Exploring container-direct business
Thomas Russell -- Furniture Today, February 12, 2006
Cebu, Philippines — Manufacturers here looking to compete in a global furniture market may soon find themselves dealing more directly with retailers.
While many see design and product innovation as their key strengths, they also see an opportunity to cut costs — and boost their margins — through more container-direct business.
Case goods producer AE Design Concepts, which mainly deals with the Middle East, wants to boost its U.S. business with a direct strategy. Company CEO Peter Cullen wants to sell to several regional retailers as a single buying group.
Design and use of materials, he said, will still give companies like his an edge in the marketplace. But he believes a container-direct option could present opportunities as well.
Some Philippine manufacturers are already succeeding in container-direct business.
Locsin International, for example, does about half its U.S. business direct with retailers and half through an importer.
Case goods producer Designer's Collection does about 80% of its business through importers and about 20% direct. The direct portion could grow, but company representative Alexander Osmena doesn't expect it to happen overnight.
Given their relatively small capacity, the challenge for some companies could be to choose the right mix of retailers. They would have trouble supplying single items to a big Top 100 account, and might do better offering mixed containers of goods.
And because they often design products for their importer clients, they also would have to be careful not to pass off those designs as their own.
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