As more and more shoppers head online to find furniture and home accessories, the online furniture market continues to grow at a rapid pace. Over the past decade, the revenue opportunity in the home space has led to the fast establishment and growth of home goods-centric retail marketplaces like Wayfair, Hayneedle, and Overstock; broadened product offerings from marketplace giants like Amazon and Walmart; and expensive shifts in focus from the physical buying experience to online consumers or a blended experience from retailers like Home Depot, Lowe’s, and Bed Bath & Beyond.
What changed? The logistics of shipping big-box, big-ticket items like furniture and appliances from warehouse to warehouse to the end consumer yielded a process that was too slow and too expensive for the online shopper, so selling home goods online required a culture shift for businesses and consumers. And while large marketplaces can build business models to absorb those expenses (they have the sales volume required to be profitable on narrower margins) and tighten timelines, independent retailers don’t have the same resources.
Still, being an independent retailer selling furniture online is possible and potentially profitable. Establishing a viable online business requires you to deal with obvious supply chain challenges specific to large items like furniture, and whether you’re an established furniture store aiming to grow your online presence or a new, exclusively ecommerce business, some of the core challenges will be the same. Similarly, keying in on core objectives like fast time to market for new products, lean labor costs, and efficient processes for keeping inventory and catalog information up to date can all help an independent retailer achieve sustainable growth. But where to begin?
In the early days of ecommerce, most of the items being sold online were relatively small and lightweight and, as a result, easy to package and ship. Over the last decade and a half, the assortment of products available online has expanded aggressively from books and media to pretty much everything else you could possibly buy– with bulky and difficult to ship items such as furniture and mattresses marking the more recently established frontier.
As stated in a 2016 Business Insider report, the furniture retail category, which includes home goods, is one of the fastest-growing segments in ecommerce. And this trend continues to pick up steam, U.S. furniture and home furnishing ecommerce revenue reached $38.5 billion in 2018, compared to $30.4 billion in 2016.
The potential for this industry is huge, and barriers to entry are lower than ever before with a wide range of services and ecommerce platforms (e.g., Shopify, WooCommerce, BigCommerce, Magento, and more) making it possible to get a functional ecommerce site up and running in a matter of days, if not hours. However, an array of challenges specific to selling furniture online means that independent furniture retailers require a sound strategy to achieve sustainable growth and long-term success.
Whether you have a brick-and-mortar store or are creating a brand-new ecommerce company, there are a few key elements you’ll need to have in place as a foundation to build upon.
Today, shoppers’ expectations for an ecommerce shopping experience are set by big name stores like Amazon, Wayfair, and others. You must have an ecommerce website that’s easy to manage, update, and potentially expand. Don’t cut corners here, as customers will easily abandon websites that provide the sub-par user experience. Think about the customer journey as you design and organize your site. It should be attractive and easy to navigate, providing a smooth and seamless customer experience from start to finish. Guiding users to what they're searching for via bestseller lists, clear product catalog organization, a clean layout, and effective search functionality (see 72% of Sites Fail Ecommerce Site Search Expectations) will engage users with a smooth, seamless experience they’ll happily repeat.
Major furniture suppliers introduce hundreds of new and updated items each season. To figure out which suppliers you want to do business with and identify which items you want to sell, we recommend attending a trade show or market event, like High Point Market, or visiting a showroom to see items in person. Alternatively, you can shop and order from a supplier’s catalog. When choosing a supplier, do your research. Get in touch with prospective suppliers and figure out how well your business is suited to work with theirs.
Here are a few questions you should get the answers to:
If you want to build a furniture store without any warehouse space, you’ll be limited to wholesalers that can ship to customers directly from their warehouse. These wholesalers typically have an advertised white-label dropshipping program for retailer partners (we will explore dropshipping further in the next point). If you’ll be managing your own physical inventory and order fulfillment, you’ll have more options in terms of what product lines you can carry.
Generally, if you’re buying products outright you can aim to pay around 50% of the suggested retail price, (according to this likely still accurate Wisebread cheat sheet from 2010, the retail markup on furniture ranges anywhere from 200-400%). If you take goods on consignment, you can expect a smaller percentage (often between 30% and 40%), meaning you’ll likely be looking at a gross margin between 30% and 50%. Pricing strategies are another topic entirely, but if you want to learn more, you can check out this simple post by Shopify or, for a more academic approach, this McKinsey report on pricing in retail.
If you want to launch an online furniture store as quickly as possible, dropshipping is an attractive approach. Put simply, dropshipping means that the manufacturer or distributor ships the purchased product directly to the end customer once a purchase is complete. In this arrangement, the retailer markets and sells the item, but never owns or physically stocks the item being shipped.
For stores built on the dropshipping model, you’ll handle the expenses associated with your website, brand, marketing, and business-side logistics, but the bulkier expenses of warehousing, inventory, and fulfillment are the supplier’s responsibility. The dropshipping model can be cost-effective, however, building a sustainable business using this strategy may be difficult, as margins tend to be thinner. Additionally, it’s important to establish good relationships with reliable suppliers to avoid problems with product quality, inconsistent communication, slow shipping times or even out of stock items. We recommend doing your due diligence when deciding on which companies to partner with and to check reviews.
You need a product catalog that’s not just cohesive and on brand, but also flexible, scalable, accurate, and complete with all of the information a consumer needs to make a purchase. As an independent furniture retailer, you’ll likely be selling products from multiple manufacturers and suppliers, each with their own brand and messaging style. Your goal should be to select a mix of products with enough range to satisfy customers’ desire for variety and options, while also ensuring products share stylistic elements that suit your brand.
Your product content must also be on brand and unified. If you were to copy and paste the product descriptions from multiple manufacturers directly into your product listings, your catalog would lack cohesion and would cause customers to question how trustworthy your business is and how accurate your product information is. To lead with the right impression, it’s critical that your product content is streamlined. Achieving cohesion in your product listings will likely require that you create original content and curate and standardize catalog data coming from your suppliers.
With a robust website in place, a brand defined, and suppliers selected, you should be close to beginning usual business operations. However, once you engage in the daily business of processing and fulfilling orders from customers, there are a few common challenges online furniture retailers face for which you should be prepared, including the following:
Starting with the most obvious, the physical size of most furniture pieces is a challenge that must be solved if you’re going to operate as an online furniture retailer. Given the size and weight of furniture, shipping is both expensive and logistically challenging. Plus, as an independent retailer, you won’t be able to absorb the cost of shipping to the same extent a big box retailer that benefits from large economies of scale (the concept that bigger organizations can spread overhead expenses across greater sales volumes, meaning they have lower costs on a per unit basis) would.
Aside from the cost, the logistics of warehousing, transporting, and packaging furniture items are more challenging than they would be for smaller items. As a result, it can often take 4-6 weeks for a customer to receive a piece of furniture after purchasing online.
For furniture, freight shipping is an option to explore, as oversized items may be better suited for freight. Regarding the cost of shipping, you can offer a variety of shipping options to serve those who are willing to pay more for fast delivery, while also providing cheaper alternatives for cost-conscious customers.
Customer returns are an even greater challenge when compared to shipping a purchase. If a customer has an issue with the product, how will the item be returned? What if the furniture is broken in transit? It’s important to have a comprehensive return and refund policy before you even sell a single item to avoid profit loss and the (too often tragic) repercussions of unmet customer expectations.
Even the largest companies in the world sometimes struggle with supply chain management and keeping track of out-of-stock SKUs (stock keeping units) and product resupply dates. In fact, there are entire companies dedicated to identifying waste, white space, and labor inefficiencies as they relate to supply chain logistics and data management for enterprise manufacturers, distributors, and retailers. Supply chain data comes from many sources, in many formats, and at various time intervals, and having a handle on all of the information that is absolutely essential to your business requires that you develop excellent inventory management processes from the start. For smaller businesses fighting to attract and retain customers, having up to date product data can be the difference. Less than satisfactory customer experience for a new user, due to longer than expected delivery times or canceled orders due to no stock available will most times result in a lost customer. Customers have so many retailers to choose from, so the company that provides the best prices, the best products, and stellar service will be the one that sees repeat business.
Robust processes and solutions can help you stay on top of your inventory figures as well as keep your online catalog up to date. If you have a smaller catalog and simple supply chain, you might effectively manage product data manually in spreadsheets for the short term; however, most businesses quickly reach the point that they require automated tools and data connections to effectively manage the constant flow of inventory updates and purchase orders.
The solution? Do some research and find a suitable inventory management solution depending on the size and complexity of your business.
As your product catalog grows, the processes you use to manage all of the rich product content that goes into creating customer-worthy, clickable listings on your website will progressively get more complex.
For each item or SKU that you sell online, you need to collect, create, and maintain an array of product information in your product catalog. Product information includes everything from dimensions to item descriptions, images, and more. Much of this product information and content will be likely provided by your suppliers, and you’ll find that some suppliers will provide much better product content than others. For information you don’t receive from suppliers, you’ll need to create and curate that information yourself.
Good, complete, and accurate product information drives sales in more than one way, actively playing a role across your sales funnel. First, good SEO content will drive organic traffic to your site. Second, consumers require as much product information as is possibly available when buying online, even to the point of searching for it on sites that they don’t end up purchasing from. According to a 2016 Criteo report, 21% of shoppers will check multiples sites because they “want more product information.” Moreover, a 2017 study by the Baymard Institute found “website errors” drove 20% of abandoned carts. In short, to get users onto your site and to win their business, your content must be as good as or better than competitor sites listing the same product. High-quality product information enhances customer experience, gives users a reason to stay on your site, and earns consumer trust.
In addition to providing extensive, accurate product information, giving shoppers a variety of product options also enhances the customer experience. More product options mean managing more SKUs. For furniture, product variants are incredibly important. Customers have different tastes and search for distinct styles, colors, fabrics, etc. Unlike other home decor products, furniture products are big-ticket items, which typically means customers shopping for furniture will take longer to make a buying decision and that they expect to be able to choose the perfect piece. Providing several product options, varied in color, fabric, and/or style, means the number of SKUs in your catalog will grow exponentially with each new product you add. This concept is known as SKU proliferation. For example, say you offer a three-seat sofa in three colors: brown, black and white. You may then have SKUs that look something like this:
A single product now has three SKUs. Now, imagine you have 100 products available, all of which are broken down into SKUs by variant as in the example above.
SKU proliferation compounds the product data challenge, as organizing product data for large numbers of SKUs and keeping it updated requires additional effort (whether the work is manual or automated) and time. Retailers that try to manage even relatively small product catalogs manually in spreadsheets find themselves making errors, and any such errors will need to be tracked down and fixed. Having to correct errors means more work for an already stretched team. Also, consider that errors lead to a decrease in revenue opportunities. If your website is down while your team fixes errors or your products are not all available, you’re missing out on potential sales.
So, the question remains, how do you manage a wide variety of complex product data and ensure that your product data is high quality?
The solution? Get the right tools. By having the right tools to help you manage your product information and automate related processes, not only is product information and inventory management easier, but you’re also building a sound foundation from which your business can scale. If at any stage you are spending significant time manually editing or updating data in a spreadsheet, there’s probably a more efficient solution out there. Business growth requires that you automate or outsource repetitive tasks to become more efficient--and, fortunately, updating endless rows in spreadsheets is an essential task that can be automated.
By thinking smarter about how your business manages product data, you’ll be able to establish solutions that enable your business to scale efficiently as customer demand increases and have more time available to dedicate to growth initiatives.
Since international sources of furniture tend to be cheaper than domestic sources, many furniture companies work with foreign manufacturers to increase their bottom line. Hourly manufacturing labor costs in China and India can be as low as 10% of comparable U.S. rates, and, as such, many foreign furniture manufacturers have a significantly lower cost of production than their domestic American counterparts. However, there are a number of additional indirect costs related to foreign suppliers for which you should be prepared.
When adding new vendors and manufacturers, conduct extensive research. Be aware that not all furniture made overseas will meet the regulations in your home market, so ensure that any items you plan to buy from overseas meet the local requirements (see U.S. Furniture Compliance Requirements). In terms of who you choose to do business with, learn a bit about the history of each new prospective vendor and consider their reputation for reliability and stability, as well as the reliability and stability of the country they operate in. You should also contemplate your own brand direction and growth objectives and select vendors that are in a position to continue to work with you as your business evolves. Although you will want to consider price in order to maintain healthy margins, a good supplier does much more for their customer than just shipping product and sending invoices. You shouldn’t settle for anything less than a great furniture supplier if your goal is to be a great furniture retailer.
Once you do engage in business with a well-vetted supplier, you should establish robust, efficient, and scalable processes for managing these relationships.
Taking care of things as they arise with ad hoc emails and phone calls will quickly turn into a time-consuming, error-prone, and organizationally frustrating mess. Take the time to develop repeatable processes and use automated systems for relationship management, like a CRM (Client Relationship Management) system, where possible. Such platforms can greatly reduce the managerial burden for the communication and relationship aspects of your business and reduce the risk of miscommunication (or missed communications) as your supply chain grows and becomes more complex.
Consistent and well-defined processes can help immensely when it comes to dealing with language barriers and long and complex shipping timelines. If you don’t speak the local language, you can choose suppliers with representatives who speak English, but keep in mind that language skills vary, especially when communications become more industry-specific or require more detail. A contact’s language skills may seem solid in initial conversations, but non-native speakers may not always understand subtler or detail-oriented comments. Be prepared for misunderstandings and build in time accordingly. In the same vein, be prepared for unexpected delays and potential complications with your first few shipments. In both cases, as your relationship matures, you’ll be able to reduce misunderstandings, complications, and delays with consistent communication patterns and processes.
Items available for purchase on your site should actually be available, meaning that you have inventory to supply a customer order. If your catalog is outdated and a customer orders a product that isn’t available but is listed as in-stock, you’ll have to discover the error and take action. If your process for refunds is like that of similar businesses, this means contacting the customer to explain the error, advising the customer on his or her options, and coordinating a refund. Inaccurate inventory may seem like a simple mistake, but consider the repercussions to your reputation (e.g., negative online reviews are damaging) and revenue opportunities. Good retailers don’t have inaccurate product statuses. It’s unlikely that the customer will return to your site. Now, because of a product information error, you’ve lost a customer, and we haven’t even talked about the fees and added hassle on the business side of refunds.
For online sales, your website is your ultimate sales tool. It gives customers 24/7 access to your products, and your product catalog is what customers will shop on your website. Make sure your product descriptions are accurate and status (e.g., available, out-of-stock, back-ordered) and stock numbers are current. We recommend automating your inventory updates to minimize and ideally avoid product status challenges.
Selling furniture online successfully requires attention to detail. Customers can’t see the products in person, so retailers must provide relevant, consistent, and impactful data to aid them with their purchases. The following tips will help you drive sales and, in turn, support the long-term growth and success of your business.