Retail

Canadian D2C Seller Brings Unique Business Model To Furniture Market

D2C Furniture Seller Uses Unique Business Model

Companies that do business in the furniture space have to deal with some serious competition. IKEA, Wayfair, Overstock and others are holding down the mass marketplace. That competition has also extended to high-end furniture market, which is starting to show some new activity with Crate & Barrell, CB2, West Elm and now a direct-to-consumer (D2C) Canadian brand called Article gaining momentum. Article has now lifted off from its Vancouver base and has taken its unique business model to the U.S., while the company has been forced to pivot to adjust to the COVID-19 crisis.

Article is an online furniture pure-play. Founded in 2011 as a high-end home décor brand, it turned a profit after just two years. In order to grow its delivery track record and customer satisfaction scores, the company introduced an in-house delivery program, the Article Delivery Team (ADT), to serve customers in Los Angeles, New York, Seattle, Vancouver and, most recently, Toronto.

In more “normal” times, Article delivery personnel engaged with customers in their apartments or homes to troubleshoot problems or simply answer questions. Wrong size or color? The ADT took the piece back. The program improves the customer experience while reducing average delivery times by as much as two days. With the program, the company experienced an 83 percent decrease in negative feedback from customers.

“Given the positive impact the initiative is making on the customer experience, we have plans to continue expanding our distribution network, including the ADT program, in areas of density,” said CEO Aamir Baig. “For now, we’ve focused short-term efforts on launching contactless delivery so we can maintain a safe six-foot distance during the delivery experience. With the uncertainty surrounding COVID-19, we want to make sure we can provide the same level of service to customers across the U.S. and Canada while protecting the health and safety of our team, customers and the broader community.”

That high-touch home delivery model has gained Article a solid customer base and five-year revenue growth of 24,182 percent. In September of 2019, it notched its second consecutive ranking as Canada’s fastest-growing company. As Baig noted, the company has adjusted its delivery model due to the COVID-19 crisis, as its teams now bring items to the front door, greeting the customer from a six-foot distance.

“We sent our HQ employees home in mid-March and implemented health and safety protocols in each warehouse location,” Baig noted. “A delivery experience that maintains a social distance is what people need right now. We were able to implement the policy in 24 hours because we have our own delivery infrastructure and strong final-mile partnerships, something that otherwise likely wouldn’t be possible to execute in a short window. Being online-only, and having our in-house delivery team and strong delivery partners, has made us extremely adaptable to the first round of retail challenges brought on by COVID-19.”

The company’s tagline is “helping customers create beautiful spaces,” a mission that has led to the acceleration of at least one initiative. Just last week it launched Bundles, a new offering that allows consumers to furnish entire rooms with just one click.

Article’s approach led the company to profitability so quickly that it has been able to avoid the huge debt load that straps other eCommerce companies. The firm is founder-funded, starting in 2011 with seed funding and a small raise of $5 million. Baig noted that its profitability has given the company flexibility, which is at a premium in the current environment. However, he hasn’t ruled out funding in the future.

“Obviously, COVID-19 is a major economic headwind for us and companies across the globe. It’s safe to say no one is immune to the impact of the virus. We’re adjusting our 2020 plan based on the current landscape, ensuring that we keep our team and customers safe,” he said. “What is a headwind may also be a tailwind for Article’s growth in the future. People who may have been reluctant to buy online before the pandemic are now experiencing the convenience of eCommerce for the first time. In a post-COVID-19 climate, I believe consumers may be more comfortable shopping online and will have less hesitation buying big-ticket items without touching and feeling the product first.”

In terms of the general online furniture market, Wayfair and Amazon dominate. Together, they capture 63 percent of eCommerce furniture sales, according to data analytics firm 1010data. In 2019, Wayfair took 33.4 percent of the market, with Amazon coming in second with a 29.7 percent market share. Baig is not aiming at the overall marketplace at this time, choosing to build the brand as its own entity.

D2C brands may have some advantage given their digital-first approach, but may not be entirely immune depending on numerous factors such as the industry they’re in, their product or whether they have an omnichannel presence,” he noted. “For example, the pandemic has caused most travel, gyms and fitness studios to close, and large gatherings are banned. As a result, D2C brands that offer products directly impacted by these guidelines will likely experience a drop in demand. ‘Clicks to bricks’ has increased over the last few years, so D2Cs that have expanded to brick-and-mortar face increased financial responsibilities. Over this time, we’ll see the D2Cs that have focused on sustainable business growth to achieve profitability come to the forefront as being in the best position to weather this time.”

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