By Powell Slaughter, Contributing Editor
HIGH POINT — There’s a move afoot among furniture retailers to bring the product selection and geographical reach of online marketplace platforms to bear on their businesses.
It’s not as if such platforms, which aggregate third-party vendors to sell directly through a retailer’s website and handle fulfillment, haven’t been around a while — Amazon for just about everything, Expedia for travel — but they represent a new development for so-called “traditional” furniture stores looking to build incremental revenue through expansion into a wider range of home goods while avoiding extra inventory and back-office headaches.
Recent examples in furniture include Mathis Home’s launch of Mathis Marketplace, a move that helped inspire the retailer’s own rebranding under a new name, and department store Kohl’s expanded offering of furniture and other home categories after a successful pilot of its Marketplace.Kohls.com platform.
Wayfair represents a long-standing example of a home furnishings marketplace, but unlike the above, Wayfair was an online native from its birth as CSN Stores.
And while the relaunch of the Furniture.com brand by a Rooms To Go-led investment group isn’t technically a marketplace platform, it does share some attributes with the model.
The non-transactional concept looks to offer consumers an Amazon-like range of shopping options but with a strict focus on home furnishings that steers site visitors to participating retailers’ brick-and-mortar locations.
What are the opportunities and challenges of marketplace platforms as they relate to furniture, and how applicable are they to small and mid-size retailers in a furniture retail environment that remains highly fragmented despite considerable consolidation over the past couple of decades?
Late to the party?
Chairish has 10 years of experience as an online marketplace platform with a specialty in high-end home furnishings targeting luxury consumers and designers.
CEO and co-founder Gregg Brockway shared some insights into applying such a model to the mainstream furniture sector. He noted that furniture in general lags behind other consumer goods and services sectors in adopting the marketplace model.
“Online is increasingly relevant to the home furnishings industry,” he said. “It’s something that’s already happened in numerous sectors. Amazon invested heavily to set consumer expectations that are really high: 24-7 operation, quick delivery — sometimes the same day — and pricing consumers can trust and verify. It’s harder to apply this to home furnishings. The home furnishings industry has some unique attributes.”
Those include a lot of small and mid-size businesses, style and taste considerations that increase along with the price of goods, and the size and fragility of the items to ship. Long lead times are often the case, not what consumers experience with the Amazons of the world.
“There are challenges in bringing online to life in the home furnishings industry at scale,” Brockway continued, adding that online success for categories such as furniture relies largely upon differentiation from behemoths like Amazon.
“Curation is one of the things that worked very well for Chairish,” he said. “You don’t sell everything to everyone. You have to be a great shipper, not just in your neighborhood, but across the country. Behind the curtain, Chairish is really a logistics company. And the further up the luxury scale you go, the easier it is to differentiate from Amazon. Luxury has been the hardest thing for Amazon to crack.”
Industry analyst Jerry Epperson of Mann, Armistead & Epperson believes the marketplace model is well worth exploring for furniture retailers, as well as vendors who aren’t already in the game via platforms such as Amazon and Wayfair.
“First, every retailer needs to look at what they have as assets and how they can leverage them beyond internally,” he said. “Second thing is, our industry has this endless assortment of products. No one can carry everything. I look at this as an opportunity for any one of those retailers to expand their selection without investing in extra inventory or vendors.
“Third,” Epperson continued, “retailers have an opportunity to expand their reach into other regions and have other retailer members of these coalitions handle the professional, white-glove delivery. Nobody is buying from every vendor, and with your credit relations, you can get your vendors to ship to those other retailers.”
Broader selection, broader reach
Mirakl, a French provider of marketplace platforms jointly headquartered in Paris, France, and Somerville, Mass., is Oklahoma City-based Mathis Home’s online marketplace partner. Mirakl’s platform has been applied to sectors ranging from sporting goods to electronics to groceries at companies such as Best Buy, Decathlon, Kroger and Macy’s.
Sophie Marchessou, executive vice president for customer success at Mirakl, said marketplaces represent opportunity for home furnishings retailers to take advantage of growing online sales of their goods while broadening their offerings at the same time.
“Marketplaces give home furnishing retailers the means to take advantage of this growth by scaling what they can offer to their customers more profitably and without having to give up valuable floor or warehouse space,” she said from France via e-mail, pointing to Mathis Home as an example.
“They’re bringing on dozens of curated third-party vendors through our ecosystem of sellers, Mirakl Connect. Those sellers will bring hundreds of thousands of new products, many from smaller independent brands who might not be able to scale to traditional wholesale relationships, in new categories like baby, kitchen and home organization.”
Mathis Home Chief Marketing Officer Rit Mathis said that the retailer sees its new platform as the “answer to keeping Amazon and Wayfair from eroding our business.”
The marketplace, he added, is an opportunity “to be a complete and exhaustive offering for all home furnishings. We aim to extend our advantage as the selection leader.”
When it announced its partnership with Mirakl in December, Mathis Home had established relationships with 150 vendors. The retailer did not share how many are currently on its platform, but Mathis Home E-Commerce Marketplace Director Kaci Crane said the number is growing dramatically.
“The marketplace team conducts a thorough vetting and onboarding process for all new vendors to ensure they align with our family of brands,” she said. “We have a promising pipeline that synchronizes with new category phase rollouts. Our online catalog size tripled in Q1 and is on track to double these results by the end of Q4.”
Mathis Home is a regional powerhouse in the Midwest and also has expanded into California. Is there potential for further increasing the brand’s national reach?
“Our primary focus is to be a better and more complete offering for those markets in which we operate final-mile delivery,” Rit Mathis said. “However, our marketplace vendors ship nationwide, and we see no reason to restrict these sales.”
Challenge and opportunity
What are some critical points in implementing a marketplace platform, especially as they relate to furniture retailing? Mirakl’s Marchessou believes there are some commonalities relative to other sectors along with distinctions.
“Overall, home furnishing marketplaces face many of the same issues that other online retailers experience,” she said. “Fundamentally, marketplace products and other online furniture offerings need to feel like a part of a single shopping experience that also matches what happens in store. Much of the challenge comes down to proper messaging and product design: Shoppers need to understand what products are available in store, what’s available for same- or next-day delivery, and what will ship separately.”
Fulfillment is an especially tricky question for furniture retailers operating marketplaces, she added.
“Shipping furniture straight to customers’ doors is a challenge, and keeping fulfillment and shipping costs down for sellers and customers is necessary for marketplace growth,” Marchessou said. “This is where having a close relationship with sellers is key. It also comes back to clearly communicating what to expect for your customers; when they make a purchase on your website, they shouldn’t be surprised by shipping timelines.”
The retail examples cited above are large regional or national operations. Is there a place for small and mid-size retailers to participate in the marketplace model?
Brockway at Chairish believes marketplace platforms offer genuine opportunity for smaller retailers, but not on their own.
“It’s about participating in a marketplace in addition to their own branded online presence,” he said. “It’s exposure to support their website and bringing people to it. … The right solution is to have a very strong, visible web presence for your loyal customers, but also participate in a marketplace where you can attract new customers and turn them into loyal customers.”
Retailers can then get the marketplace’s benefits of scale to get more eyeballs.
“It’s also about efficiency,” he added. “The marketplace platform can invest in technology and analytics that’s hard for a smaller or mid-size business to do at scale. Pick the right marketplace because they’re not all the same. Marketplace participation needs to be applied selectively.”
The marketplace model isn’t just for the big guys, Marchessou said, and her views regarding smaller players share similarities with Brockway’s.
“There are businesses like Mathis that are operating marketplaces of their own, scaling what they can offer to customers online. It’s a much more cost-effective way to compete with the digital natives that have entered the space,” she said. “There is also a growing industry of businesses that use marketplaces as additional sales channels, selling through the marketplaces of established brands to reach new audiences, geographies, you name it.
“Plus, they have more control of their brand than through a traditional wholesale relationship. Mirakl works with more than 50,000 of these marketplace sellers. The beauty of marketplaces is that you can do both: choosing to sell on marketplaces, run a marketplace through your own ecommerce site, or blend them for maximum impact.”
Cooperative efforts among a group of retailers could be a way for more furniture stores to take advantage of marketplace platforms. Epperson pointed out that buying groups illustrate the potential opportunities of retailers and vendors working in concert.
“When you get groups of non-competing retailers together, there’s so much they can do for success, not only on the front-end sales, but also on the fulfillment and delivery,” he said. “E-commerce never had any trouble selling merchandise. They had trouble completing the fulfillment profitably.”
Retail has gone through many transitions over the years — peddler, general store, catalog, department store, malls, etc. Does the marketplace model represents the next phase of retail? What with examples such as Amazon, is it already?
Several of the sources for this article say that while e-commerce will continue to grow, online marketplaces won’t fully replace brick-and-mortar anytime soon, at least when it comes to selling furniture.
“The marketplace model has been here a long time, and it’s evolving, and as the world becomes more digital and online, it’s getting even more important,” Brockway at Chairish said.
That said, he added, “physical retail is not going away, but online can enhance traffic to the physical location and the experience in the physical location.”
See also: Furniture.com relaunch gathers retail brand power