You can order up just about anything online these days — from books to clothing to food to toys to office supplies. Essentially, if you can think it, there’s an ecommerce store that sells it. But some big — and big ticket — items might give consumers pause when it comes to buying online and sight unseen — particularly those which involve the “touch and feel” factor. Like furniture. Wondering how today’s consumers feel about buying sofas, dining tables, and bedroom sets online? Let’s take a closer look.
Industry-Wide Growth
The furniture industry is having a moment. It saw continued growth throughout 2015, finished strong, and has a promising outlook for the year ahead thanks to a robust housing market and the combination of low fuel prices and interest rates, according to Furniture|Today.
Financial holding company CIT, meanwhile, projects that the furniture industry will perform approximately twice as well as the overall economy in 2016 at an anticipated growth rate of six to seven percent.
The Perfect E-Commerce Storm
While retail stores did just fine — with North America’s largest home furnishing store, Nebraska Furniture Mart’s Texas location making particularly noteworthy debut at a whopping 560,000 square feet (that’s the size of nine football fields, for those keeping track) and an anticipated $1 billion in annual sales — e-commerce made a particularly strong showing.
Nearly two years ago, industry experts Blueport forecasted a “perfect storm for furniture ecommerce.” Did this forecast play out in the real world? Yes, and then some according to the company’s “Year in Review” for 2015.
Take Furniture.com, for example, which not only had a record President’s Day, but also saw a whopping 260 percent revenue increase from the prior year. Blueport also reported significant growth in online revenue across Labor Day, Cyber Monday, and Blockbuster Boxing Day, with year-over-year increases of 75 percent, 200 percent, and 419 percent, respectively.
Also coming out on top in 2015? Online home furnishings retailer Wayfair. Not only did the company boast a 66 percent bump in net revenues to more than $490 million, but the number of people purchasing from the company topped four million — a 54 percent increase over a 12-month period, according to Business Insider. Wayfair CEO Niraj Shah attributed the company’s remarkable growth to the combination of “market opportunity, and rapidly changing and favorable dynamics of how customers purchase home goods.”
Business Insider went on to predict that — due to the success of companies like Wayfair and Americans willing to spend $32 billion on furniture over the course of the year — the furniture industry would surpass electronics to claim the third-place spot among e-commerce categories.
Who’s Buying Online?
As they come of family age and finally start venturing into the housing market, Millennials represent increasingly big business for the furniture industry. In fact, Millennial furniture spending increased by 142.1 percent from 2012 to 2014 online with this mega-generation making up 37 percent of all furniture and bedding purchases.
By now we’re all familiar with the massive spending power of Millennials, along with their penchant for all things online. They love disruption, but online is not in itself enough. E-commerce companies which understand and play to their preferences will come out ahead.
Pleasing to the Millennial mindset when it comes to how they’ll buy furniture moving forward? Omnichannel is an increasingly obvious essential. Perhaps less obvious? The appeal of financing — both for brick-and-mortar and e-commerce stores. In fact, a staggering 59 percent of Millennials say their choice of retailer is directly impacted by whether or not financing options are offered.
Just as dangerous as overlooking the many factors which add up to a desirable consumer experience for Millennials? Underestimating the lucrative Baby Boomer market. In fact, according to Forrester Research, Baby Boomers will spend twice as much as Millennials online annually by the year 2025.
And despite their oft-discussed differences, Millennials and Boomers do have plenty in common when it comes to what they look for in furniture. Personalization and customization top the list, along with multifunctionality and and comfort. By 2018, meanwhile, a staggering 70 percent of furniture purchases will involve the internet with Millennials and Boomers alike willing to give it a go if the right pieces are in place.
That brings us to one critical takeaway for today’s online furniture e-tailers: While the furniture industry at large has always been as much about selling a lifestyle as it’s been about selling a particular chair, sofa or side table, the call to do so — and the challenges associated with it — are amplified in an online environment which by nature fails on the “touch and feel” front. The upside? Those companies which manage to overcome this obstacle — and plenty are, as evidenced by the booming market — will find themselves positioned for some serious growth opportunities in 2016 and beyond.