Wayfair (NYSE:W) enjoyed close to ideal operating conditions during the initial months of the COVID-19 pandemic. With consumers flush with cash from federal stimulus payments and eager to shift spending toward online purchases for the home, sales soared through the first two quarters of 2020.

That success helped the home furnishings retailer's stock more than triple this year, but the rally has also set a high bar for the business performance in the next few quarters. Investors will get an important window into that performance in Wayfair's Q3 earnings report on Nov. 3.

Let's dive into the metrics that might determine whether the stock keeps rallying into late 2020.

A woman shops using a smartphone.

Image source: Getty Images.

Growth wins

Investors didn't have to squint to see evidence of a major growth surge in Wayfair's last few reports. Sales in the first half of 2020 landed at $6.6 billion, up $2.3 billion -- or 54% -- from the prior year. The boost was even more pronounced in the latest selling period, with revenue rising 84% in Q2.

Investors are expecting continued strong growth in Tuesday's report as sales rise by nearly 60%. Key factors determining the quality of that spike include consumer engagement, which shows up in metrics like repeat order volume and average spending per order. Wayfair's market share position will also be heavily influenced by how well management succeeds in converting most of its 5 million new customers into steady shoppers. Look for CEO Niraj Shah and his team to discuss their progress toward that ambitious goal this week.

Sustainably profitable

Wayfair executives said that the company's robust earnings growth has been about much more than just the demand surge brought on by the COVID-19 pandemic. "These results demonstrate the inherent strong structural profitability of our platform," Shah told investors back in early August as the company generated $1.3 billion of gross profit equating to 31% of sales.

If that description holds true, then investors shouldn't see much of a margin slump as demand trends settle back down toward normal. Wayfair has predicted that gross profit margin should stay between 25% of sales and 27% over the long term, to support adjusted bottom-line profitability of around 9% of sales.

The shopping stampede through the early summer months added lots of noise around these metrics, but clearer trends will start to shine through over the next few quarterly reports. Wayfair's sales surge isn't as valuable, after all, if it requires too much spending in areas like digital marketing.

A persistent lift

Wayfair's e-commerce home furnishings niche was growing quicker than the broader market before the pandemic struck, and investors are excited about the potential for an accelerating shift toward its business that endures long after the virus threat has faded.

We won't know the sustainability of that move for several more quarters. However, investors might get some clues about how Wayfair sees the health of its segment, and Wayfair's market position, in comments executives make about the key holiday shopping season ahead.

A conservative outlook might imply a competitive selling environment against rivals like Overstock. If Wayfair instead predicts more surging sales gains, then that will support management's thesis that it is attracting more shoppers to its platform and delivering compelling value to these customers while stealing them away from retailers located online or in physical stores.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.