Internet test fuels SOHO growth
Home Office Solutions enjoys online bounce
By Tom Edmonds -- Furniture Today, March 14, 2004
As a major mover of premium office chairs, Marc Levin's original retail strategy leaned toward a traditional approach, with a growing chain of stores serving the Chicago market and supported by an Internet presence.
Circumstances and events led Levin in a different direction. While he does have three stores, his Internet sites, particularly officedesigns.com, have proven to be unexpectedly powerful engines of growth and his plans for new stores have been shelved.
In fact, having recently completed his fifth year in business, Levin's company has now been around long enough to be considered for Inc. magazine's list of fastest-growing U.S. companies. Last year, he says, he would have ranked 97th if he had been eligible, with 1,400% total sales growth since the first year. "We're anxious to get into this so we can see how we stack up," Levin says.
Levin's businesses – Home Office Solutions, The Ultimate Back Store and officedesigns.com – stack up a lot differently now than they did four years ago when he was featured in a SoHo Today article. Currently, Levin has two brick-and-mortar formats with three stores. Both those formats, The Ultimate Back Store and Home Office Solutions, have their own Web sites, but it's his Internet-only store, officedesigns.com, that is a leading online retailer for several major chair manufacturers. Featured brands include Herman Miller's Aeron, Steelcase's Leap and other commercial-quality chairs.
In April 2000, though, Levin, who evolved into the SOHO category from his experience with ergonomic products at The Ultimate Back Store, had two Home Office Solutions shops, with three more planned for the Chicago market.
But the expansion never took place. Sales never really took off at the second store in Vernon Hills, Ill., but they were growing rapidly on the homeofficesolutions.com Web site, which had started out humbly.
In 1998, Levin developed a Web site primarily as a marketing tool. "It was a way for our customers to revisit us," he said. "It was also a way for people outside the market to find out about us."
A few sales trickled in —perhaps one a month. "This was so early in the Internet," he said. "We were just experimenting. The important thing that we didn't do, which a lot of dot-bombers did, was build a beautiful site and a huge distribution center and have no orders. Each and every month, we were learning what not to do on the Internet."
Packaging and shipping were a steep part of the learning curve, with the most expensive lessons learned during the Christmas season of 1999. Up to then, the company had used LTL carriers, but that process was too slow. "People wanted to buy chairs as gifts, but FedEx wouldn't take them because the boxes were too big," Levin said. His staff monkeyed around with the chairs and repackaged them into smaller boxes, but they all came back crushed or otherwise damaged.
"The Internet customer was not impressed, but we picked up some valuable knowledge," he said. "What we learned was our customers were 'George Jetson,' expecting a 60-pound chair to pop out of the computer and be on their doorstep the next day. This was the customer that was going to be buying from us.
That convinced Levin to hire the packaging expert who designed the FedEx-acceptable packages that the company uses today.
Levin rented a warehouse, ordered a couple of truckloads and before the bills were due, the chairs were all sold. "We were offering immediate gratification," he said. Customers received chairs in 24 hours to the Midwest, 72 hours to the East Coast and four days to the West Coast. "This was a huge thing because we had no control of the shipping when it was being drop shipped by our manufacturers."
That same winter, Levin made what turned out to be an equally critical move, hiring John Snow as chief information officer. "He investigated where small business was on the Internet, and he made the decision to move our site to Yahoo Store," Levin said. Although Yahoo offered a basic template for e-commerce, Storm set up officedesigns.com as a more sophisticated site in terms of navigation and appearance, and Yahoo brought the traffic in.
And the orders rolled: "We went from one sale a month to five or 10 a day. It was almost all Aeron chairs for $849." In the first full month of a standalone site for homeofficesolutions.com —separate from ultimatebackstore.com — the Internet outsold the second retail store in Vernon Hills.
The company was drop shipping to SOHO customers, not just residential consumers, opening a few eyes. "The small businessman didn't know where to go," Levin said. "They were buying junk out of catalogs or going into Office Depot. The good stuff wasn't available, and nobody knew where to find it. The Internet changed all that. Now people could go online and see what the market had to offer."
More specifically, they could visit homeofficesolutions.com or officedesigns.com and buy a brand-name office chair. With all these systems set up and with his second Home Office Solutions store struggling because it was in a younger community where consumers were already accustomed to shopping online, the terrorist attacks of Sept. 11, 2001, occurred.
From Levin's perspective that changed everything: "Within two weeks we decided to shut our new flagship store and cancel all brick-and-mortar expansion."
Serving the SOHO spectrum from residential to small business, sales have grown from there, as has the company's supplier list. "We brought Herman Miller and Steelcase in under one roof," Levin said. "That had previously been taboo."
Levin's sites are sponsors on several major search engines, and they come up near the top of the page when people are looking for relevant products, such as office chairs.
On the Internet or in the stores, Levin believes the formula is all the same: inventory to meet demand on prestige products, immediate shipping and excellent service. "We have always said that we want to provide service to exceed Nordstrom's," he said. "Whether they're in our store, visiting us on the Internet or calling us on the phone, they need the same satisfaction and caring that a Nordstrom's customer receives."
This combination of Internet marketing and service seems to be working. Sales are growing fast, and the volume of visitors to the Internet sites is growing even faster. In 2003, Levin said his three Internet sites had more than 11 million page views. "We're a focused store," he said. "We're not selling A to Z. That's really a lot of traffic for such a niche market."
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