Online sales of home furnishings have exploded during the coronavirus pandemic. That’s the good news. The bad news is that the surge in e-commerce has exposed serious deficiencies in a venerable industry’s supply chain.
What furniture retailers lost from store closures due to nationwide lockdowns, they’ve been making up through online orders. Stuck at home, consumers opened their wallets to spruce up their living (and remote working) quarters. In just the first few months of the pandemic, the industry saw increases in online sales of more than 220% in home goods, 428% in outdoor furniture, 104% in office chairs, and 89% in office desks. And the results are anything but a blip. Between 2020 and 2023, the U.S. furniture market is estimated to experience a compound annual growth rate of 4.3%.
That said, furniture has always been an uncomfortable fit for e-commerce. The product is heavy and bulky, often requiring scheduled delivery times and assembly at destination. To satisfy picky customers, order fulfillment and service have to operate at maximum efficiency.
Except they don’t. Historically, the furniture business “has not been terrible vertically integrated,” says Bo Grist, executive vice president of product delivery with Ignition Commerce. Manufacturers have had to draw from multiple outside sources for items such as fabric, foam and wood. And those suppliers have been distant and widely scattered, often in East and South Asia.
More recently, traditional furniture makers have had to deal with aggressive upstarts like Wayfair Inc., creator of an online platform that reportedly offers some 14 million items from more than 11,000 suppliers around the world. Then there’s Amazon.com, the oft-described “Everything Store,” which didn’t even blink before jumping into the difficult business of selling furniture over the internet.
Many more online furniture sellers have joined the fray, including Anthropologie, Etsy, West Elm (a Williams-Sonoma brand), and big-box retailers such as Target Corp. Along with these disrupters has come a radical shift in customer expectations. The old-line furniture merchandiser, whether selling through its own branded locations or big department stores, might take weeks to fulfill an order. Then buyers would have to clear an entire day while waiting for their deliveries. “There are custom manufacturers getting things out in days, whereas a six-week delivery window was the norm before,” says Grist. “Now that seems unacceptable.”
Those same manufacturers are often still the ones turning out physical product — neither Wayfair nor Amazon makes a single chair or couch — but the demands imposed on them by e-tailers are intense. At stake is access to an increasingly crucial channel for selling their wares.
This isn’t the first revolution to hit furniture makers. Sweden’s IKEA upended the domestic market when it opened the first of its American megastores outside Philadelphia in 1985, offering cheap home furnishings (with cute names) in flatpacks, and requiring assembly by the purchaser. But the rise of e-commerce has presented consumers with many more options since then, and manufacturers are still scrambling to keep up.
For many years, the traditional American furniture industry leaned heavily on domestic sources of supply. North Carolina, for one, became known for its extensive production capabilities. (The state still calls itself “the furniture capital of the world,” employing some 36,000 workers.) Grist says that remains the case to some extent, especially when it comes to products that require some degree of craftsmanship, or extremely short order lead times. But for basic items like a wooden chest of drawers, it’s now far cheaper to have it made in Asia. And domestic producers are finding it increasingly tough to compete.
The challenge for retailers becomes gaining visibility to, and integration of, inventory throughout the supply chain. That’s not especially difficult for the bigger names in the business — say, Crate and Barrel, Ashley HomeStore or Restoration Hardware. It’s another matter entirely for smaller entities, for which the technology to acquire real-time visibility of online orders can represent a significant investment. “They are frequently ill-equipped to accomplish that,” says Grist.
The degree to which retailers and manufacturers are successfully collaborating with suppliers — freely exchanging data on demand, supply and the status of orders — differs widely. In a locked-down world, where personal contact is impossible, supply-chain partners need to be meeting in virtual spaces. An iPad, for example, can serve as a means of examining fabrics and patterns without the benefit of physical touch.
For traditional retailers, the biggest challenge lies in balancing activities conducted online with those in physical stores. Many have yet to transfer key data from older legacy systems into modern formats such as XML files and web-native services.
As for the ability to schedule, track and deliver orders efficiently to the online customer, “it’s all over the board,” says Grist. Large e-tailers are partnering with white-glove and delivery services to offer pinpoint tracking of orders in transit. Many smaller players are having trouble matching that capability.
Will those tech-challenged players survive? “I think the jury’s out,” says Grist. “The capacity for customizing furniture and visualizing it in the customer’s space becomes table stakes for all retailers and manufacturers. If there’s not an investment made in that area, they’re going to struggle to compete with those who do have those types of tools. If real and relevant data isn’t being extended out to the retailers, then they’re going to suffer.”
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