Nov. 04, 2024
Home & Garden
Unless youre reading this from the far future, we dont need to tell you that is not without its share of hurdles. The many problems of still continue, and even long standing, traditional sectors like the furniture industry are feeling the pressure.
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In such times, there is no one simple answer, as the challenges are unique and diverse. Companies need to both embrace new opportunities, but also optimize existing processes to avoid wastage and bring costs down to a minimum.
Now, we wouldnt be talking about this if we didnt have a few solutions for you were nice like that Below you will find what we consider to be the 6 most impactful problems in this sector but also 6 of the most solvable!
At the start of , the furniture sector faced the global economic slowdown that all industries faced. However, the rising cost of raw materials, supply chain issues and the ongoing energy crisis have further impacted furniture businesses around the world.
On top of this, the recent pandemic made the importance of online business paramount. For a sector that long relied on showrooms and in-person sales, digitization of trade in the furniture industry has increased greatly. This is worthy of note when you consider all of the above issues even when entrepreneurs and CEOs are extremely cautious (and not without good reason!) the awareness and need to go digital remains high.
Of course, digitalization is only valuable when its tied directly to business results and not technology for the sake of it. Therefore, we want to advise you on the exact challenges that this sector is facing, and the solutions that can help avoid or conquer them.
Unlike other sectors especially those that deal in smaller products the furniture industry has long been attached to the idea of offline sales. However, even something as stable as the furniture sector cant avoid the marches of time.
In , 43% of respondents in the United States confirmed that they buy furniture online, of which 25% chose an e-commerce platform and 18% made a purchase directly on the brands website. Global overall data shows that 20% of customers buy home decorations, furniture and gardening items online, and almost 40% use both channels. In Poland, in , 14% of furniture sales revenues came from online stores, and by an increase to 22% is forecast.
Consequently, a lack of an online sales channel puts furniture businesses at a disadvantage when compared to their more advanced competitors. For those that shop only online, checking in with offline counterparts isnt always a step they think about. An inconvenience for the customer is a direct loss of opportunities for the business.
Of course, we also know that money is not an ever flowing resource for new initiatives so, when planning to expand sales, it is worth betting on solutions that will allow you to do it quickly and with a relatively small investment. A marketplace offer is a good first step. If this formula works, the next step may be to invest in your own e-commerce platform.
Expanding or even sustaining a business is not just about gaining new customers, but also improving the Customer Lifetime Value (CLV). In other words, while new customers are of course great and necessary, its also worth investing in how much each customer spends with your business overall. If you increase the Average Order Value (AOV) you can increase the overall CLV.
Pricing is usually the biggest barrier here and, more so, in an area such as the furniture industry, this is a bigger hurdle. Customers typically buy less frequently and are less prone to impulse purchase (unless were talking about Ikea meatballs ), but there are opportunities. Specifically:
For example, if you specialize in the production and sale of living room furniture, you can enrich your offer with additional complimentary products, such as interior design elements. At the right price, this will encourage customers to either shop more often or to improve the AOV.
However, this can only work if you have a proper and thorough understanding of consumer preferences. At the beginning, simply having addition products in a like-for-like categorization will work but, in the long run, an automated machine learning application built on your customer data will provide the best way to scale.
On the other side of the CLV topic, there is ultimately a limit to how much potential any market can have. This is limitation is felt especially strongly during the current crisis, where additional frugality and price sensitivity of customers has increased. The resulting purchases are less frequent, or smaller in value, so there is an inevitable limit of the CLV.
However, the furniture industry is not beholden to any one market. After all, Polish industry leaders export their goods on a huge scale, occupying the position of the fourth largest exporter of furniture in the world. You dont need to be an industry giant like Ikea to embrace a cross-channel business model.
We wont lie opening up to new markets is not free, but its arguably more cost effective than you realize. People are willing to wait for their furniture, unlike their groceries, so its more about adapting your existing e-commerce architecture (see point 1) for multiple markets.
On top of the existing functionalities, you need to consider different language versions. As many as 76% of customers are more likely to buy products if information is provided in their native language and native or multilingual customer service is essential for enhancing your brands impact on those markets.
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Of course, you also need to adapt to new currencies and the integration of cross-border logistics, but thats readily supported in todays tech landscape. Headless commerce platforms, specifically, allow for the freedom of both design and multiple websites/stores, while their supportive such as PIM readily support multiple languages.
The one thing you may discover, however, is that shopping habits and preferences change depending on the markets. This is certainly true for furniture: shoppers in the UK prefer upholstered and floral patterned units, while North American shoppers prefer large, solid pieces and Israeli shoppers have shown a strong aversion to wooden upholstery. Thats also why we hinted at the implementation of effective data solutions before we got to this point
As a company grows, the number of repetitive tasks and processes also grows. Areas such as sales, marketing, data analysis and customer relations all increase in scale. This often leads to two common problems.
With automation, you can optimize your workflow by reducing manual efforts. The result is an increase in the efficiency of the entire organization, as well as increased security, reduced errors and greater stability of systems. Such action is a solid foundation on which you can build further development or wait out a more difficult time being sure that everything will function properly.
While being online is important, its also worth noting that outdated IT infrastructure can cause a lot of problems. As we mentioned, headless platforms are ideal for cross-channel growth so what happens if you end up with an old fashioned monolith or server-based system?
With increased demand, such platforms drop in performance, the system can become unstable and the costs of growth outweigh the benefits.
The first step many companies make in this situation is to move infrastructure to the cloud. This can bring some immediate benefits in regards to resource flexibility, automatic scaling both up and down and a greater ability to optimize your costs.
Logically, the next step is to embrace cloud-native elements that allow for more granular adjustments. Tools provided by AWS for their own platform, for example, enable companies to only pay for direct usage (for example, through both microservice and serverless functionalities) so that individual parts of the business scale up and down in line with real-time demand.
*Its also, FYI, a great way to maintain high performance in your foreign markets thanks to edge locations
Ultimately, nobody can foretell the future, but a highly educated guess is better than nothing. For the furniture industry, where every unit has a high cost of production and every unsold unit only adds to ongoing costs, any reliable indicators are a must. And for this, we can turn to our old friend Mr Data Solutions.
Forecast demand tools are prevalent in many markets, and its time for the furniture sector to follow suite. Through using both your own data and any other available information, a forecast demand solution can identify when demand peaks and drops (including between different countries and/or markets) and advise you on the anticipated units to product. This ensures you are both more likely to have the desired products to sell, and also avoid unnecessary inventory management costs for the unpopular or out of season goods.
We understand that this is a lot to take in. But the key to a successful strategy is just like assembling your own furniture: step-by-step, with all the right parts and hopefully not in Swedish.
Yet its worth remembering that every crisis is not only about threats but also opportunities primarily for those that tackle the threats head on. Often, a quick response to the most important market needs and challenges can provide a strong advantage. We can also speak to the inevitable march of technology and that, in the long run, optimizing existing processes and creating new digital business models has been a long time coming. Such a well-developed and flexible strategy isnt just to get over this current hurdle, but to win the race in the long run.
In the wood business, supply chain management (Supply Chain) is essential. Whether in furniture, carpentry or construction, the sequence of processes and associated information is very important.
Compared to other industries (automotive, electronics, ), the design and construction of products is much simpler. However, because of the variety and multiplicity of options, the information system is more complicated and requires business software packages.
If you buy a car, you can not request a specific size, or you can not choose between open doors or sliding doors. In the furniture or woodwork, you have all these choices.
The problem for these industries is to have a flexible production tool, but above all an information system to monitor the activity of design to installation, through the sale, supply, manufacturing and delivery. Therefore, only one of business software packages and then specific modules (eg 3D Configurator) ensure that supply chain.
The diagram below summarizes the various information used in the case of the furniture.
Contact us to discuss your requirements of Custom Made Rattan Furniture. Our experienced sales team can help you identify the options that best suit your needs.
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