For items like shirts and pants, shoes, paper towels, and dog food, it’s easy for companies to pack it in a standard box with common packing materials and send it off to UPS or FedEx for delivery. The same cannot be said for delivering most furniture items.
While many Americans are reluctant to buy furniture online, giving brick-and-mortar stores an edge over online-only furniture retailers, there is a growing number of consumers willing to make an online purchase for furniture items. 80% of consumers research furniture choices online before making a purchase. Forrester projected that ecommerce furniture sales would grow at a compounded rate of 15% from 2014 to 2019.
As the number of online sales increases for the furniture market, companies will likely see an increase in frustrations, specifically around delivery.
Why is Delivery a Unique Challenge for Furniture Companies?
Shifting Consumer Trends and Expectations
The furniture industry has found it difficult to keep up with consumer expectations. In an Inbound Logistics article, David Purvis, the Vice President of Manufacturing and Operations at AHFA, says, “The furniture industry has been Amazoned to death.”
Consumers have been trained to expect same-day or two-day delivery when buying a product online. Many furniture companies haven’t been able to meet or overcome those expectations.
Traditionally, after an online furniture order, consumers wait a day or two for a phone call to schedule their in-home delivery. From there, it could be anywhere from days to weeks to receive their order, particularly if it is something that it customized, like upholstered furniture. Switching to a model where consumers can choose a time and date online and on their own time would reduce the burden on customer service and hasten shipment time.
Millennials, being the most likely to buy furniture online, now make up 37% of furniture shoppers. Unlike Baby Boomers and Seniors, they are not saving to purchase heirloom pieces that can be handed down for generations to come. They have less disposable income and high amounts of debt compared to previous generations. In today’s dollars, Millennials make $10,000 less than 25-to-34 year olds did in 1989 and owe, on average, $35,000 in student loans. In comparison, Baby Boomers, on average, owed $21,000 (accounting for inflation) after graduating college. As a result, they are less likely to invest in expensive furniture items or spend hundreds of dollars for shipping.
Additionally, more than a third of household heads rent their home. Renters who are moving from place to place every two to three years want to buy furniture that is easily disposable and inexpensive rather than buying big-ticket items that are hard to move.
Furniture delivery is also plagued by inconsistent customer experiences. Mainly when using a third-party delivery service, the furniture company loses control over the customer experience and interaction with the driver or delivery team. A customer may have a seamless online experience, then receive the pieces they ordered with a ding or stain. Such scenarios damage the furniture company’s brand.
Long-distance furniture delivery can cost a furniture business almost $2,000 for one truckload in some cases. Many companies oppose investing in more distribution centers and have chosen to focus on saturating local or regional markets to create delivery density.
Due to their large size and unusual shape, most furniture items, such as sectional sofas or mattresses, cannot be delivered through standard parcel delivery services (FedEx, UPS, or USPS). As a result, the delivery often takes longer than two to three days, which is the norm for most consumer items. Parcel companies find it difficult to service bigger boxes because they do not fit in their automated sorters and are not easily read by package scanners. Bulky items also require more labor, an increase in the usage of cargo, and larger delivery trucks.
The cost of freight shipment is also cutting into the earnings and postponing deliveries for retailers and manufacturers. Recently, freight rates have been on the rise due to stricter requirements – logistics experts expecting prices to rise 12% in 2018.
Electronic logging devices have made it difficult for truckers to ‘fudge’ their driving hours, increasing the number of rests they take and the number of hours to deliver a truckload. The number of loads a driver can take per week also decreased from four to three, leading to freight companies to charge more per load. Analysts estimate these devices, which costs about $50 per month for each driver, will reduce trucking capacity between 2% to 5%.
Rising delivery and freight rates from these new regulations are compounded by a shortage of delivery drivers and higher wage demands. Freight and delivery companies are finding it difficult to find drivers that can drive, lift, install, and assemble product, all while being personable with the customer.
Randy Coonis, President of South Zanesville, Ohio-based furniture company, says, “You’re getting a double whammy. It’s already becoming an industry problem.” The recent article illustrates how the cost of freight shipments and struggle to find dependable and affordable drivers will impact the furniture industry: Six months ago, the consumer was paying $300 for a sofa, and the furniture company was paying $1,500 for a freight truckload. Today, the same sofa increases in price to $310 for the consumer, and the cost of a freight truckload jumps to $1,900.
Supply Chain and Logistics
Having the right amount and type of inventory in the right location is a significant factor in determining delivery times for the furniture industry. To tackle this, some businesses are increasing their inventory in warehouses located in major cities, building more warehouses, or even changing to a postponement supply chain strategy.
When shipping to a last-mile facility, efficiency is critical. Long-haul carriers are starting to use two-driver teams, second-shift unloading, and more frequent shipments to decrease the amount of time between the warehouse and the last-mile delivery center. Companies who have access to customer demand and product availability data will be better equipped to control their line-haul process.
Businesses have shifted their focus to white-glove delivery services or dropping long-haul service and focusing more on the last-mile to create a seamless supply chain. With white-glove service, the item is unpacked and inspected before final delivery to the consumer, reducing the number of damaged items the consumers receive.
Wayfair’s Supply Chain Takeover
Wayfair, a company that doubled their stock price in 2017, is taking advantage of the growing number of consumers buying furniture online. For all orders over $49, Wayfair offers their shoppers free delivery. To reduce delivery cost and time, Wayfair is making moves with its supply chain strategy and bringing its delivery services in-house.
In 2015, Wayfair opened the first of five last-mile delivery services and its first warehouse. Since then, it has launched CastleGate, serving as a third-party logistics supplier via its own warehouse operations for suppliers of high-volume goods.
The online-only furniture retailer is also taking strides in optimizing its line-haul trucking and having fuller truckloads. Currently, it has twenty of its own last-mile delivery centers. Truckers are put through an extensive customer service training, ensuring that the customer’s positive online experience carries over to their delivery experience. As Wayfair takes more control over the different stages of supply chain and logistics, it can better plan for inventory replenishment by sharing its customer demand data with its suppliers.
Late last year, Wayfair launched its Day Of Delivery Tracking. In real time, the feature tracks the driver locations through an interactive GPS map. With this new level of transparency, the customer is free to go about their day without having to worry about missing their delivery appointment. Not only does this build trust with the customer, but also reduces the number of delivery snafus.
It’s unlikely delivery drones will be the answer for faster furniture shipment, at least not any time soon. However, driverless trucks may be more likely in the next fifteen to twenty years. Before then, companies like Wayfair, Ashley Furniture, and IKEA have been making efforts to keep up with demanding delivery expectations and customer satisfaction.
If you’re interested in learning more about current ecommerce trends for furniture retailers, check out the “2017 Furniture Ecommerce Report.”