bringing total funding to $86 million (Mandell, 2018). Rumors of an initial public offering began to simmer after the last funding round (Basin & Wolf, 2018).

Communication to Stakeholders (February 22, 2018)

Glossier’s valuation reached $390 Million this year (Olsen 2018).Traffic is heavy, both literally and digitally— Its flagship NYC store does more sales per square foot than the average Apple Store (Gingras 2018) and there are more than two million unique visitors a month to the brand’s beauty blog, Into the Gloss (Bhuiyan 2018).  

Dear Tech People reports 79% of Glossier’s staff is female, including its CEO, Emily Weiss.  Weiss, 33yrs old, went from Teen Vogue Intern to beauty blogger to the ‘Estee Lauder for millennials’ in roughly three years (Mandell 2018). You may remember Weiss from her cameo as Super Intern on the MTV series ‘The Hills.’

Above: Then, 2007. 

Below: Now, 2018.

Photograph by Ben Hassett 

Emily Weiss (Glossier) & Kirsten Green (Forerunner Ventures) | Disrupt SF

Another titan of retail, Katrina Lake, Founder and CEO of Stitch Fix, the youngest female founder to take a company public, joined Glossier’s board of directors in June. Lake is the first independent director to join the board, which includes Weiss, Glossier president Henry Davis and three venture capitalists (Del Rey, 2018).

Glossier is simultaneously innovating and disrupting ecommerce, with its tech-forward, direct-to-customer product and communication business model.  It has a strong brand identity, synonymous with ‘Millennial pink’ and minimalist aesthetic, with a mission to serve as a conduit for connection. Glossier’s value is not in the sheer scale of its user base, rather, the social activity happening on its user network (Andjelic, 2018). And I would argue, much of Glossier’s value is  its People Capital.

MY MUSINGS & REACTION

In a study of the 4-year old startup, via the lens of The Page Principles, ‘Manage For Tomorrow’ and ‘Listen to Stakeholders’ are seemingly embedded in Glossier’s core tenets. Meanwhile, ‘Conduct public relations as if the whole enterprise depends on it’ is a work in progress for this rapidly evolving Brand. And one I believe will only become more challenging, given Glossier does not appear to have a Chief Communications Officer; Instead, Weiss serves as the foremost voice and image of the Brand.  

Manage For Tomorrow

Weiss believes “we’re really at the dawn of ecommerce,” which makes up just about 10% of global commerce (Olsen, 2018). “My job is to be thinking 12 months to two years ahead,” she writes in an ITG blog post (https://intothegloss.com/2016/01/meet-emily-weiss/).

Glossier quietly acquired Montreal Digital agency, Dynamo, at the close of 2017. Dynamo helped Glossier with its U.S. launch, developing its website and ecommerce platform. Following the acquisition, Dynamo Co-Founder Bryan Mahoney was named CTO at Glossier (Kolm, 2018).

With the additional venture capital funding injected in February, Glossier is preparing to enter “Phase Two,” creating a social-commerce site.  Though Glossier’s Instagram account has roughly 1.5 million followers, Weiss wants to build her own version of a social media and shopping mashup and she hired Keith Peiris, a developer who led teams at Instagram, Facebook Inc., and Oculus, as Glossier’s product chief to spearhead the new site (Perez, 2018).

Listen to Stakeholders

Glossier launches a new product every six weeks, on average, and spends a lot of time working on its formulas and engaging in two-way conversation between product teams and its user community. For example, crowd-sourcing input to co-create its cornerstone product, Milky Jelly Cleanser and inviting 100 of Glossier’s top customers to participate in a Slack channel, exchanging thousands of messages weekly.  “That’s the difference between a marketing tactic and actually having your customer engaged in your process and your brand,” says Weiss (Chapin, 2016).    

How to not conduct PR as if the whole enterprise depends on it

Glossier has been criticized for not being particularly concerned with explaining the science behind its products, “Weiss just doesn’t think her customers care about ingredients if they’re happy with the results,” according to a spokesperson for Glossier (Larocca, 2018). But Glossier claims that its lack of transparency is a matter of safeguarding business assets.

Glossier received backlash in response to its Instastory thread, which promoted the benefits of Glossier’s Solution, a chemical exfoliating toner, while slamming competing products from industry-revered brands, like Biologique.  Many felt Glossier was ill-positioned to opine on other acid formulas when the percentages of its proprietary acid blend are not disclosed. Further, Glossier’s authoritative voice on chemical products felt ingenuine, when fragrance, a known skin irritant, is a listed ingredient in Glossier’s Solution. Further hypocritical, Glossier threw shade at the same competitors that it previously lauded on Into the Gloss.  

Luckily, Glossier’s brand image of inclusivity and transparency seems largely intact since its very off-brand misstep, but as Warren Buffet has cautioned, it takes significantly less time to ruin your reputation than it takes to build it. 

SOURCES

Andjelic, A. (2018, October 19). Opinion: The ‘4 Cs’ of the modern beauty     brand. Glossy. Retrieved from http://db.glossy.co/platform-effect/opinion-the-4-cs-of-the-modern-beauty-brand

Bhasin, K. & Wolf J. (2018, August 30). Inside Glossier’s plans to shake up your makeup routine. Bloomberg. Retrieved from https://www.bloomberg.com/news/features/2018-08-30/millennial-makeup-brand-glossier-shakeup-makeup-routine

Bhuiyan, J. (2018, September 18). Emily Weiss wants Glossier to own the online beauty conversation. Recode. Retrieved from https://www.recode.net/2018/9/18/17869814/glossier-emily-weiss-makeup-beauty-engagement

Chapin, A. (2016, January 11). Emily Weiss explains why people are freaking out about Glossier. Racked. Retrieved from https://www.racked.com/2016/1/11/10749536/glossier-emily-weiss-into-the-gloss-new-cleanser

Del Rey, J. (2018, June 26). Stitch Fix CEO Katrina Lake has joined the board of Glossier. Recode. Retrieved from https://www.recode.net/2018/6/26/17501370/katrina-lake-glossier-board-director-stitch-fix

Gingras, M. (2018, April 18). While retail’s behemoths die, these 4 retailers are rising from their ashes. Entrepreneur. Retrieved from https://www.entrepreneur.com/article/312112

Kolm, J. (2018, March 2). Glossier acquired Dynamo. Strategy.  Retrieved from http://strategyonline.ca/2018/03/02/glossier-acquires-dynamo/

Larocca, A. (2018, January 8). The magic skin of Glossier’s Emily Weiss. New York Magazine. Retrieved from https://www.thecut.com/2018/01/glossier-emily-weiss.html

Mandell, J. (2018, February 22). Glossier just got $52 million in fresh capital, bringing total funding to $86 million. Forbes. Retrieved from https://www.forbes.com/sites/jannamandell/2018/02/22/glossier-just-got-52-million-in-fresh-capital-bringing-total-funding-to-86-million/#1a1dd56412b6

Olsen, D. (2018, September 2018). The changing face of beauty brands in an Instagram-obsessed world. PitchBook. Retrieved from https://pitchbook.com/news/articles/the-changing-face-of-beauty-brands-in-an-instagram-obsessed-world

Summary

On August 8, 2016, Delta experienced a crash of its computer systems which led to the cancellation of thousands of flights worldwide. For an airline known as the second largest in the world, it was a problem of epic proportions. The ensuing crisis lasted for 3 days, affected many passengers across the globe and resulted in the cancellation of more than 1,000 flights on the first day and around 1,000 more flights on subsequent days (DiPietro, 2016). The crisis caused confusion, delays and financial losses for Delta and its customers. Within hours of the onset of the crisis, customers reacted by unleashing about 43,000 tweets on Twitter instead of the usual 3,600 social conversations (Carey, 2016).

Delta initially explained that the problem was due to a power outage. Georgia Power promptly denied the charge, stating that the problem was due to Delta’s failed switchgear (Scott & Nomiyama, 2016). Delta later stated that the problem arose from a power surge to its transformer and the failure of its critical systems to switch to backup. It apologized and offered travel waivers to customers who want to reschedule their flights. It also offered $200 travel vouchers as compensation to those affected (News.delta.com, 2016). Below is a brief timeline of how the crisis unfolded and Delta’s response.

Monday, August 8, 2015

2:30 AM – Delta suffers loss of power. Computer systems crash occurs, affecting operations.

5:11 AM – Delta acknowledges power outage and puts in place a ground stop. It later lifted the ground stop and said limited departures are resuming. 

6:39 AM – Using its Twitter feed, Delta tells customers headed to the airport to expect delays. It informs them that there might be a lag time in display of accurate flight status on its website and app.

11:08 AM – Georgia Power denies responsibility for the outage. Its spokesman John Kraft said, “It was a failure of Delta equipment, adding, there wasn't an area power outage and the Delta problem did not affect other power customers” (Scott & Nomiyama, 2016, para. 2).

11:48 AM – In a video apology, Delta CEO, Ed Bastian, gives an update and addresses distressed customers while speaking from the operations and customer center in Atlanta.

5:26 PM – Delta announces the offer of $200 travel vouchers to compensate to all customers who have experienced a 3+ hour delay or cancellation.

Tuesday, August 9, 2016

5:37 AM – Delta announces the cancellation of more flights. It also announced continued travel waivers and asked customers to check their flight status online.

12:25 PM – In a press release posted on its news hub, Delta’s COO, Gil West gives an update on the situation. He said the cause of the systems crash was a power surge to a transformer and the inability of its critical systems to switch to backup. He explained that this was causing slowness in the system for check-ins, boarding and dispatching of aircraft. It is also affecting pilot and flight attendant rotations.

5:08 PM – In a new video statement, Delta CEO, Ed Bastian gives another apology saying, “This is not who we are.” He assured customers that the system is now running slowly and the company will do everything to avoid a similar situation in the future.

Wednesday, August 10, 2016

6:48 AM – Delta gives more updates to customers and asks them to check their flight status online. It extends its offer for travel waivers and compensation until August 11.

9:27 AM – Delta says 80% of departures are leaving within 30 minutes of departure time.

12:57 PM – Delta says its operations are now back to normal.

Reaction:

I think Delta acted quickly and responsibly in its response to the crisis. With all its systems down, it began communicating with its customers and the media using its dedicated news hub and social media channels like Twitter and Facebook. Within hours, the CEO gave an apology. This appeared effective as it cleared the initial speculation that the company was hit by hackers. The company engaged with its customers by offering travel waivers and compensation to those affected. I believe the CEO’s video apology followed by a press release by the COO helped to calm some nerves. In essence, Delta quickly owned the problem, worked on solutions while considering its affected stakeholders. I think the company had a crisis plan in place and kept up timely communication efforts all the way through the crisis. It is instructive to note that Delta’s share value during the crisis only dropped slightly from $37 on August 8 to $36 on August 12. It now stands at $39 per share (Yahoo Finance, 2016).

On the other hand, Delta seemed to downplay the problem in the early stages without being sure that a solution was in place. It could have avoided the situation that led to its unnecessary confrontation with Georgia Power. In addition, it delayed the offer of compensation to customers for a while. This could have had more impact if it was announced during the CEO’s first apology video. Finally, the CEO was not specific about what steps the company would take to reduce the vulnerability of its computer systems. His promise was simply that everything would be done to ensure that such a situation does not arise in future.

Page Principles:

Tell the truth.

After its initial effort to downplay the situation and shift blame, Delta was generally truthful in the way it handled the crisis. It owned the problem and communicated with passengers. It sent out advisories on what to expect and what passengers could do while reassuring them that the company was working on a solution to the problem.

Prove it with action.

Delta did not only communicate, it acted with sincerity to find real solutions to the problem. The CEO apologized twice and demonstrated sincere regret by offering travel waivers and compensation to those affected by the delays and cancellations. The company considered the outcome of the computer crash on its customers and took concrete actions that could alleviate it.

Listen to the customer.

The major focus of the airline during the crisis were its stakeholders, especially its customers. Using its social media channels, it tried to communicate with them and addresses their concerns. It referred them to agents to rebook their flights, put some in hotels, offered drinks and pizza and sought out ways it could make things easier for them. It worked hard to rectify the problem and ameliorate the concerns of its stakeholders.

Manage for tomorrow.

Delta and its management certainly know that the future of its business depends a lot on sustaining the loyalty of its passengers and other stakeholders. Delta pulled out all the stops and offered compensation to its customers for the inconveniences they suffered. Though there might be big short term financial losses due to this decision, it shows clearly that Delta had its eyes on the future and is focused on keeping the loyalty of its customers in the long term.

– – –

References

Carey, S. (August 8, 2016). Delta meltdown reflect problems with aging technology. The Wall Street Journal. Retrieved from http://www.wsj.com/articles/delta-air-lines-says-computers-down-everywhere-1470647527

Dipietro, B. (August 22, 2016). Crisis of the week: Delta grounded after computer crash. The Wall Street Journal. Retrieved from http://blogs.wsj.com/riskandcompliance/2016/08/22/crisis-of-the-week-delta-grounded-after-computer-crash/

Facebook.com. (August 8, 2016). A message from Delta CEO Ed Bastian: ‘This isn’t who we are’. Facebook. Retrieved from https://www.facebook.com/delta/videos/1268434493175730

Isidore, C., Mullen, J. & Sutton, J. (August 8, 2016). Travel nightmare for fliers after power outage grounds Delta. CNN Money. Retrieved from http://money.cnn.com/2016/08/08/news/companies/delta-system-outage-flights/

News.delta.com. (August 9, 2016). Chief operations officer gives Delta operations update. Delta News Hub. Retrieved from http://news.delta.com/chief-operating-officer-gives-delta-operations-update

News.delta.com. (August 9, 2016). Delta CEO Bastian: This isn’t who we are. Delta News Hub. Retrieved from http://news.delta.com/delta-ceo-bastian-isn-t-who-we-are

News.delta.com. (August 10, 2016). Compensation offered for customers affected by cancel, delays. Delta News Hub. Retrieved from http://news.delta.com/compensation-offered-customers-affected-cancels-delays

Scott, A. & Nomiyama, C. (August 8, 2016). Georgia Power says Delta Airlines equipment failure led to outage. Reuters. Retrieved from http://www.reuters.com/article/delta-air-outages-georgiapower-idUSL1N1AP0QT

Twitter.com. (August 8, 2016). CEO Ed Bastian apologizes to customers for the disruption to the airline's operations today. Twitter. Retrieved from  https://twitter.com/deltanewshub/status/762707203207761920