Retail

Amazon Targets The One Vertical No One Thought They Would

Amazon is getting into the furniture market, gearing up to build four or more warehouses to handle what it expects to be booming orders of bulky household items.

According to a report in The Wall Street Journal, while Amazon has been selling furniture for some years, now the eCommerce giant is going after it in a much bigger way. Amazon will be taking on the likes of Wayfair and Pottery Barn in the online furniture market.

Furniture is the second-fastest-growing segment of online retail in the U.S., with only groceries ahead of it. Citing Barclays, the Wall Street Journal reported sales in the online furniture segment grew 18 percent in 2015. Meanwhile, IBISWorld said around 15 percent of the $70 billion of the furniture market in the U.S. is on the internet.

“Furniture is one of the fastest-growing retail categories here at Amazon,” Veenu Taneja, furniture general manager at Amazon, said in a statement to the WSJ. The executive said Amazon is expanding its offering, including adding more Ashley Furniture sofas and Jonathan Adler home décor.

Amazon will also roll out custom furniture design services and will provide one- or two-day delivery in certain cities around the country.

The furniture market may not be as easy for Amazon to dominant like in other retail segments, partly because the cost to ship the items is much more expensive and consumers want extra delivery services, like bringing the furniture into the house, putting it together and getting rid of the old one, which will make it a more expensive proposition, noted the report.

Troy Cooper, chief operating officer at XPO Logistics Inc., which fulfills online orders for large retailers including IKEA, told the paper that to guarantee customers get their furniture in two days, 99 percent of the time a retailer or logistic firm would require a dozen big warehouses throughout the country and more than 100 smaller shipping hubs to get the deliveries to customers’ homes. If a retailer didn’t mind it getting there within a week, it would require a big distribution center on the East and West Coast.

The paper noted Amazon is using XPO and other third-party logistic companies to handle distribution centers and delivery for now but is aiming to bring more of it internally.

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