And the third one, which you’re asking about is the tender-neutral loyalty program. And the tender-neutral loyalty program, the way to think about it today, what we have for a loyalty program, all the benefits of the loyalty program are associated with having the Wayfair credit card. So, you have to get a Wayfair credit card, either the Mastercard that’s co-branded with Citibank or just the Wayfair-specific store-based credit card. And then there’s different rewards benefits that are associated with that. But we don’t have a broad-based loyalty program that works regardless of how you choose to pay. And we think that there’s a real opportunity for that, which could also help us not just provide customers with enhanced benefits, but help make us the more top of mind place for all things home.
So it creates significant incremental revenue and drive significant profit. So, we’re going to launch that later this year. We’ve internally of kind of figuring out the framework of what that is, but we need to build the technology to support it and the marketing plans for it and to roll it out. So that’s coming. But the reason I referred to it is we know that customers love us and we think, A, there’s an opportunity to deepen their understanding of what we do. That’s where the marketing campaign comes in. And we also think there’s a lot of things we can do to just cause them to come to us far more often. And that’s where the tender-neutral loyalty program plays a big role.
Oli Wintermantel: All right. Thanks very much. Good luck.
Niraj Shah: Thank you.
Operator: Your final question comes from the line of Curtis Nagle from Bank of America. Your line is open.
Curtis Nagle: Good morning. Thanks for taking the question. Kate, just if you go back to 1Q and the guidance, just curious if you could go through is kind of the range of outcomes within the mid-single, sorry, the low single-digit EBITDA, how much is that based on the ranging of the gross margin? How much of that is revenue, right? I think anticipation is it continues into low singles. So, mid-single, so if that got better, what would that mean? But just walking through kind of the most important or the biggest things that could drive variability within that low single would be really helpful.
Kate Gulliver: Yes. So, obviously, we’re somewhat unique about the first quarter. We’re guiding somewhat seven weeks into the quarter. We said the trend on revenue is quarter-to-date that negative mid-singles. Obviously, if trend on revenue improves, certainly, you see more flow through, right? And that could be a variability on the bottom line. But generally speaking, that’s what we’ve seen so far quarter-to-date, we’ve maintained that 30 to 31 guidance range on gross margin. You’ve seen that hit that very consistently over the last several quarters. And then obviously, on the AC&R and the ad spend, that being another line that you’ve seen us bring that into that 11.5, 12.5 very consistently over the last several quarters, those being two of the more somewhat variable pieces there.
Certainly, if revenue were to accelerate from here, would you see more flow through to that low single-digit number? Absolutely. But I’d again point you to the fact that we’re in the third week of February, we’re into the quarter and we see negative mid-singles at this current time.
Curtis Nagle: Got it. Make sense. And then just a quick follow-up on the AOV. It sounds like it was impacted and certainly more than you expected from, I think you said mix. But could we just dig a little bit more into what the change — the theoretical change? Was it anything you did or anything, I guess, a customer perspective?
Niraj Shah: Yeah. So I think the thing about AOV, I think what I was trying to describe is actually the real phenomenon AOV over the last 1.5 years has actually been that all the ocean freight inflation then reversed and have come back out. And as that’s come back out, you’ve seen AOV drop. That’s been the primary driver of AOV, but then as you start anniversarying where it drops. So in other words, it started dropping in the fourth quarter 2022 the subsequent drop to the following year is not going to be as high because a lot of the drop had already happened, right? And so we’re just in the latter stages of anniversarying that deflation coming out. So over the next couple of quarters, that — all that deflation will come out a year ago, and so that AOV will not really be moving for that reason anymore.
And what I was trying to say is that AOV can move for many reasons, right? It can move for mix of our brands. It can move for category mix. It can move from a mixture to seasonality. And those are primarily the things that move AOV. It’s just that the phenomenon over the last year where it’s come down a lot, is due to the deflation and we’re nearing the end of that. And so you should expect AOV to not necessarily drop as much because we’re now finishing the anniversarying of that AOV. So that was more just kind of the question I was trying to answer earlier.
Curtis Nagle: Okay. Got it. Thanks very much.
Niraj Shah: Thanks. And so I just want to thank everybody for joining on the call. One more plug, just to encourage you to read our shareholder letter, which is on our Investor Relations website, which we think you’ll enjoy. And obviously, we think we’re poised for really great things both in the tough macro, while we can take share. And then as things recover, obviously, significant EBITDA gains to come this year regardless of the environment. And we’re seeing great customer success. So thank you very much for your interest in Wayfair.
Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.
