It may be on the “Big 3” American consumption food chain, sitting quietly alongside houses and cars, but unlike the other two cohorts, furniture purchases are overwhelmingly a one-time, retail transaction.
“Everyone you know has furniture, and lots of it,” Kaiyo founder and CEO Alpay Koralturk told PYMNTS in breaking down the hierarchy of consumer spending. “Cars and furniture are both high depreciation assets. The moment you buy them they lose 30, 40, 50 percent depending on where you bought them. And they both have comparable lifetimes,” he added.
While the secondhand car market is actually larger than the new vehicle segment because “people keep transacting,” Koralturk said, furniture resale is only a “fraction of a fraction” of the spending done on retail.
“This is a very underutilized, under penetrated market today, so we’re trying to envision what it will take to grow this,” he said. “Our vision at Kaiyo is to really build that service, which in our view does not exist.”
Something From Nothing
Although Kaiyo has been in business for seven years and actively building a network of loyal customers in the New York, Philly and D.C. metropolitan regions, in many ways its corporate life changed Tuesday (March 29) with the announcement of its $36 million Series B fundraise.
“We’re turning a pivotal corner as a business and finally have the resources to do the things that we’ve been talking about for a long time,” Koralturk said, noting the company’s expansion plans that will bring Kaiyo to LA and San Francisco by the end of the summer, as well as usual upticks in hiring and investment.
It would appear that the market is more than ready for the brand and concept. While any digital retailer would be pleased to have doubled its sales over the past two years, Kaiyo has done that — and then some.
“This funding round comes amidst rapid growth for Kaiyo [which] has experienced more than 100 percent consistent growth every month over the past two years due to growing interest in the circular economy and pandemic-induced supply chain issues,” the company’s statement said.
The embrace of this trend, and the mind shift it entails, is reflected in the fact that nearly 70% of Kaiyo’s sell-side customers had never sold furniture before.
“That is the kind of behavior change we wanted to see because you can’t close this gap any other way,” Koralturk said. “You need to now make it worthwhile for people.”
The Kelly Blue Book of Furniture
While first-time buyers on Kaiyo frequently go on to become first-time sellers within two years, Koralturk said the other side of that metric is not as easy, since people tend to sell and then move away to a place where Kaiyo is not available. While geographic expansion will address that problem, the company is primarily focused on providing an excellent experience that no one else is doing.
“We’re the only company today that provides ‘white glove’ delivery at either $19, $29 and $39 based on the category [and size] of the item,” he said. Apply that concept to a “like new” three-piece sectional sofa purchased on a secondhand marketplace and then having it delivered for $39.
“For anybody who’s tried to shop on Craigslist or Facebook Marketplace, these are game changing capabilities,” he said.
There are also advantages to sellers too that go well beyond a nice user experience and include a combination of heavy lifting and high tech, such as professional pickup, cleaning, photographing, storing, selling and ultimately delivery to the new owner.
“All of this free of charge to the seller, then also, at the time of the pickup, we even offer the seller cash up front,” Koraltirk said before pondering, “Why would a seller not want to do this?”
With the help of its proprietary tech and database, the more Kaiyo buys and sells, the smarter it gets, as its algorithms constantly look at changing price data and react accordingly.
“There’s no ‘Kelley Blue Book’ of furniture out there,” he said, “so Kaiyo has built an algorithm that very accurately does that and it gives us confidence today to be able to tell anybody who sends product our way, that this is what we can pay for it.”
While the business grows and scales and consumers get more comfortable with the resale concept, Koralturk also points out sustainability remains a core tenet of the company, noting the fact that furniture is, by far, the largest waste category in the Western economies in terms of how much is put in landfills.
“Kaiyo has been very aspirational from day one,” he said, and continues be to this day.