From Home Furnishing Business
Retailers and Vendors come together to carve out ideas on tackling e-commerce in home furnishings.
By Powell Slaughter
Take four home furnishings retailers seasoned with varying degrees of experience in e-commerce. Add six furniture vendors active in online channels. Toss in a dash of technology experts and consultants. Stir with questions about their thoughts on the challenges and opportunities facing our sector when it comes to selling furniture online. Cook thoroughly in a daylong discussion. Serves: Anyone looking for ways to think about how online commerce is affecting their business. That was the recipe for “The Future of Furniture Retailing,” a gathering last month of vendor and retail executives at Internet marketing technology vendor MicroD’s office in Hickory, N.C., where they took part in a roundtable discussion of e-commerce in the furniture industry. Key takeaways from the event: Data and information, product delivery, pricing and defining a brand are challenges facing the home furnishings industry as it ventures onto the online playing field. Participants hashed out their online initiatives and the challenges they face in bringing the home furnishings sector up to speed in e-commerce. “MicroD is in a unique position of serving both sides—the retailers and the manufacturers,” said MicroD CEO Manoj Nigam. His goal in the meeting was to “get a group together to start a dialog on how we should be doing things. “E-tailing is not just e-commerce. How do we get the products online? How do we engage consumers? How do we bridge the gap between retailers, manufacturers and consumers?”
Roundtable participants said organizing product information and presenting it in a manner that’s easy for online shoppers to use is one of the toughest things about e-commerce. Walter E. Smithe Furniture in Chicago was set to go live this month on an e-commerce platform developed with MicroD. President Walter E. Smithe said getting data is a huge headache. “A tiny sliver of our vendors are truly e-commerce compatible at this point,” he said. “Some kind of industry standard is necessary for it all to work. It seems like MicroD could become the default for the industry.”
The industry could learn from other sectors when it comes to standardizing data formats, said Richard Sexton, founder of Concord, N.C., retailer Carolina Rustica. “The lighting industry does a much better job. The industry accepted American Lighting Association standards for e-commerce data,” he pointed out. “The downside is its further commoditized the lighting industry. Every Web site looks the same. It’s a good guideline, but if you’re serious about e-commerce, you need to personalize it with your own descriptions, your own photography.” Access to data is extremely important at Boston, Mass.-based online home furnishings powerhouse Wayfair.com “We track reasons people contact our call center,” Mike O’Hanlon, vice president of corporate and business development. “Number one is ‘Where is my stuff?’ but number two or three is product information.” Getting that information online demands time. Colfax Furniture’s biggest Web-related challenge is integrating the store’s point-of-sale system on the Web site, according to Mandy Jeffries, general manager of the Greensboro, N.C., retailer. To do that, she wants vendors’ support. “Our information on the Web site is only as good as what we get from the manufacturers,” she said. “Our biggest challenge in resources is that our industry is so far behind, our point-of-sale system, for example. We tried SAP, but that was like driving a Mercedes in an alley. I had to settle for a POS that was furniture-related. … Every package has its own pros and its own cons.”
VENDORS WANT STANDARDS TOO
As a fairly young company, a lot of the technology solutions Four Hands brought to its retailers were homegrown. “Doing that costs a lot, and we’re looking now to partner, moving from proprietary platforms to more widely adopted ones,” said Mike Bullock, vice president of marketing. “Second, we bring out 600 new products a year. Getting all that data together, building the discipline to do it is something we’re working hard on. We’re working on ease of ordering, a consistency in the process, providing the tools retailers need.” Sherrill Furniture focuses heavily on custom finishes and fabrics as part of its high-end value proposition, and that creates complex information needs.
“How do we bring our 600-plus styles, our 3,000-plus fabrics into focus for our retailers who are going into e-commerce?” said Tim Bohon, executive vice president of sales and marketing. “How do we get our customization capability to the masses without getting redirected off a site? They want seamless access to what’s on our site without leaving their selected brand. A Walter E. Smithe is the brand, we’re the vehicle. “We have so much data —10 brands, nails, fabric, shape, traditional—and no way to get to it. We need to slice and dice our data.”
Another concern is making sure that seamlessness applies to the devices consumers are using to shop online. “My biggest concern is the integration of all devices, from desk top to mobile,” said Bohon. Responsiveness to current technology is one thing, but it’s important to think ahead. “We’re talking about tablets, mobile devices. We have to think about where it’s going,” said Kevin Walker, president of Right2Home, the division of Home Meridian International that specializes in drop-shipments for e-commerce sales. “How do I get this site to work on a watch?” Right now, Walker said there are gaps between what vendors have and what types of information they need to deliver, both with sales initiatives and data. “How will you differentiate yourselves online? How will you define product value? It’s hard to differentiate promotional versus high-end from a picture without more information,” he said. “We have to get our data uncovered, organized and be able to feed it with EDI or an automated data feed. It takes time to get it on the site—Wayfair’s loading 7 million SKUs.”
Keeping product information up-to-date on the Web site was a big challenge at A.R.T. Furniture as it grew its business in the e-commerce channel. “Sales reps weren’t being fed the information properly, and (e-commerce channel) is a difficult animal for them,” said Bill Sibbick, senior vice president of sales and marketing. “It’s changed how we operate. Videos have become extremely popular, but when you do one for a retail salesperson, it’s completely different from what you’d do online for consumers.” Sibbick noted that one customer told him getting better information available online can help boost sales: “He said, ‘I’m not getting as many ups, but I’m getting a much higher rate of closure.’ That’s because that shopper has learned what they need online and are more ready to buy.”
The growing importance of e-commerce could make the industry improve its data management. “Retailers like Wayfair have raised the ante for the additional data requirements needed to interest the customer and increase conversion rates,” said Ron Carpenter, principal of Greensboro, N.C.-based management consulting firm Strategic Marketing Solutions. “I think you’ll see vendors change their product development process to capture that data at that point. We’ve been dealing with (e-commerce data requirements) by exception. What happens when you have 300 customers who want that data?”
Nigam noted that MicroD is building software to help manufacturers create a product catalog: “If you house your data with us, we’ll make it available to anyone you authorize.” “One of the things e-commerce is forcing us to do is make every element of the shopping process relatively simple,” said Samson Marketing CEO Kevin O’Connor. “Consumers are confused by such a big assortment of product that’s indistinguishable to the untrained eye.” That’s why retailers have to pay special attention to information management on their Web sites. “In talking to a lot of our retail customers, they think they’re in e-commerce because they take (a vendor’s) picture and put it on the Internet,” O’Connor said. “And a lot think (e-commerce) will be a passing fancy. Running a Web site, getting all the information in is a cost of doing business, and they’re asking ‘Do I want to make that investment?” He added that reps at Samson Marketing companies were encouraged to open accounts among e-tailers: “They needed to, because so much of our traditional retail channel went away. The amount of furniture sold through the traditional channel is half what it was seven years ago. We do restrict our e-tail business to those e -tailers who ‘play fair.’”
ONLINE PRICING ISSUES
Hooker Furniture is focusing this year on its proprietary e-commerce platform for retailers, P3. In addition to aggregating data online, Vice President of Corporate Marketing John Albanese, a former retailer, called “a complete disconnect with regard to minimum pricing policies” the biggest challenges facing furniture with regard to e-commerce. Hooker’s e-commerce platform relies upon an “Internet Minimum Price” versus Minimum Advertised Price (MAP). “We set what we thought was a reasonable cost for our Internet minimum price,” Albanese said. “Some stores might sell it for less inside the store. Our I-store lets the retailer make an additional note that ‘additional savings my be available at the store.’” Albanese did note that Hooker has “discontinued selling certain product to certain retailers” over pricing issues. “We haven’t had anyone who stopped doing business with us because of that,” he said. He suggested that vendors protect pricing by having customers sign documents to receive product data that indicate how it should be used; and for pricing policy. “If you violate policy, you lose rights to images and product information.” It might surprise traditional furniture retailers, but Wayfair.com is fine with pricing policies. “People buy from us because of convenience,” O’Hanlon said. “We have MAP. We have a lot of margin requirements, so we’re big fans of manufacturers having a pricing policy. The worst case is having a policy and not enforcing it.” Wayfair has some built in controls that in effect penalize vendors who don’t pay attention to pricingpolicy slips. “All our product rankings are driven by an algorithm,” O’Hanlon said. “It’s very complicated, but two important components are margin and popularity. If we can’t make margin, it falls, and if we’re too high in price due to non-enforcement, our conversion rates go down.”
Sherrill Furniture doesn’t want its businesss in the e-commerce to alienate its existing brick-and-mortar distribution, and its pricing policies play a role there. “How to we get through to the merchant without upsetting them, that this is where we need to go--together?” Bohon said.
To that end, the company will have strict distribution limits on what can be offered online--and a very strict Minimum Advertised Price policy: “Two strikes and you’re out,” Bohon noted. “If they cross the line we cut them off for 90 days--and they come back. If we get too greedy with distribution, margins go down, there’s no bottom line.”
It remains difficult to fully to enforce MAP pricing. “It’s impossible to enforce with a heavy hand—it’s hard to have those pricing conversations without raising legal problems,” said Right2Home’s Walker, adding that “crawling” software lets e-tailers automatically drop a price if it finds something lower. “Do you drop the one who started it, or drop everyone?” (Wayfair’s O’Hanlon pointed out that with MAP-applicable products, the retailer’s pricing decisions are not automated.)
SERVICING THE BUSINESS
Fulfilling delivery and meeting customer expectations is critical to providing a good experience for the shopper whether they buy in the store or online. It might be even more important in e-commerce, since no matter how good your Web site, an online sale can’t be as hightouch as in the store, and that delivery might be the most personal thing about the online sales process.
“And now consumers are enabled with ratings and reviews to talk about your brand,” Walker said. “Think of the money you spend to get them to the point of purchase, and they see a bad review.” Right2Home is creating three-way partnerships among itself, its customers and the carrier. “Our goal is to get all of our customers to follow our white-glove shipping policy so it’s a level playing field,” Walker said. “We’ve ID’d our most (commonly) damaged SKUs. We’ll take them off your Web site if you aren’t using (specified) carriers.” Hooker’s P3 relies on retail partners ability and experience in delivery.
“We ship it to the retailer the way we would any product,” Albanese said. “We’re leveraging the infrastructure they already have in place. With our 21 (live) sites, we’ve exposed our product to 12 million more customers than we would have otherwise.” Bohon at Sherrill Furniture believes customer relationship management sometimes takes a back seat in online sales.
“They seem to be defaulting to the old ‘I made the sale so it’s over,’” he said. “On the e-commerce side, the sale is were CRM begins. I spend more time vetting the last mile than I do for anything else related to the e-commerce channel.” Carolina Rustica is willing to give some when it comes to returned merchandise. Fortunately, the retailer’s return rate is less than 1 percent. “You have to have a fairly liberal return policy, or people will go elsewhere,” Sexton said. He added that sometimes a product was clearly damaged in the plant, not in transit, but Carolina Rustica rarely goes after a vendor.
“It’s so much work for us, and we want a good relationship with manufacturers, so we eat that a lot,” he said. “We don’t get a lot of claims, though.” Consumers are used to fast, efficient service in their online purchases, and furniture retailers need to meet those expectations.
“Amazon has created expectations online that impact our industry. Our mantra is ‘fast, on time, clean,’” said O’Hanlon at Wayfair. “’Fast’ is that people see a good chunk of our assortment leaves in one or two days. ‘Ontime’ means you make sure when you say it goes, the customer expectation, matches reality. ‘Clean’ means managing the last mile.” He added that expectations created in other sectors are just about impossible for furniture, noting shoe e-tailer Zappo’s willingness to take return on multiple pairs of shoes no questions asked: “I think people get that they can’t order even sofas and the return six you decide you don’t want.”
That’s one reason the quality and depth of information available to the shopper online is so important. Say a shopper orders that sofa, but it didn’t look they way she thought it would after she saw it on a Web site. “We’d rather turn down a sale than sell something that’s awful for them and awful for us,” O’Hanlon said. “If it’s a distressed item, make sure the customer knows what that means. You don’t want something returned because it looks the way it’s supposed to look.”
PLAYING CATCH UP
Nigam said MicroD wants to make the ecommerce roundtable a regular event. He also suggested an online forum on the topic. “It’s not too soon, it’s almost too late to have this discussion,” Albanese said. “Gen X and Gen Y have said they don’t want to shop in a traditional furniture store. This isn’t a cutting edge conversation, it’s not bleeding edge. It’s healing edge. Only if (vendors and retailers) do it together will it work for the consumer. I think of how much of this business is moving to other channels because we’ve been slow to react.
“We’re past the point of a long-term study, or we’ll be like the last livery stable guy. He survived longest, but he still went out of business. Like it or not, consumers don’t care if we survive.” HFB
TRANSLATING, PROJECTING YOUR BRAND IN THE ONLINE WORLD
Cooking with E-tail
The sheer number of eyes that can see a brand through an online presence creates both opportunity and challenge. The plus side is the exposure to potential new customers. The challenge: Those shoppers could be anyone from bargain basement price shoppers to a couple planning to create the home of their dreams. How do you tell your story online to attract the customer that’s right for you? Four Hands, for instance, has built its brand as a hip company largely through its market showroom atmosphere, which many retailers like to replicate on their on floors, according Mike Bullock, vice president of marketing. The company wants to figure out how to do the same thing on the Internet. It’s a work in progress.
“We’ve experienced a lot of growth by nailing down our showroom experience,” he said. “When people in the industry walk in, they get it, but doing that online is a very different proposition. “How do we take that showroom experience, where we’ve developed a strong skill set, and translate that (online) to inspire consumers?”
Sherrill Furniture has multiple brands in all categories, and offers a huge range of custom finishes and fabrics. The company looks to protect—and build—its brand online by teaming with retailers who will honor its pricing policies and work to project its custom story. Sherrill looks at what high-end brands outside the furniture sector are doing online as well. “By being online with the right partners, we build our brand presence,” said Tim Bohon, executive vice president of sales and marketing. “There are going to be winners and losers here, and we approach that from every angle. We look at BMW and see how they present themselves online.” Hooker Furniture feels having its goods available online is critical to its long-term success, but wanted to leverage relationships with its retail partners and help them establish an e-commerce presence.
“We decided that whatever we did had to help our retailers make the transition to e-commerce,” said Johne Albanese, vice president of corporate marketing. “Our product had to be on sale online through pure-players or traditional retailers. “Independent retailers were shrinking, and we felt part of that was because they didn’t take advantage of their proximity to the customer, who usually likes to buy locally … Forrester Research reported that 83 percent of consumers who can’t find a price on a Web site just leave.” P3’s reliance on retail partners—who have the infrastructure to service the sale—also protects Hooker’s brands. “Our focus was to acknowledge a retailers control of their ‘ground space’ and give them control of their ‘air space’ locally,” Albanese said. “I can say as a former online dealer that nobody bought a stick of furniture they hadn’t seen somewhere else.” A second belief central to P3 was the importance of education— a knowledge and understanding of the real cost of managing on online business, and offering a way to manage that business.
Albanese also would welcome the participation of other manufacturers in the P3 platform. “You can have seven guys in the same town doing e-commerce,” he said. “We have a way to get these retailers engaged in a local-focused, omnichannel program.” A big surprise during the development of P3 was how many retailers had no digital media presence. “When we got them to do digital ads, site activity increased 10 times; and cart activity 50 times,” Albanese said. Samson Marketing CEO Kevin O’Connor observed that a brand can’t be everything to everyone; and that whether a retailer or manufacturer, working with the right partner—store, vendor or carrier—will affect the way consumers view your brand.
Consumers don’t depend on advertising for inspiration, Four Hands’ Bullock said, and furniture companies have to get proactive in that regard. “They’re getting it from a global perspective,” he said. “How consumers make their decision is dramatically different from in the past. … They’re influenced from all over the place. How do we become an influencer?” He noted that many companies in the furniture industry traditionally gauged success by the sheer number of accounts sold.
“You’ll be forced to make choices, and then it becomes a less complicated problem than trying to be everything to everybody,” he said. “Who you choose as your partner, whether you’re a manufacturer, a marketing company or a retailer, is critical to your brand. You need a shared ideology.”
Online Furniture Sales March on. Are You Part of the Parade?
By Powell Slaughter
Whether brick-and-mortar retailers like it or not, e-commerce is serious business in furniture these days. And it will only get bigger.
While still less than 10 percent of total home furnishings sales, the growth of online purchases continues to outstrip more traditional channels as consumers grow more confident in buying via the Net; and as vendors and retailers adapt to serving a consumer goods category that’s quite a bit trickier to deliver than books or apparel.
Pure-play Internet retailers such as Wayfair and Hayneedle come to mind when talking furniture and e-commerce, but Manoj Nigam , president and CEO of Charlotte, N.C.-based online marketing specialist MicroD, believes brick-and-mortar retailers need to embrace the channel, at least to some extent.
MicroD went live with several furniture stores on its new ePiphany Commerce platform during August, starting with Walter E. Smithe in Chicago. The program integrates with MicroD’s ePiphany platform and its Exim electronic data interchange server. A full-fledged launch is set for October High Point Market.
“We think every retailer needs to be ready for e-commerce,” Nigam said. “There’s a fallacy: If I’m selling locally, I don’t need to be in e-commerce. Let’s say I came into your store and saw a product I’m interested in. I go home and do research on line, decide I want it, and then I find I can’t buy it online from you. If I see that Wayfair or another online dealer sells it, I’m not going to worry about returning to your store.
“E-commerce isn’t necessarily an offensive strategy, it can be a defensive strategy against your becoming a showroom for consumers who buy somewhere else if you’re not even in the game.”
IN ITS INFANCY
Selling furniture online is still in its “infancy,” according to Carl Prindle, president and CEO of Furniture.com, and the online furniture site’s Blueport Commerce platform. He said it’s one of the last major consumer categories to go online in a meaningful way.
Furniture.com will relaunch this fall with new ownership investment from retailers Schottenstein Stores (owner of American Signature and Value <st1:placetype w:st="on">City); and Rooms to Go. The venture will rely heavily on fulfillment by local “anchors,” which as of press time include RC Willey, Leon’s and Sleepy’s, along with those retailers with an ownership stake.
“Furniture today reminds me a lot of shoes online, pre-Zappos,” Prindle said. “For years, no one thought anyone would buy shoes online. Then, Zappos delivered a customer experience that wowed consumers. The rest is history.
“Furniture shoppers are no different than other online shoppers—they’re waiting for a ‘wow’ experience that makes furniture shopping meaningfully easier and better,” he said. “They’ve come to expect great selection, expert advice, fast and inexpensive delivery, and the ability to return something if it goes wrong.”
Prindle believes that to date, the online furniture shopping experience hasn’t met that standard.
“A lot of the furniture sold online to date has been through ‘pure plays’—companies looking to be the Amazon of furniture,” he said. “Unlike Amazon, however, there’s no UPS for furniture. As a result, delivery experiences are slow, expensive and problematic, returns are even worse. Shoppers are underwhelmed, except maybe for smaller, UPSable pieces like accents and occasional.”
He added that this is good news for traditional furniture retailers, not because furniture sales won’t keep growing online, but because they know how to provide the service and ‘wow’ factor.
ON THE OTHER HAND
While furniture e-commerce certainly faces unique logistical challenges, some of those pure-play companies might take issue with the above, and can point to big strides in terms of the shopping experience and service during and after the sale.
Boston-based Wayfair, for example, which is tracking 50 percent-plus growth this year on the way to a projected $1 billion in sales, makes a huge investment in providing detailed product information and inspiring ideas as part of its creation of a rich online shopping experience.
“We’re doing a few things particularly appealing to customers,” said CEO Niraj Shah. “First, we continue to offer the right product with the biggest selection, competitive pricing, better images and information.
“In the last year we’re offering a lot more online help to the shopping process, both things we’ve done in-house and through partners, sections like Room Inspirations, Shop by Color. All those things make the online experience richer and richer.”
He noted that there’s room for online customers to have better tools to visualize product in their space, things like 3-D imaging tools.
“There are 10 to 12 companies out there with different approaches to that, and we’re watching all those very closely,” Shah said. “One of the reasons we’ve succeeded is having best-in-class techonology, and if you’re not providing the best experience (shoppers) will go somewhere else.”
Sara Shikhman, president of BedroomFurnitureDiscounts.com, said her company used to get a lot of customers calling to say they were a bit wary about making big-ticket purchases on the Internet.
“Now consumers are becoming more comfortable with doing a lot of their own research online and are quickly able to find reviews, prices, and offers from several different merchants,” she said. “We are based in New York and have great partnerships with the top white-glove delivery companies around the country, but I would like to see the furniture home delivery industry expand their efforts to service all areas of the country well.
“For example, a customer living in North Carolina could potentially receive an order in just a couple days because many vendors’ warehouses are located there.”
To get there, more vendors need to use electronic data interchange and ship orders quickly.
“Online consumers need to get their products as quickly as possible and we as an industry need to meet that demand,” she said. “We built a custom cloud-based software to handle our orders all over the country that allows our vendors, partners, customers, salespeople and customer service staff to login from anywhere and manage their own orders. This helps fulfill the online customers expectation of having accurate real time information about their orders 24/7.”
THE FUTURE IS NOW
For years, brick-and-mortar retailers said consumers won’t buy “real” furniture, that is bedrooms, sofas, dining rooms, etc., on line, but companies such as Wayfair and BedroomFurnitureDiscounts.com—not to mention more and more retailers with a foot in both brick-and-mortar and online channels—keep proving them wrong. That said, some keys to online business remain remarkably similar to those in the store.
“You want a company you can trust for product, service, selection and competitive pricing; and you need them to help you,” Shah said. “There are two reasons people buy online: access to more selection; and the convenience to do it where and whenever they want.”
Interestingly, Wayfair is finding some synergy with brick-and-mortar stores through its Get It Near Me program, which continues to grow. The program lets a brick-and-mortar retailer advertise on Wayfair’s site next to the product and brands of their choice want. There are currently 170 active advertisers in the Get It Near Me program, up 70 percent from 100 at this time year ago. Those include American Furniture Warehouse, Jerome’s, Leader’s Furniture and Nebraska Furniture Warehouse. Five or more advertisers are in each of the top 25 <st1:country-region w:st="on">U.S. metro areas; and 17 of the Top 100 furniture retailers, up from 4 a year ago.
“They’ve been talking about how its very high-ROI for them because they’re getting in front of a motivated consumer who wants to buy,” Shah said. “Only 8 percent of the market is online, but our view is the majority of our traffic is people researching. It helps us pay for providing all the information that we put online.”
Shikhman said that BedroomFurnitureDiscounts.com keeps looking for ways to make its buying experience more customer-focused, with quicker, more reliable service.
“As our service gets better, sales improve,” she said. “This is the balance that we strive to achieve each and every day.”
In the past 12 months, for example, the company added an entire section for children’s furniture.
“It was very exciting, and the site has been getting a lot of attention,” Shikhman said. “I think it works so well because it adds a nice, whimsical touch to the experience, and allows children to shop with their parents for the bedroom of their dreams.
BedroomFurnitureDiscounts.com also have implemented a Q&A section to give customers an opportunity to ask other customers questions about products.
“They can ask us or other customers anything about a product and usually get a response within a day,” she said. “We have also begun to advertise much more on social media sites and get more involved with online interaction with our customers whether it be through online chat, Facebook, Twitter, Houzz, or other platforms.”
Some things, though, storefront or online, never change.
“Reputation is key,” Shikhman said. “We have been able to achieve top ratings on Google for our service and customers come to us because they know they will get great service.” HFB</st1:country-region>
Furniture.com Sets for Re-Launch
An Online Furniture Retailing Pioneer Gets a Makeover.
This summer, one of online furniture retailing’s original names, Furniture.com, announced it would re-launch in the fall.
In addition to a new ownership stake taken by furniture retailers Schottenstein Stores and Rooms to Go, the revamped site is developing a network of regional retail heavyweights to handle order fulfillment nationwide.
Carl Prindle, CEO of Furniture.com and e-commerce platform Blueport Commerce, shared some thoughts about the relaunch.
Furniture.com originally began back in the 1990s, when online retailing was just getting started. The logistical and service issues associated with a bulky product, plus the fact that the whole concept of buying furniture online was brand new, had the company losing money.
Under the new version, the site looks to rely on brick-and-mortar retailers’ traditional strengths in customer service to avoid those issues.
So what’s going to be different about the consumer experience on Furniture.com?
“Where most furniture e-commerce sites are weak—delivery and set up of real furniture—we’ll be great,” Prindle said. “We’ll be able to get 70 percent of the population a sofa in a few days, for a very low delivery fee, set it up in their home, and if it’s not right, take it back. Thanks to the distribution muscle of our retail partners, we’ll be able create the wow delivery experience that unlocks furniture online.”
On the product side, Furniture.com will offer a selection of participating retailers’ best merchandise, as well items they may not carry in the stores.
“Across rooms, styles and price points, we’ll offer a broad but curated selection of products, all delivered with same level of care and expertise,” Prindle said. Finally, we have some new technologies around matching consumers to the right pieces and visualizing them in their home that will complete our offering over the next year or so.
“All in all, we feel like we have the opportunity to transform furniture shopping online, by marrying what our retail partners do best, our technology and expertise and the best URL in in the business.”
Some mighty big names in furniture retailing have an ownership stake in the business now, and Prindle said he’s flattered by their commitment to the model.
“Most of the retailers that have invested were already clients, so for them to want to be a part of the business is something I’m very proud of and grateful for,” he said. “The investment was an outcome of a process that began with a well-known technology company offering to buy Blueport. That spurred a process that resulted in offers from technology companies, pure financial investors and the furniture players that ultimately invested.”
Furniture.com opted to partner with those retailers rather than financial or technology companies since they could provide the ability to deliver goods.
“Not to be glib, but we had the technology, and money isn’t hard to come by,” Prindle said. “Partnering with Top 10 retailers with the distribution muscle to deliver the experience that today’s shoppers demand—that was a game changing opportunity for us, and it’s been everything we hoped.”
Any changes to the Blueport platform that were made to accommodate the retail alliance, both for those with ownership and the anchors?
“Our business has always been about enabling furniture retailers online, whether by helping them with their own e-commerce sites on our platform, or driving incremental sales on Furniture.com,” Prindle said. “Over the past decade, most everything we do has been geared to what we’re doing now for the retailers in our alliance.
“That said, the size and vision of the industry leaders we’re working with now takes it to a new level. As an example, for some time, we’ve been looking for a client to pioneer a seamless, omnichannel approach to our Blueport business. With our new partners, we’ve finally been able to build and deploy this system on our retailers’ Web sites.”
Let’s say a shopper visits a Value City store, works with a salesperson and puts aside merchandise.
“After they’ve shopped around or checked with their spouse, they can complete their order on a phone, tablet or desktop, without having to go back to the store,” Prindle said. “Conversely, a shopper can start an order online, send it to the store, then stop by the store to touch and feel and quickly complete their sale.”
The patent-pending system “reflects the fact that in furniture, showrooms and salespeople play a real role in the sales process,” he said. “Instead of imagining we can circumvent either, we’ve enabled this shopping process, and seen phenomenal results.
“It takes a certain type of retailer to try something as revolutionary as this, and we’re lucky enough to have exactly these types of partners.”
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
By Bob George
This is not something many of us want to do. However, this is an inevitable condition in today’s fast-paced environment. And the Internet is a big part of that environment. We cannot slow its growth or lessen its influence even if we want to. It is hard to contemplate the fact that today 17.5 percent of all furniture is sold via the Internet. What happened to the age-old maxims of “They need to sit on it or see the quality or appreciate the finish”?
Before you dismiss these statistics as not believable, understand the fact that only one-third of this 17.5 percent is sold by direct e-tailers—the balance is sold by brick-and-mortar retailers who recognize that consumers want to shop online. There was a time when no one would have envisioned the owner of a fast food restaurant would cut a hole in the wall of the restaurant and sell food through it. However, today one expects this type of restaurant to have a drive-thru window.
This is not to compare furniture to fast food. Instead, it is to help us emphasize the fact that the retailer must conform to how the consumer wants to shop. In the research focusing on this subject (see “Hot Wire” on page 16), the Ease of Shopping was as important to the consumer as Price.
We also cannot ignore the consumer’s perception of Selection when shopping on the Internet (sharing first place with Price as the most important reason for consumers to shop the Internet). To understand this perception, observe the in-store interaction between the sales associate and the consumer. Notice your sales person as he or she goes through a “needs analysis” with a customer. Then, compare that with the efficiency of the Sort capabilities on the Internet. You can begin to understand why more than 50 percent of customers leave the store believing “I couldn’t find what I wanted.”
The Internet is here to stay. Its scope spans such a wide-ranging territory that it boggles the mind. Therefore, it is important for the furniture retailer to recognize the inevitability of change, be willing to make the leap, and embrace the ‘Net.
The successful retailer must anticipate change, not wait until competitors have seized the advantage. This is true of major strategic shifts, such as the Internet. However, it is equally true of certain ongoing changes as well. Among the more important areas on which to focus are the strengthening or weakening of certain product categories, the effectiveness of advertising and the measurement of that effectiveness, and a careful consideration of price point migration. To anticipate change requires a measurement. Without a sundial, a watch, or a digital phone, you would not know what time it is. As pointed out in this issue’s section on motion upholstery, there has been significant growth in the category. However, there are still retailers with limited assortments of motion who wonder why their upholstery sales are down.
From outside the industry there is a fear that furniture retailing is destined to move in the direction of apparel and footwear retailing with the concentration of the volume being in mass merchants or very focused specialty stores. The results are declining dollar volume with stable unit volume. We don’t believe this is true. However, retailers that meet this challenge need to embrace change and adopt the current business model to meet consumers’ demands. Or they will have to create a new retail model that satisfies a need they have yet to recognize.
By Sheila Long O’Mara
Take a tour down nostalgia lane with me for just a few minutes. For those of you over the age of 40, think back to shopping when you were a young teen. Not just for home furnishings, mind you, shopping for nearly anything—clothes, cars, sunglasses, books, toys, wine—and everything.
For me, the lone girl in a family of three kids, shopping for the back-to-school wardrobe was the best. First of all, neither of the boys gave a hoot about clothes—t-shirts, jeans and sneaks got them through. I, on the otherhand, did care, and it just so happened that my mom did, too. Secondly, a day spent shopping was a day spent building a mom-daughter bond.
Back in the day, in small town <st1:place w:st="on">North Carolina, store options were limited. We had the home grown department store of Belk, where you could spend nearly a day in the juniors’ department. There was an Ivey’s. Remember that name? The Charlotte-based department store was acquired by Little Rock-based Dillard’s in the 1990s.
For jeans and corduroy Levi’s in all the colors of the rainbow, the Gap was the place to go. I, a lanky teen with a small frame and long legs, appreciated the abundance of waist-length combinations available in those cubbies stacked floor to ceiling with denim and cords. Shopping was an all-day adventure that always included at least one meal, and sometimes three, out. It was THE scavenger hunt of all scavenger hunts.
At the end of the day, the prizes were all folded and tucked neatly in the bags, carried home by an exhausted yet happy girl. Fast forward to back-to-school—or any other—shopping today. The experience has changed exponentially. I still find myself living with boys who don’t care to shop, but the choices in store fronts has exploded over the years. The department stores don’t carry quite the same draw, whereas specialty stores have developed quite the cult-like following.
Add the World Wide Web—the Internet—to the number of brick and mortar stores and the total of places to shop has become nearly infinite. E-commerce is booming, and the Internet has become a shopper’s first stop prior to buying most things, including furniture. Oh, she may not buy, but she’s certainly looking, and IF she finds the perfect match to what she’s hunting, then look out. She’s just as likely to put that bed or chest or dining table in her virtual shopping cart, pull out her credit card and own both the product and the shopping experience.
E-commerce no longer only revolves around books, shoes and hard-to-find wines. Like it or not, the phenomenon is here to stay. Laptops, desktops, tablets, smartphones—consumers are using all devices to shop with AND buy from.
Is the thought scary? Of course it is, if you’ve not figured out how to add that shopping cart feature to your Web site and the back end logistics needed to make it work. Is e-commerce the end all be all for retailing—furniture or otherwise? No, but it is a very real, very tangible part of the business.
In this issue, we explore e-commerce and share insight from retailers who are making it work and experts who understand the subject and how to help home furnishings retailers create a dynamic, online experience.
Here’s to figuring out the future of retailing on the Internet while we old folks reminisce about the good ol’ days of running from store to store in search of the perfect fall wardrobe.