DTC furniture companies are capturing the market share of traditional furniture retailers. But will they replace them? This DTC furniture guide discusses how the furniture industry is transforming. And its latest development: eliminating the middleman.
- DTC furniture brands deliver products directly to customers, eliminating third-party retailers and distributors
- With the benefits this space offers, competition is increasing, but few brands have cracked the code
- Traditional retailers will soon face a real threat in DTC furniture brands
What do we mean by DTC furniture?
The Direct to Consumer (DTC) approach is where manufacturers sell directly to the consumer. This eliminates the middlemen like distributors and traditional retail stores.
The brand manages everything, from design and production to sales and customer service. And customers access quality goods at affordable prices with the middleman eliminated.
The evolution of furniture sales: How DTC furniture brands came into being
Until the 19th century, artisans would custom-build and sell furniture to buyers. When industrialization took over, furniture, too, began to be produced en masse.
Soon enough, pre-made furniture pieces began to be displayed in stores to lure buyers. Thus the furniture seller or the middleman came into being.
DTC brands are steadily gaining market share.
Casper was one of the first home furnishing companies to adopt the DTC business strategy in 2014. The brand cut out the retail stores and began reaching out to customers directly over the web.
A year later, in 2015, Burrow joined the space. This brought the ‘couch-in-a-box’ idea to the market. But the growth was not immediate. Up until now, customers visited retail stores to buy furniture. And buying furniture online didn’t have the intended attraction.
But that was until 2020. It was during this time that the online furniture sector witnessed real gains. With customers stuck inside the walls of their homes, sprucing it up became a priority. And as a result, online shopping grew.
DTC brands with an online presence thrived on one hand. While on the other, brick-and-mortar retailers scrambled to develop their online presence.
In the present day, homeware is the fastest-growing DTC category, according to Blueprint. This is why.
Advantages of DTC furniture
1. Cost savings
DTC furniture brands remove the middlemen in their product delivery. This cuts out the profit margins of retailers that increase the furniture cost. So, now consumers get the same product for a reduced price.
‘A wholesaler buys a sofa from a factory for $1,000, marks it up to $2,000, and sells it to a retailer, who doubles the price again, so you’re buying a $4,000 product that in reality costs $1,000.’ - Benchmade founder Edgar Blazona
This slash in price gives brands an advantage over their retail counterparts.
2. Convenience and accessibility
DTC furniture brands access their customers through the internet. This helps them showcase their brand to internet users from around the world. So, they have greater visibility and brand reach over their competitors.
Also, customers can search for a wider product selection without leaving the house. Today 52% of consumers say half of their purchases are influenced by convenience.
Today’s buyers demand sustainability. And to stay relevant, brands must cater to them.
MIT found that traditional shopping has twice the carbon footprint as online shopping. And this is a believable stat in the furniture space.
After all, furniture first gets transported from the manufacturer to the retailer in the traditional setup. Then it moves to the customer’s home after purchase. The same is not true for DTC furniture.
In this case, the product is transported from the brand’s warehouse to the customer’s home. This reduces the number of trips and reduces carbon emissions as well.
4. Customizable offering
Since customers buy directly from the manufacturer, they can customize the product. And this is known to increase sales by 22 to 30% for DTC brands like Inside Weather.
Unlike their traditional counterparts, this DTC furniture brand employs a zero-inventory approach. They customize their offerings as per the needs of the customer and attain three goals.
- Customers become co-creators of the final product.
- Through this process, customers build an emotional attachment to the product.
- Customized products fulfil the customer’s self-expression needs.
Moreover, customization helps Inside Weather save a fortune on warehousing and extra material.
5 .Enhanced customer experience with augmented reality
Augmented reality (AR) technology is a powerful tool for DTC brands. It has the unique ability to deliver an immersive in-store-like experience to online buyers. And it achieves this by adding a digital projection of the product over the real world.
Thanks to AR, DTC brands make their online shopping journeys engaging. They also increase customer confidence by allowing buyers to interact with digital products. All of this increases conversion rates.
DTC Furniture brands to look out for: Article and Interior Define
Article is a Canadian DTC furniture brand earning $95.6 million in revenue. Its unique products and one-of-a-kind in-house delivery system separate it from the rest.
Through this system, Article cuts its delivery time and reduces its operational costs. Moreover, it eliminates delivery issues such as damaged packaging and mistreatment during transit.
Its approach to furniture delivery has allowed Article to earn a 460% growth in sales in March 2021.
2. Interior Define
Another leading contender in the DTC furniture space is Interior Define, with an annual revenue of $18.8 million. Unlike its competitors, this brand offers design consultancy services apart from affordable and durable furniture. Their customers can get expert opinions on furniture pieces and their placement. All this from the same platform they get their furniture from.
Challenges faced by DTC furniture brands
1. Limited physical presence
DTC furniture brands do not have multiple showrooms where they display their offerings. Instead, they have a single online platform and maybe an occasional physical store. As a result, customers don’t get to touch and feel the product before the purchase.
Brands lose out on sales because of this, even with customer-friendly return policies.
2. Customer trust issues and buying decision
Customers often have questions regarding a product's size, shape, design, etc. Research finds that e-commerce brands have a higher return rate than physical retailers.
This is because products don’t always match their online description. Customers don’t get to answer all their questions before purchasing. And so they must return the product.
3. Product quality control
With the fast furniture trend emerging, customers often have doubts about product quality. And for DTC furniture brands, this boils down to two things.
Firstly, the furniture is much cheaper than what is sold by retailers. Secondly, customers believe manufacturers might skimp on quality checks, costing the product its durability. Hence, brands must redouble their efforts to convince customers of production standards.
Where is DTC furniture headed?
The global furniture market is set to achieve a US $725.5 billion valuation by 2027 with a CAGR of 5.4%. DTC furniture brands are uniquely placed. They can leverage technological trends to meet the needs of the modern customer, especially with AR.
Brands can look to offer customers improved customer journeys with immersive experiences. For example, customers can now interact with furniture products. They can view it from varying angles and in different colors.
This gives DTC furniture an edge over retail. These experiences are not possible with retail offerings. Providing a product visualization could outrun the challenges of the space with time.
DTC furniture brands pose a real threat to traditional retailers. This is because they offer a lot of value for very little money. Additionally, their current challenges are only a result of a lack of familiarity. But DTC brands can change this by partnering with 3D and AR companies like Enhance.
Integrating augmented reality furniture products into their online customer journeys through such partnerships will give DTC an edge over traditional retailers and their competitors. All of this will drive conversions.