New generation of e-commerce disruptors turns stores’ perceived strengths into pure play gains
May 15, 2017,
HIGH POINT — The news that Amazon officials were at last month’s High Point Market to recruit furniture dealers to its platform reinforced the e-commerce giant’s relentless effort gain a foothold in furniture and highlighted the undeniable importance of the Internet in shaping the furniture industry’s future.
While brick-and-mortar furniture sales have grown at a low single-digit pace the last several years, Internet sales of home furnishings — including full-size furniture — have been growing by approximately 13% annually, according to Furniture Today figures. And while the total dollars remain comparatively small — e-commerce currently accounts for approximately 11% of furniture and bedding sales — it’s clear that brick-and-mortar retail will need to adapt to remain competitive in the age of the Internet.
“For disruption to work, you either need to provide such an amazing experience at the same cost that it’s demonstrably better than anything else or you can do it at such a low cost for the same experience that you’ve taken yourself out of the sea of sameness,” said Carl Prindle, CEO of Blueport Commerce and a former furniture industry disruptor.
As part of a group that launched Furniture.com in 1999 to create an Amazon-like furniture shopping experience, Prindle was among the early disruptors in the furniture industry, perhaps too early. “The Furniture.com model was probably a good example of something that was a little ahead of its time,” Prindle said. “But it was also probably the wrong model.”
While delivering a convenient shopping experience and a larger assortment than consumers would typically find in stores, the site could not overcome consumers’ desire to touch and feel product prior to purchase, nor could it profitably deliver furniture in a way consumers found equal or superior to what they received from their local dealers. (see related story)
But when he looks at the new generation of furniture industry pure plays — whether it is Joybird, Benchmade Modern, made.com or others — Prindle sees, in some ways, the execution of the model he envisioned nearly two decades ago.
“They’re much closer to that equation of a better experience and a cheaper model,” Prindle said. “The Joybird experience, for example, of customizing the sofa and the ability to offer both a great experience and a relatively good value is pretty unique.”
Closing the gap
But what about consumers’ desire to touch, feel and test-drive their would-be sofa purchase?
“Our return policy really takes any of that concern out,” said Josh Stellin, Joybird CEO and co-founder. He explained that the company offers free pick up and return for the first 14 days after furniture is delivered. Following that the consumer still has the remainder of a year to change their mind, at which point they pay the return shipping but Joybird takes care of all logistics.
Benchmade Modern, a direct-to-consumer site that sells sofas by the inch and can ship in seven days, also handles its own manufacturing. And it, too, has recognized the importance of return policy in overcoming shopper concern about Internet sofa purchases. “We allow the customer to take the product home and have it for 100 days,” said Edgar Blazona, founder, CEO and a former Pottery Barn designer.
The other area where the new industry disruptors have been working aggressively to close the gap with brick and mortar is delivery. While not an issue for accessories, accent furniture or smaller home products that can be shipped via Fed Ex or UPS, sofas and other full size furniture have historically been a challenge for e-commerce players.
That is changing.
“We decided from the get go we were going to be white glove all the way,” said Mat Herman, founder and president of Apt 2B, a lifestyle home furnishings site founded in 2011. “We’re furniture people, and we know all the problems. We brought everything in house. It’s been worth it.”
Like Benchmade Modern’s Blazona, a former designer at Pottery Barn, and Joybird’s Stellin, a former general manager at Richter Furniture, Herman is a furniture industry veteran who previously worked as an Ashley marketing specialist and as a territory manager for Stratford Simmons. Their backgrounds provide each of them with a clear focus on the issues that can bolster or buckle a retail furniture operation.
“We often joke with people that we’re a logistics company that happens to make furniture,” said Stellin, adding, “We can get a sofa from San Diego to the upper East Coast home delivered in 14 days.”
Perhaps the clearest indication that e-com players have clued in to the power of logistics in capturing consumer furniture dollars is the effort that industry giant Wayfair is making in both middle-mile and final-mile delivery. For the former, Wayfair’s Castle Gate initiative, launched in 2015, is providing 3PL capabilities to its manufacturers (for a fee) and forward-positioning those manufacturers’ highest volume products in Wayfair’s own warehouses to support next-day and two-day delivery.
As significantly, since 2011 Wayfair has been working to take control of its own large parcel delivery capabilities. To support that effort, the company’s Wayfair Delivery Network (WDN) now owns and operates its own consolidation centers, cross docks, line haul and last-mile home delivery facility.
“This is about us being the leader in building our own nationwide home delivery operation,” said Niraj Shah, Wayfair CEO and co-founder, stressing the importance of this component as an integral part of the company’s customer service efforts.
To that end, the company opened last-mile delivery facilities in six major markets; Boston, New York, Philadelphia, Chicago, Dallas and Los Angeles, through the end of 2016, with plans to roll out 15-20 additional markets by year-end 2017. And while Shah declined to discuss individual new markets the company has publicly stated its last-mile operation will reach approximately 60% of the U.S. population by end of year.
Spirit of risk taking
So does the company, now listed on the New York Stock Exchange, with $3.4 billion in annual sales, still see itself as a “disruptor”?
“Yes and no,” said Shah. “We see ourselves as a technology-driven company, not for the sake of technology but for what else we can do next. What’s the opportunity?”
And despite its size Wayfair still works to retain its entrepreneurial roots, according to Shah, fostering a spirit of risk taking that, odd as it may sound, embraces failure. “The type of person who succeeds here is someone who will try 10 things and six will fail,” he explained. “That’s vs. someone who tries three things and they all work. The net effect is the former will have four working and has learned a lot.”
Some new generation disruptors learn what doesn’t work, the hard way.
That was the case with Greycork, a 2015 furniture e-com startup targeting young urban dwellers with affordable, easier to assemble furniture. Despite a lot of positive early reviews, the company — founded by Rhode Island School of Design grads John Humphrey and Bruce Kim — closed its “doors” earlier this year.
Calls and e-mails to Humphrey for this story were not returned. However, a published report on the Curbed website quoted an e-mail from the founders to backers: “We wanted Greycork to be known for ‘revolutionary quality at a revolutionary price.’ It turned out we delivered quite well on the former but no so much on the latter. We made tables that were so nice, our friends and peers couldn’t afford them — even at zero margin for us.”
The company website currently indicates, “We are closed.”
What remains wide open, however, is the full spectrum of Internet entertainment and shopping experiences that confront consumers each day and that have forever changed the landscape within furniture will be sold.
“The most seismic impact of disruptors, whether they’ve been successful or failed, is that every shopping experience has to be as elegant as Joybird, as extensive as Wayfair,” said Blueport’s Prindle. “The seismic disruption model is Uber and Pinterest and sites like those.
“If you think of the hundreds of millions of dollars that’s been spent to build extraordinary experiences, furniture retailers are expected to be as good as all of those.”
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