Amazon is a disruption company first and foremost — and word has it they’ve been eyeing the roughly $100 billion furniture retail business. It’s an attractive market by any estimation. Analysts are projecting a 20% growth rate for the global online home decor market through 2020 and e-commerce sales for home furnishings are estimated to be a $29 billion business in 2017, according to a recent report from Fung Global Retail. It’s a valuable audience, too. Desktop and mobile commerce buyers spent an average of $295.73 per transaction vs. $86.30 across categories, according to MarketLive.
Why has Amazon waited so long to disrupt furniture retail? Simply put, selling furniture is surprisingly complex. Customers have until recently been reluctant to buy large, expensive and fit-sensitive items like dining room sets without seeing the merchandise in person. Other challenges include
It’s not the only thing that they’ve been waiting for, but Amazon has definitely been waiting for Augmented Reality to mature and gain broad acceptance. Surprised? Augmented Reality and Virtual Reality are core to the future of furniture retail. Customized visualization – the ability to see an item in an existing room or to see an entire room of furniture within the constraints of an existing floor plan – can inspire both online and brick-and-mortar customers with confidence. Visualization technologies like AR and VR not only increase pre-purchase confidence, but because they set expectations in advance of delivery, they can also serve to increase overall customer satisfaction and to decrease returns.
Augmented and Virtual Reality solutions allow shoppers to view items in their home before they buy, which decreases returns by eliminating surprises upon delivery. Purchases fit into rooms and through doorways, and the new and existing pieces look right because the customer has seen the configuration before. Increased confidence through clear expectations translates into higher initial customer satisfaction and fewer returns.
Amazon isn’t the only company looking to Augmented Reality and other emerging technologies to write the future of furniture retail. From Wayfair to Houzz and Walmart to Alibaba, AR and VR visualization is set to play an important role in disrupting the furniture industry. Here are five companies that are currently reinventing furniture retail for the post-industrial economy, some of them already relying on these technologies to change the way that people shop and buy furniture.
Houzz touts itself as “The New Way to Design Your Home,” which is as true today as when the company was founded back in 2009. Houzz is part online community, part marketplace. Users can explore home renovation and furnishing ideas as well as shop for home decor using the latest Augmented Reality tech to visualize items in their home before they buy. The company doesn’t stock merchandise or handle fulfillment — they leave that to their partners. Their consumer focus is entirely on providing a robust set of useful inspiration and design tools with a direct path to purchase that helps users to take ideas and make them reality with ease and elegance.
Houzz’s mobile app provides users the full suite of Houzz tools, allowing them to take a remodel or redesign project from creative spark to completion. In doing so, Houzz puts its users in touch with a network of professionals, millions of products, and a community of like-minded individuals to seek advice from or bounce ideas off. By positioning itself as a facilitator and resourceful middle man, Houzz has become a must-visit site for renovators.
A technology company that happens to sell furniture, Boston-based Wayfair has been ahead of the competition in using emerging technologies to retail merchandise. In June of last year, the retailer released WayfairView, a smartphone app that used Augmented Reality to allow users to preview products in their home. Yes, the app only worked on the handful of phones equipped with Google’s Tango platform, but the implementation points the way to the future for the sale of large items.
Wayfair is a major player in home decor, with over 4000 employees and $2.25 billion in net revenues in 2015. The company has also become the subject of rampant acquisition rumors, with Walmart being bandied about as a possible suitor.
The Big W isn’t exclusively a furniture retailer, but they definitely sell furniture. They also are directly taking on Amazon, so if Amazon is looking at furniture, no doubt that Walmart is doing the same. Just look at their recent acquisition binge, which includes the purchase of Amazon Prime competitor Jet.com (which had already acquired online furniture store and more, Hayneedle.com), outdoor apparel maker Moosejaw, indie apparel retailer Modcloth, and a rumored purchase of men’s clothing maker Bonobos. If Amazon is looking to get into furniture retail, it’s a safe bet that Walmart will also look to move into the space in order to remain competitive. Walmart knows that they need to invest like mad in online retail in order to stave off Amazon (which is now worth more than Walmart, Costco and Target combined).
Jumping across the pond, European furniture seller Made.com has developed a fascinating business model that American retailers could look to emulate. As I wrote last summer, Made.com maintains a physical showroom, but it’s tiny compared to other furniture retailers. Shoppers try out the limited stock on hand, then use one of the store’s iMac computers to customize their selections and place an order.
Ning Li, co-founder and CEO, talked about the concept with retail-innovation.com, saying “Everyone is trying to find a way to link both online and physical worlds. Online, there are no square footage constraints – space is endless – so coming up with ways to showcase our full catalogue here was a challenge. We’ve achieved this by incorporating digital elements but only in ways we feel add value and are not in any way gimmicky.”
Made’s innovations go beyond the showroom. The company has streamlined the furniture design and manufacture process, allowing it to take products from design to sale in as little as four months. Made releases two new collections a week, and minimizes overheads by selling online, grouping orders of the same item, not owning its factories and building close working relationships with factories and designers. Sounds like the model of an innovative e-commerce company to me.
No discussion of e-commerce is complete without a mention of Alibaba. The world’s largest retailer (sorry, Walmart), the Chinese e-commerce giant is more willing than other giant companies to experiment and try something new. In addition to a robust online portal and a colossal network of partners, Alibaba is working hard to harness new technology like Virtual Reality to better meet their customers, and has already experimented with a VR storefront for its Chinese customers.
Alibaba is already selling furniture online, though it’s not a real focus of the company. Expect it to move quickly if it looks like Amazon, Wayfair, Made or another retailer finds success selling furniture online.
Joe Bardi is a former newspaper editor and movie critic who also likes dogs, small children and three foods (all of them meats).
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Virtual Reality is constantly changing and there is much to learn. Here is a supplemental list of VR/AR resources for you to enjoy and share.
Marxent Via @NextRealityNews, @Snapchat sells advertisers on #AugmentedReality with new e-commerce features: https://t.co/gEsCrQO7am
Marxent RT @FutureStores: Visual commerce has been growing in popularity thanks to social media platforms such as @Pinterest and @Instagram. Howeve…
Marxent Via @TheNewEconomy, #AugmentedReality will change how retailers engage with consumers: https://t.co/NXUnOYi96r