Retail

Bringing Supply Chain Expertise To Office Furniture

office furniture

Furniture is a tough business. In January eCommerce leader Wayfair had to thin its employee ranks to meet profit targets, and just this week regional Midwestern home furnishings retailer Art Van Furniture filed for bankruptcy with minimal customer notice. So when Branch Co-Founder and CEO Greg Hayes talks about challenges, he knows there’s a lot at stake for his furniture company.

Fresh off a $2.4 million funding round in November, Branch was launched in beta as Bureau last year by Hayes, Sib Mahapatra and Verity Sylvester. The rebranded Branch will use the financing to accelerate product development and distribution as its office furniture business expands its footprint and its innovative business model.

Branch sells to individual consumers as well as office purchase managers. It does not work through traditional distribution channels. It sells direct in a $10 billion business that usually relies on middlemen. Branch has taken an approach more suited to the gig and startup economy. It offers 50 percent savings on office furniture, delivered and installed in a week. When companies outgrow their office space, they can keep the furniture or trade it in for credit.

“Companies have two bad options when purchasing office furniture,” said Hayes. “They can purchase premium products through traditional furniture dealers, which is expensive, slow, and confusing, or they can purchase inexpensive ‘fast furniture,’ which is convenient in the short term but isn’t built to last in an office environment. At Branch, we’ve married the craftsmanship and service of contract furniture with the ease and convenience of fast furniture. We also refurbish or recycle Branch products free of charge at the end of their useful life, helping to reduce the 17 billion pounds of office furniture American companies send to the dump annually.”

Furniture is of course dependent on supply chains. And supply chains are dependent on China. And China has been hit by … you know the story. Hayes and his team believe they can avoid what seems to be the inevitable disruption from Chinese factory production issues due to the ongoing coronavirus crisis. They have been shrewd about placing orders early and divesting to different suppliers. Branch manufactures furniture components in United States and in China and recently Canada. Branch has not yet seen any negative effects from the coronavirus, Hayes said.

“We won’t see a hit in the short term,” he said. “If this turns into a long-term issue, then we’ll certainly see a hit. Only in one or two cases have I seen an order that we haven’t been able to fill on time, which is why we have showroom in Manhattan and we’re about to launch one in Toronto, Canada. I think that we’re going to see a little bit of a drop-off in physical attendance in the showroom. And you know, the effort involved is worth it. The average ticket price for a product as well into the tens of thousands of dollars. And typically you want to go sit in a chair and feel the desk experience the furniture before you make a purchase like that. So you may see that slow down. But again, that’s still to be determined.”

Branch is looking at a big year in 2020. The company already booked more revenue than it did for all of 2019, which was its first year in operation. Hayes says the company plays in a space where big companies have not yet launched, and so sees a wide range of potential. He has seen two customer groups emerge: One is a company of up to 60 employees moving into their first real office. The other group is landlords. They’re starting to create their own versions of WeWork and need furniture to fill those spaces. Marketing to these groups is still a successful work in progress.

“We operate almost purely on word of mouth, really,” Hayes said. “We literally just turned on Google ads. We were experimenting with a couple of different advertisements, but almost everything has been word of mouth. So customers telling other customers of course, are real estate brokers who find out about us and our service, get really excited and tell their clients about us.”

The U.S. office furniture market size was estimated at $10.74 billion USD in 2016. Development of new products along with online retailing like Branch is expected to reduce costs and increase distribution efficiency. The business is still recovering from a severe downturn in demand during the 2008 financial crisis. Analysts point to macroeconomic trends such as office construction, capital investment and employment levels. That would bode well for the business model at Branch.

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