Harness the Internet

June 30, 2007  by in UnCategorized   

By Home Furnishings Business in Retail Technology on July 2007 Time was, a lot of brick-and-mortar furniture store owners thought the chance that consumers would buy big-ticket items such as furniture online wasn’t worth their consideration. While a lot of shoppers still like to sit on that sofa or touch that finish, there are others who’ll get out their credit card in front of a terminal and make a purchase—especially if they’re comfortable with the amount of information offered not only about product, but delivery and terms.

Within a few years, consumers entering their peak buying years won’t remember a time without the Internet, and some furniture retailers are casting their lot with the Web for either all or most of their business.

Milan Rousset is founder and owner of furniturefromhome.com, a 3-year-old, Internet-only furniture retailer based in Newport Beach, Calif. Rousset grew up around a furniture store—his father owns Rogers Furniture, which has sold furniture in La Puente, Calif., for more than 30 years.

Rousset’s operation began as a marketing site for 10 brick-and-mortar retailers in Southern California, with the idea that he’d sell their goods on the Web site.

“At the time nobody thought people would actually buy furniture on the Internet, and I started selling on my own two-and-a-half years ago,” he said. “It had become increasingly difficult to deal with 10 separate store owners, and none of the stores really respected what I was trying to do for them.”

A lot has changed over the three years Rousset’s been in business, he said, and not only in terms of the number of people selling furniture on the Web. Rousset finds a much higher level of respect on the vendor side for the concept.

“You have to remember that my whole family’s in the furniture business, so I do know the industry,” he said. “Well, a couple of years ago I’d walk into showrooms at the Las Vegas market and introduce myself to a sales rep and tell them what I was doing. I can’t tell you on how many occasions the rep or the owner would come out yelling and screaming that the Internet was a worthless business for furniture. Now I go into showrooms, and while there are still companies that won’t work with online furniture retailers, a lot more are clamoring for our business now.”

Consumer Comfort Breeds Business

There’s also more respect for the Web where it really counts—among consumers.

“Web users are now much more savvy, and are used to doing everything from banking, car buying and even house shopping on the Internet,” said Adrienne Cregar Jandler, president of Atlantic Webworks, a Greensboro, N.C.-based firm specializing in Web site development, strategic planning and site lifecycle services including development, marketing, evaluation, maintenance and hosting. “These shoppers tend to be high-income, and they’re much more time-starved. They go online and shop around, and when they’re ready to buy, they really want to move on it.”

Online shoppers, she noted, have grown more and more comfortable with big-ticket purchases via the Web.

“With real-time credit-card processing and certified secure shopping environments, security has become less of a concern,” Jandler said.

Those companies already selling furniture on the Internet have come a long way this decade, and brick-and-mortar stores, whether or not they’re looking to sell on the Web, will find stiff competition. These e-merchants, Jandler noted, without the overhead of a retail store, can heavily market their online stores.

“The ‘click merchants’ have refined their policies and incentives, especially in terms of price guarantees and matching, and order tracking,” Jandler said. “Consumers don’t feel quite the anxiety they used to for big purchases on the Internet.”

Telling a Story, Setting a Mood

Josh Dorfman came out of a background in Internet marketing to found Vivavi, which began in April 2004 as an online retailer of high-quality, eco-friendly contemporary goods. Interestingly, the operation started with Internet-only sales at vivavi.com, not opening a brick-and-mortar showroom until December 2005 when a Vivavi store opened in Brooklyn, N.Y.

Vivavi has what Dorfman calls a “double niche”: home furnishings that couple strong contemporary design with environment-friendly materials and production processes.

“Because we were in that double-niche market, the Internet was going to be a very important way for us to reach that consumer, and it was really important to us to be able to sell through the Internet,” Dorfman said.

“With our positioning around eco-friendliness, we’re selling a real values-based product.

“Some people look at the goods, say, ‘It’s eco-friendly, and I like the way it looks—I’ll buy it.’ Then you have people who say, ‘OK, how is this product eco-friendly?’”

By using hyperlinks, consumers can easily delve as deeply as they want into Vivavi’s green story. Dorfman himself has a blog, lazyenvironmentalist.com, that focuses on trends in “Green” living—and yes, there’s a link on the Vivavi Web site.

“With the Internet, you’re able to offer people the level of information they want. I happen to feel very strongly about the environmental aspect of our business, but I don’t want to alienate a consumer by giving them too much information,” Dorfman said. “We also want to do that in the showroom, but it’s a lot more automated on the Internet.”

Paul Reitzin, who spent 25 years on the wholesale side of the industry, is president of rezon8 living, a specialist in contemporary whole-home furnishings and accessories that opened its Los Angeles showroom in April. The real focus of the business, however, is the rezon8living.com Web site it launched early last month. The Internet, Reitzin said, is the key to telling his company’s lifestyle story.

“We have 30 vendors, but we’re trying to build our own new national brand of quality mid-priced contemporary furniture geared to urban markets,” said Reitzin. “Our customer is typically a younger customer, say 39, living in or right outside a major metropolitan area.”

Rezon8 living seeks to provide a fully accessorized contemporary setting for a whole room or entire house, and the Web site is chock-full of realistic scenes that the retailer shoots in its own in-house studio, Avenue Six Studios. The studio also offers its services to other companies. Reitzin believes Avenue Six will go a long way toward selling an entire lifestyle.

“Not only do we have the store, we have this huge photography studio where we shoot everything the way we want to show it,” he said. “We can get realistic backdrops, a big city setting for instance, so we can take the right picture with the right look to the point the shopper says, ‘That’s what I want.’

“A lot of people doing e-Commerce don’t have enough forethought on the photography on their site. They get all the factories’ shots and label them by vendor. That way, (consumers) shop the factories and play one site of the other.”

The Web site itself is very atmospheric—visitors to rezon8living.com can even select music to listen to while they browse the site, and there’s plenty of browsing to do. For instance, having chosen an item of interest, shoppers can simply move their cursor over optional finishes or fabrics, and the image of the furniture appears in the selected finish.

There’s a full array of coordinating lighting, textiles and other accessories, as well as a “Design Tips” section written by the company’s stylist, and Reitzin’s wife, Barbara “Basia” Reitzin. The feature covers emerging trends in color, flooring and other home décor, and changes periodically.

Focusing on Service

Rousset at furniturefromhome.com said the key to growing Internet sales is to develop a site in a way that gets the store in front of a lot of people, so anyone thinking about the strategy needs to learn as much as possible about search-optimization on engines such as Google.

“There’s a misperception that you’ll set up a site and people will just come there and buy, but it’s kind of like the yellow pages,” Rousset said. “The more people that get into retailing on the Web, the thicker the ‘Yellow Pages’ get, and the harder it is for people to find you.”

Another factor is service—Rousset believes what happens after a sale is a big differentiator at furniturefromhome.com.

“We offer more service than what your typical online (furniture) retailer offers,” he said. “We ship, install and inspect our goods, and replace any problem items.”

Furniturefromhome.com contracts with a national network of shipping and trucking companies that stock items around the country for faster shipment. Those contractors operate according to a consistent service and delivery standard specified by the retailer.

That’s expensive, though, and the cost of contracting and warehousing creates a lower margin than one might expect from a retailer that relies purely on Internet sales. While Furniturefromhome.com has very low personnel overhead, it spends a lot of money elsewhere.

“The cost delivery and marketing in our particular model is very high, but it’s what we need for our service level,” Rousset said. “It costs us five, six, seven times more than a typical store to deliver, since we’re nationwide, and the cost of replacing a damaged item is huge. My (margins) typically are not really that much better than a retail storefront.”

Rezon8 living’s product assortment, some of which the retailer sources itself with private label original designs, lends itself to rapid, easy shipment.

“A lot of our goods are RTA, so we can ship to that loft that doesn’t have elevators,” he said. “We have real upholstery, for example, but it comes in a box and assembles with a couple of bolts.”

Customers can get threshold delivery to the door—a lot via Fed Ex or manufacturer drop shipments in addition to service out of rezon8 living’s warehouse. They also can opt for a “white glove” delivery that includes installation and assembly through a network of contractors.

See What’s Out There

Jandler at Atlantic Webworks offered some other examples of how online furniture retailers have refined their services incentives for consumers. Homefurniture2go.com (“selling furniture online since 1998”), for example, offers free shipping, satisfaction guarantees, free lifetime warranties, free color samples and free literature.

Onewayfurniture.com offers free shipping, price matching, 120-day price guarantees, order tracking, and client testimonials and feedback. Both sites, and numerous others, Jandler said, offer 0 percent or low-rate financing, simple return and cancellation policies, coupons and specials, live chat/help and low-price guarantees.

“While some of their incentives may be difficult for brick and mortar retailers to match, such as free shipping or price guarantees, brick and mortar retailers can take a cue from these sites,” she said.

One thing brick-and-mortar stores have in their corner is that brick and mortar itself.

“Use that storefront to tell your story on your Web site,” Jandler said. “That brick and mortar tells consumers you know the furniture business, and it does help increase their comfort level in many cases.”

Reitzin agreed that having a physical store can indeed reassure potential customers, and in rezon8 living’s case, it made sense to open a showroom as the company is headquartered in Los Angeles and Southern California is a strong market for contemporary furnishings. The company, however, remains firmly focused on the Internet as its major growth vehicle.

“Our customer base is used to things moving fast, and shopping and comparing on the Web,” he said. “We might open up more stores around the country, but it is our Web site and brand that we really look to build.”

Security concerns among consumers are much less of an issue these days, Dorfman at Vivavi noted.

“We haven’t had a security breach to date, and I attribute that to the fact that the technology and services available are really good” he said. “We use Geotrust for security, and Authorize.net verifies that all our transactions are not fraudulent. The costs have really come down to enable sites to become e-Commerce-capable.”

And Dorfman is convinced of the Web’s usefulness in projecting a retailer’s individual personality and niche.

“The Internet opens up more possibilities,” he said. “It reaches a customer who might not realize they should be your customer.”