Consumers have been purchasing clothing, books, and electronics online for years, but until very recently it was highly unusual to buy a mattress or furniture online, in part because of high shipping costs and unease around buying high-ticket items through a website.
While only 11% of US internet users currently prefer to buy furniture online and the category accounted for only 9.6% of total retail ecommerce in 2018 in the US, cross border furniture and homeware e-commerce sales are growing and at the fastest rate (18.2%) of all product categories. Revenue is expected to show an annual growth rate of 9.8% and market volume of $327,080MM by 2023, with the US and China as the largest markets.
The Mattress Disruptors
In the not so distant past, consumers mulled over their "sleep number" and tried out innumerable mattresses at brick-and-mortar stores. Enter disruptors such as Casper, which launched as a digital native retailer and is planning to expand its market from the US, UK, Canada, Germany, Austria, Switzerland into other countries.
The shift to online purchasing occurred in this category due to several factors: e-commerce retailers such as Casper, Leesa, and Tuft & Needle (which recently merged with Serta) offer a relatively small number of products and clear pricing structures. They lure customers with free shipping and generous try-out and return policies. Leesa and Casper, for example, also offer relevant items such as sheets and bed frames.
Mattresses have also proved a boon for Amazon, which recently moved into the home furnishings category. Mattress and box springs were its most popular item in that category in 2017, bringing in over $1.1 billion in sales that year, an 82 percent increase over the previous year.
The Tech for Selling Furniture
Global e-commerce furniture retailers are luring in customers with AI technologies, AR and visual search features that enhance the shopping experience and surface better personalized product recommendations. For awhile now, Wayfair has been offering an AR feature on its mobile shopping app that allows shoppers to view 3D images of furniture and imagine how an item will look and fit in their space. The retailer is also experimenting with an AR device called Magic Leap, a technology that it believes will become an integral part of the e-commerce furniture space. Facebook recently bought visual search tech startup GrokStyle, which uses AI to help consumers shop furniture and home goods. Indeed, virtual reality has become an integral element of the customer experience for both larger online retailers like Wayfair and smaller ones, too. MYCS, a Berlin-based e-commerce start-up that specializes in customizable furniture and relies heavily on AI, recently expanded to France, Switzerland and the UK.
The Ikea Place App is another new tech that helps shoppers visualize the placement of furniture. Ikea is investing heavily in new distribution centers and (in some instances) shifting its physical presence from city outskirts to city center showrooms and pop-up stores in order to support their rapid e-commerce growth. Ikea also recently announced that it is finalizing details to launch a third-party website that sells both its own products and those of competitors as another avenue of expansion in the digital space.
Creating IRL Brand Experiences
One interesting trend in the e-commerce furniture space that we're seeing is certain brands moving from online-only to opening physical showrooms. Retailers such as Made.com, which saw impressive sales growth in 2018, are opening stores to provide a 'brand experience' for customers. Casper – which plans to open 200 stores by 2021 – is also following the lead of other digital natives and expanding into the brick-and-mortar space.
Logistical challenges in the furniture space
There are several considerations when exploring the balance between digital and brick-and-mortar sales, and these factors are further complicated when selling cross border.
One unavoidable challenge for e-commerce furniture and homeware retailers is meeting expectations in the age of Amazon. Consumers used to one-click purchases and overnight deliveries easily handled by UPS or FedEx are no longer willing to deal with cumbersome delivery processes. Customers expect almost immediate delivery for everything except custom-crafted items.
E-commerce furniture retailers with global aspirations must satisfy impatient consumers while navigating the challenges around high international shipping costs and deciding when to set up local distribution centers. These brands need to figure out how to provide a flawless delivery and courteous ‘white glove’ service, even for international customers, or face their wrath on social media.
Feeling At Home with Cross Border
There is a lot of potential in the home goods and furniture market that cannot be ignored. And while global e-commerce retailers of large and bulky items face robust growth opportunities, there are unique logistical challenges in the era of one-click shopping that require strategic planning to ensure the unit economics will work for your business.
To overcome these logistical and operational hurdles and expand internationally you'll need a tech solution and partner to help you along the way. Get in touch today to learn how Flow's console can enable your business to go global.