New tools assist e-business
By Brian Carroll -- Furniture Today, December 26, 2004
High Point — If you were to blow the dust off Powerpoint presentations detailing new Internet businesses that were circulating in the industry in 1999 and 2000 — the pre-dot-com bust period — you would see quite a few mentions of Year 2005.
For think tanks, research firms and Internet companies, next year once was projected to be the end of the rainbow, the year when Internet pure-plays would find the pot of gold, become profitable and complete the e-commerce revolution.
Perched as we are on the cusp of 2005, we note that the pure-plays are, by and large, merely quaint case studies of hubris and hype. It is difficult to fathom how business plans like those of Homepoint.com and Living.com, to name just two, ever got traction and, yet more surprising, the investment dollars of companies such as Starbucks and Amazon.com.
While the barricades of conventional commerce were never breached and the e-commerce revolution fell short, the furniture industry is vastly different as it enters 2005 than it was when its decision-makers endured the lengthy parade of Powerpoints. Business-to-business e-commerce has a long way to go before it is standard practice for mid- to small-sized furniture companies, but it has taken hold.
FurnishNet, for example, saw an 8.2% increase in the number of purchase orders transacted via its Internet data exchange this year over 2003, signaling an increased readiness on the part of retailers and, more recently, manufacturers to go paperless.
"We just came off of our best quarter ever, with 12 new deals, and our (fourth quarter) pipeline is the best it's ever been," said Ron Sellers, vice president of sales for FurnishNet. "We estimate that still only about 10% of home furnishing POs are going electronically, so there's still a lot of room for growth."
Sellers predicts that electronic document interchange over the Internet will move from early adapter stage to the mainstream in 2005.
"We are seeing that people who have been using traditional EDI are switching off and moving to Internet-based transaction exchange," he said.
Manoj Nigam, president of Micro-D, agreed, predicting a 2005 that sees leading retailers and manufacturers "completing the implementation of what we define as a 'full-circle' B2B."
Nigam describes this as a sales and transaction process that begins with accurate and standardized electronic catalogs from manufacturers and flows through to purchase orders and PO acknowledgements.
"EDI is entering its second phase of implementation in the furniture industry," he said, "with the addition and integration of electronic catalogs with current pricing and configuration options in the whole order-placement process."
Industry standards are seen by many as a key ingredient to a more systems-efficient 2005.
The ad-hoc Furniture Industry Data Exchange committee has made good progress developing and promoting electronic data exchange standards. Next year will be an important one in adoption and proliferation of these standards.
"Overall, we feel the industry is beginning to understand that the environment in which they must compete has changed very dramatically over the last few years, and the smart ones have figured out that e-commerce can help them survive," said Ron Martell, CEO at Micro-D and chairman of FIDX's steering committee.
Martell said IT executives have "made great progress developing the standards" and that it's time for "the marketing types" to promote them.
For retailers with Web presences, look for a proliferation of shopping aids, from more robust online color product catalogs to sophisticated fabric-on-frame and finish-on-wood rendering software. If the industry learned anything from the dot-com boom-to-bust cycle, it's that consumers have embraced the Web as a shopping tool if not as a buying tool.
A lot of these tools, in fact, were available during the boom period, but slower Internet connections meant they did few people any good. In 2005, consumers and their connection speeds have caught up and prices on these shopping tools have come down.
More furniture shopping sites should become more visually oriented because of the growth of broadband. Approximately 40% of home users and 95% of office users have access to broadband, or very fast, connections, according to comScore Networks, a research firm specializing in Internet usage.
Because so much of online shopping is done during the day, at work, these figures signal a green light for high-definition digital photography, richly detailed virtual catalogs and rendering software applications previously impossible or at least impractical.
Broadband "affords a tremendous opportunity for fashion industries to capture the minds-eye of the consumer," said Sev Ritchie, president at FurnitureFan, an Internet marketing company. "We continue to see traffic growth between 7% and 11% per month as more and more consumers turn to the Internet as a viable tool to pre-shop."
In response, FurnitureFan plans to unveil in 2005 a new Web site that, beginning in January, will feature enhanced product images and the use of Flash, enhancements to its room planner and favorites folder functions, and an organization that will aim to connect consumers with retailers in their area in a fewer number of mouse clicks.
"We believe that 2005 will bring a lot more sophisticated shopping aids," Micro-D's Martell said. "Several companies are currently embedding our technology in their retail product presentations and point-of-sales systems, as well as factory order-entry systems. Our Web-based services also are growing very rapidly."
In terms of hard numbers, online retail sales overall are not predicted to continue to grow at a rate greater than retail in general, although growth is expected. FurnitureFan's Ritchie, for example, said his customers report growth in sales made online that involved a physical visit to the store. This points to increased emphasis on shopping cart capabilities.
Across all consumer goods categories, online sales are expected to finish 2004 at 6.6% of total retail sales, up from 5.4% in 2003, according to Forrester Research.
Retailers believe that 24% of offline sales last year were influenced by the Web, according to the research company's surveys. It is this segment of sales that offers the most opportunity in furniture. Web sites will increasingly be seen and treated as more a virtual front door into the store rather than merely or solely a sales channel. This means more sites will do a better job projecting the stores they represent, Ritchie said.
Eric Lau, chief executive at pure-play online retailer VisionDecor.com, believes giving consumers confidence to buy online will continue to drive growth. He credits in part his Internet store's "no-hassle, risk-free" return policy and product warranty for dramatic growth in his sales.
"We know that many customers are concerned with damaged furniture arriving at their doorstep," said Lau, who also sells via eBay. "In most cases of damage, we have an insurance claim filed and a replacement item sent to the customer within two business days."
He said sales of his all-import line have grown to $200,000 per month from approximately $5,000 per month only a year ago. He, too, plans visual merchandising enhancements for the site, including giving consumers the capability to "put images of different products together to build a 'collage'."
The collage technology is expected to roll out sometime in the spring of 2005.
-
Reaching out online
Jan 10, 2012 -
Hometown heroes succeed in variety of ways
Dec 14, 2009
Specialty retailer LoveSac introduces new store design
Belfort Furniture, Lawrance Furniture are NHFA Retailers of Year
Kincaid Furniture honors Jimmy and Rosalynn Carter for Habitat work
Furniture, mattress sales boost Conn's sales 37.6% in recent quarter
Bob's Discount Furniture and several employees help ailing girl
Featured Company
-
Wright Labels
Bill and Tom Wright founded Wright of Thomasville in 1961 on the idea that printing was a creative medium and the belief that "a promise made is a promise kept." The Wright brothers focused their attention on providing exceptional printing for the... more
VIEW ALL GALLERIES
