HOW COMPANIES LIKE WAYFAIR AND IKEA HAVE RESHAPED THE THIRD PARTY LOGISTICS INDUSTRY.
The Furniture Industry and the Advent of E-commerce Fulfillment
For nearly two centuries, the American Furniture Industry’s distribution system was largely unchanged. Most furniture manufacturers were located in the Carolinas and Virginia, where they had easy access to an abundance of various hardwoods and a multitude of shipping options to deliver their goods to retailers across the nation.
A large portion of these stores were family owned and independently operated. They depended on a variety of manufacturers who shipped their merchandise based on orders placed twice a year at the High Point Furniture Market and fill-in orders given to factory reps who traveled the country servicing these accounts.
The Furniture Industry Before the Birth of the Internet
Eventually, these mom & pop stores began to yield to multi-store chains, like Levitz, who were able to use their buying power to reduce their costs on popular styles and increase pressure on independent retailers who could not compete with the larger chains’ buying power.
But for the home furnishings consumer, the in-store buying experience was unchanged. They entered a large showroom filled with different brands, price points and buying options. They purchased in-stock goods and the retailer delivered it to the home which, in most cases, was located within 30 miles of the store.
Even the arrival of the internet had little initial impact on the furniture industry. Manufacturers resisted it, retailers feared it, and home furnishing consumers seemed to prefer to visit the store and choose their furniture based on price, comfort, look and feel. While other consumer goods, such as apparel and small appliances flourished on the world wide web, home furnishings lagged behind.
There were a couple of very good reasons. Furniture is large and it is heavy. Shipping large items involved considerable freight charges based on weight, size and distance...a formula that made the cost of most long distance furniture purchases exorbitant and unrealistic compared to the local retail environment.
Then came Amazon and that changed everything.
Furniture Manufacturers and their need for e-commerce fulfillment services
Amazon Arrived Like the Online Behemoth That Their Name Implied
Starting out just as a modest bookstore, then eventually offering just about everything and everything cheap, fast and in most cases, freight free, regardless of weight or size. Soon, furniture manufacturers and shippers had to scramble to adapt to and incorporate e-commerce fulfillment services or risk being left in the digital dust. Their goal was clear....to make the e-commerce experience as satisfying as shopping in-store, which required shortening delivery times as much as possible, fixing prices to include freight charges and to compensate for any delay in arrival at the consumers door by the promise of substantial savings over brick & mortar stores.
This business model presented substantial hurdles to major manufacturers of quality home furnishings, especially case goods, which had previously been shipped by common carriers with the charge paid by the retailers or consumers based on weight, size and distance. Now the supplier was forced to reconfigure their costs and streamline their national distribution strategy to include freight costs and give all consumers identical prices regardless of where they are located.
Thus was born the urgent need for a new version of an old business….logistics.
E Commerce Services | The Challenge to Furniture Manufacturers
Logistics and the Need for E-commerce Fulfillment
Though the business of logistics is as old as trade itself, the industry now had to incorporate elements that had seldom played a major role before, including deep discount pricing, last mile delivery and setup.
Furniture Warehousing, Handling, and Delivery of Home Furnishings
So it was that Massood Logistics was born in 2010, applying their sixty years of experience in both furniture transportation and retail to the challenges of assisting furniture (and other) manufacturers with the demands of furniture warehousing, handling, and delivery of heavy but sometimes fragile home furnishings to demanding consumers nationwide.
Massood Logistics | Our E-commerce Fulfillment Services
The Art of Online Furniture E-tailing
While Massood was building their network of warehouse and e-commerce fulfillment centers, other newcomers were mastering the art of online furniture e-tailing. The first to take hold was a company called Wayfair, which entered the marketplace as an internet only seller, with no stores or ties to any retail entities.
It was a big gamble but it paid off, since in 2019, they controlled 33.4% of all on-line sales, splitting the market with Amazon, who controlled 29.7% of online furniture market sales with a combined total internet furniture sales at approximately 63%.
Wayfair is the leader in online furniture sales in 2019, with 33.4% of the market, plus it is the fastest grower within the online furniture market, according to 1010data.
IKEA | Advances into E-tailing and adds Furniture E-commerce Fulfillment Services
IKEA's Need for an E-commerce Distribution Strategy
Wayfair’s success, and the emergence of other major players in the home furnishings e-commerce battle caused many to change their market position. Chief among those was IKEA, the Scandavian producer of high quality contemporary furnishings with a dedicated following of young budget-minded consumers.
Although their sturdy and attractive furniture was designed to be assembled by the purchaser in their home, and therefore already in a disassembled state that was perfect for shipping, the company had long resisted any type of shipping service by them or third party logistics companies.
They preferred to build massive stores that warehouse furniture near major metropolitan areas, confident that their loyal buyers would make the trip to their stores and haul the goods home themselves, which they continued to do for decades. But as Wayfair and Amazon continued to build market share with this same young, price-conscious consumer, they made the unavoidable decision to jump into e-tailing and e-commerce fulfillment with both feet. Today, Ikea owns 1.8% of the on-line furniture sales market and is growing market share every day.
The Roll of Third Party Logistics Companies in the Furniture Distribution Arena
Furniture Warehousing, E-commerce Fulfillment and Distribution During COVID19
At this point, it would appear that the e commerce sales model was well established with an internet savvy young consumer while still leaving room for traditional brick & mortar stores to serve those who preferred the in-store experience.
But just when everything seemed to settle into a predictable model, mother nature threw everyone a curve that would change the retail experience completely, with some saying it would last forever….the Covid 19 virus.
This deadly disease terrified consumers and sellers alike, from furniture buyers to retail sales staff, regardless of their technical abilities or the love of ones in-store shopping experience. Suddenly, nearly everyone was restricted to their home for work, relaxation or their children’s education. This may have signaled positive trends for e-commerce business models, but it completely changed the role of the retail store. Here's what one industry leader had to say…
Keith Mercier, general manager of WW retail and consumer goods for Microsoft, agreed.
“What we’re seeing globally is that COVID is the new chief innovation officer in the retail industry,” he noted. From his perspective, COVID-19 changed the role of retail stores forever, colliding the front and back of the house and turning every retail store into a kind of fulfillment center.
“It’s now a customer experience center, it’s a warehouse, it’s a logistics node,” Mercier elaborated. “It has just forever changed, and it’s probably going to stay that way.” It has also changed the shopper journey, Mercier said, with the proliferation of things like curbside pickup dramatically increasing the number of people who begin purchases online before ending them at stores. Many have also just completely turned to completing purchases online.
Massood Logistics - Third Party Logistics Company Providing E-commerce Fulfillment
This deadly virus has put a strain on every link in the supply chain, an unexpected stumbling block that makes an already difficult task even more challenging...and dangerous.
However, for manufacturers and on-line e-tailers, the show must go on, and that means an ever increasing dependence on qualified and experienced third party logistics companies, like Massood Logistics. Massood has committed tremendous resources to the safe, efficient and timely warehousing and distribution of goods to consumers or retailers. With more than sixty years of experience in transportation, logistics and retail, they have the equipment, resources, and facilities to meet any furniture warehousing or 3PL need.
We provide a comprehensive list of 3PL services, including warehousing, product assembly, order fulfillment, drop shipping, e-commerce fulfillment services and last mile delivery.
Do you need third party logistics services?
Tara Massood, Vice President of Massood Logistics, wants to assure anyone looking for a third party logistics partner that safety is their top priority “We are committed to helping you bring your goods to market with a program designed for you and your unique needs….a program that will protect your reputation, your brand, your customers and your employees”
For more information about our furniture warehousing and third party logistics services, contact us here or call 336-635-4500 and we’ll develop a 3PL strategy just for you!