Too Big to Ignore

September 6, 2013  by in Industry, Web Retail   

Furniture Vendors Can’t Ignore Online Sales’ Potential for Future Growth.

By Powell Slaughter

Traditional furniture stores might not like it, but it’s hard for their vendors to ignore the business potential of selling furniture on the Internet.

With online channel growth in home furnishings chugging along at double-digit growth every year while the category overall is in the low-single digits, e-commerce gets an increasing amount of attention from manufacturers and distributors in our sector.

A lot of vendors weren’t willing to go on the record about their business with Internet retailers, but the channel is of increasing importance for many—one that declined to go on the record noted that it sold $200,000 worth of goods during a five-day flash sale at Joss & Main, part of home furnishings e-commerce giant Wayfair, which expects to hit the $1 billion mark this year.

That’s a hard potential customer to ignore.
Niraj Shah, CEO of Boston, Mass.-based Wayfair said traditional stores blaming the online trend for lost sales might want to look to their own business.

“What we hear from suppliers we work with … is that some retailers complain that the online business should belong to them,” he said. “The biggest group of complaints, though, are from brick-and-mortar retailers who aren’t doing well, and they blame online sales. The fact is they’re probably losing share to their brick-and-mortar competition.”

A CORE BUSINESS
While most vendors remain mum on the sales volume they conduct with Internet retailers, commenting was no problem for Abbyson Living. Online sales constitute the core of the Los Angeles-based supplier of lifestyle home furnishings’ business.

Since 2008, Abbyson has worked on a drop-ship model that’s tailor-made for e-commerce. The company has a strategic partnership with white-glove delivery service Ace Delivery that accounts for 70 percent or more of its transaction fulfillment, according to Homaira Shifa of Abbyson Living’s marketing department. Ace is growing, but in states not served yet, Abbyson contracts with other third-party delivery services.

“Shoppers order through the Web site of our retail partners, and we ship the items from our Southern California distribution center,” Shifa said. “We have about 68 percent of the top 100 <st1:country-region w:st="on">U.S. retailers we partner with.”</st1:country-region>

Those include pure-play Internet retailers such as Wayfair and DirectBuy, as well as retailers with brick-and-mortar locations that also play on the e-commerce field. All Abbyson’s business is drop-ship and through the Internet.

Exclusivity is an issue in e-commerce, but Abbyson also has customized programs with retail programs to grant exclusives on certain products in its line.

At any rate, Abbyson is riding the growth of online furniture purchasing.
“The Inc. 500 has us as one of the fastest-growing private companies, and that’s because of our e-commerce,” Shifa said. “This is our business.”
In addition to ranking No. 159 on the 2012 overall list, the company received three Inc. 500 category achievements, as well: No. 15 in Top Consumer Products & Services Companies; No. 37 in Top 100 California Companies; and No. 14 in the Los Angeles Metro Area.
Traditional retailers really can’t fault vendors for wanting to get their products in front of consumers. With as many as 80 percent of shoppers using the Internet at least to research their purchases, an online presence is of particular interest to manufacturers and distributors.
Hooker Furniture has a presence with a limited number of pure-play e-commerce retailers. Those include Wayfair, Hayneedle and Cymax.
“E-commerce is by far the fastest-growing channel in our industry,” said Johne Albanese, vice president of corporate marketing for Hooker. “It remains very important for our brands that they are available where the consumer wants to shop. We recognize that the online business is very important to our future.”

A HYBRID APPROACH
Pure-play, national e-commerce sites for furniture appeal to those consumers who want a massive choice of products from which to choose. While Hooker has a presence there, its major e-commerce focus right now runs along more traditional retail lines.
“The big opportunity is local-based e-commerce,” Albanese said. “Imagine for a minute from the consumers’ perspective why they purchase online. The number one reason is convenience. If you add to that the ability to purchase locally, they know can get service after the sale.
“Second, in the omni-channel marketplace there’s significant influence in the e-commerce channel that’s transacted at the retail-store level. Say they’ve never bought a Hooker piece—if they see something online, and even if they want to buy it, they still want to check it out at the store. I start from the customer and work my way back. My opinion is the best model for the consumer, if the product she wants is available, is a local hybrid,” that is, a local retailer with the ability to sell online.
Such is the reasoning behind P3, the e-commerce platform Hooker launched earlier this year, in which Hooker is building out Web sites or “iStores” for retailers that offer the company’s brands for sale in the retailer’s local marketplace. Those brands include Hooker, Sam Moore, Bradington-Young and Seven Seas Seating. Retailers eventually may add other vendors to their iStore as desired.
The iStores are being built and serviced by Hooker’s partner, Channel Redefined of Green Bay, Wis., which has more than 15 years of e-commerce experience in the home décor arena.
“We have around 22 retailers live on the platform and another 30 we’re trying to get to,” Albanese said. “It comes down to finding a way to address an opportunity. For an individual retailer to engage in e-commerce from 0 to 60 is very difficult.
“We have a responsibility to our retailers to help them move into the omni-channel space,” he said. “It gets them started in the channel—it’s not the end of the road, just the beginning. We make it clear that to be successful in e-commerce they need to add additional brands.”
Retailers who’ve gone live on P3 include Toms-Price in Chicago; Belfort Furniture in the Washington, D.C., area; Interiors of Harrisburg, Pa.; Maynard’s of Belton, S.C.; Brownlee’s in Lawrenceville, Ga.; Bacon’s of Sarasota, Fla.; and Design Spree of Lawrenceville, N.J.
The P3 program also includes in-depth training by Hooker in online marketing and sales best practices; consumer trends and product knowledge through an ongoing P3 University Webinar program.

DEFINING ONLINE SALES
Albanese believes mobile technology is blurring the line between online and in-store sales.
“If someone’s in the store, sees a product and buys it on their phone, what kind of sale is that?” he said. “I’m convinced that as of today, nearly half the influence defining what consumers will do regarding furniture purchases takes place on your Web site. Our perspective is that the best solution for independent retailers is a locally focused e-commerce business that’s essentially a new location.”
It’s also closer to the heart of what traditional retailers do best. Selling furniture online on a national basis, relying on drop-shipping arrangements with vendors, and such, is an entirely different business than serving a local market.
“We discovered that that’s not a sales business, it’s a logistics business,” Albanese said.
Furniture stores, he added, must recognize how consumers’ shopping habits are challenging traditional ways of reaching furniture shoppers.
“The emerging young Millennial consumers have shopping preferences that are vastly different from our industry’s core Baby Boomer customer,” he said. “Simultaneously, we’ve seen a major shift in shopping activity to the Internet and an explosion of activity on smart phones and Web-enabled mobile devices.
“The purpose of the P3 Partnership Program is to help our retailers navigate these new paradigms in a way that will grow sales in both their brick and mortar and online channels.” HFB