It's tempting, to be sure. Wayfair (W -1.25%) shares are still down more than 90% from their pandemic-induced 2021 peak, and the company is suggesting that a return to operating profitability is in the near-term cards. And maybe it is.

This is a case, however, in which investors might be better off not making themselves part of yet another turnaround project. There are too many things that could still go wrong for Wayfair and too many other great opportunities to plug into elsewhere.

Wayfair is back in the red (perhaps to stay)

There's no denying that the online home-goods retailer gave it the proverbial old college try. Since its launch back in 2002 and Wayfair.com's launch in 2011, consumers as well as investors have enthusiastically watched -- and even cheered -- the company's efforts to crack into a crowded, complicated market. Everybody loves a good David-and-Goliath story.

After many mostly unprofitable years, though, it's time to concede that this particular e-commerce model just might be untenable. Even in the throes of the COVID-19 contagion, when consumers were spending tons of money redecorating their homes, Wayfair was only marginally profitable. And since then, it's slipped back into the red. Indeed, it's losing more money now than it was prior to the pandemic.

W Net Income (Quarterly) Chart

W Net Income (Quarterly) data by YCharts.

But is this time different? Maybe. That's what the company's management team would have you believe, anyway. In its first-quarter earnings report, posted earlier this month, CEO Niraj Shah explains that by lowering costs while improving customer experience, "we expect to have positive Adjusted EBITDA in the second [current] quarter." For good measure, Shah adds, "We are clearly demonstrating that the Wayfair model is inherently profitable."

The problem is, no such demonstration of net profitability is actually occurring. It might well never occur, either, for one overarching reason.

Anything you can do...

OK, never say never -- stranger things have happened. Again, though, look back at the past couple of decades and, in particular, the past 12 years since Wayfair launched its online presence. If a cost could have been cut, it arguably would have been cut already. If the average customer experience could have been improved, surely it would have been improved by now.

The revitalization and restructuring (read "layoffs") plans introduced in August are not growth drivers. They're defensive. And they won't likely be enough.

Wayfair's net-profitability hurdle isn't exactly a tough one to figure out. The company's competition is bigger, better, and better-equipped to win market share.

Take Sweden's Ikea as an example. Just last month, the low-cost, chic furniture company announced it would be shelling out $2.2 billion to expand its presence in the U.S., where Wayfair does about 85% of its business. With annual revenue of only around $12 billion and continued net losses, there's little Wayfair can do to dampen the impact of Ikea's investment.

And it's not just Ikea, of course. Behemoth Amazon is in the furniture and home furnishings business as well, leveraging its far-greater customer base. Numbers from research outfit Numerator suggest that 8 out of 10 U.S. consumers regularly shop at Amazon.com, placing an average of 74 orders per year.

Let's also not forget that 90% of U.S. shoppers live within a 10-mile drive of a Walmart store that sells low-cost furniture and decor. Consumers can have those goods in hand today.

Connect the dots. Wayfair just doesn't have the unique edge it needs to consistently compete with these (much) bigger players.

Yep, Wayfair is a sell

The tricky part for investors is that there likely will be flashes of relative brilliance in the company's future results. The slow implosion of Bed Bath & Beyond works in Wayfair's favor. Continued cost-cutting will boost Wayfair's bottom line compared to year-earlier figures. These flashes will make it look as if the company has finally figured out a winning formula.

Just keep the deeper, more philosophical picture in mind when you see these little victories. After years of losses despite lots of effort, Wayfair's next-best growth option is now just cutting costs, which isn't growth driving at all. Investors should think about buying something else instead.