It was at business school at MIT in 1993 that I first saw the World Wide Web – a simple page on a PC, some of the text underlined, where a click would take you to another very similar-looking page.
Beaming, the friend showing me this purported miracle intoned, “This will change everything.” At the time, I was thoroughly unimpressed.
A 1992 screenshot of the first web page, launched internally at CERN on August 6, 1991.
She, on the other hand, was right. Twenty-five years later, it’s hard to imagine an area of our lives that hasn’t been transformed by the Web’s nearly limitless capacity to share information.
The Internet: Not One Size Fits All
Still, the internet hasn’t impacted everything equally or in the same way.
On one hand, goods and services where “information” makes up the bulk of an offering – think music, books, photos, advertising, banking, TV, radio, newspapers, and the like – have been fundamentally transformed.
On the other hand, areas involving more physical bulk have been more incrementally altered, mostly around the edges where information impacts a transaction that is primarily physical – think restaurants, car services, travel, and, of course, dating.
The Internet and Retail
Retail is somewhere in the middle. While shopping is an information-rich process, particularly in the area of marketing, it can also be deeply dependent on physical interaction with a product and its delivery.
This was a lesson my friend and I learned soon after business school. She was working for WebVan, an early “Amazon of Groceries” and I was at Furniture.com, the original “Amazon of Furniture.” Both were good examples of what worked very well for some online categories not working well at all for others. For both groceries and furniture, the technical, informational challenges of selling online were exciting, daunting, and surmountable. It was the physical – delivery, overcoming the lack of a showroom – that proved fatal, at least back then.
Today, just under 10% of retail sales are transacted online, with Amazon on track to do 50% of those transactions this year. Most of this volume is in easy to understand, easy to ship items, where the internet’s strengths are most easily leveraged.
It’s in more complex categories like furniture, however, where the internet’s impact on retail can best be evaluated. And, it’s by looking at these categories as the other 90% of retail transforms that the internet’s future impact on retail can best be predicted.
The First Wave of Digital Retail: The Amazon of [Everything]
Despite looking the part, Jeff Bezos wasn’t a bookseller who put his bookstore online.
Bezos was a hedge fund manager who shrewdly selected books to be the beachhead for Amazon, the website he launched in 1994.
Books – easily understood, easily shipped, with a brick and mortar shopping experience easily disrupted by providing vast selection – proved right in the internet’s retail wheelhouse.
Amazon’s Original Home Page, circa 1994
Amazon’s success led to a frenzy of copycats, applying the Amazon model to less ideally-suited categories, powered by a torrent of capital willing to fund them to do so.
The fundamental premise of these early dotcom models was the promise of vast selection at low prices, without the real estate or personnel expense of opening a store. More stuff, cheaper.
In categories where stores didn’t provide much value to shoppers, dot-com models thrived at the expense of suddenly useless brick and mortar players. Retailers like Blockbuster, Borders, and Tower Records, all stores that essentially sold physically packaged information, didn’t stand a chance.
At the same time, retailers whose stores did provide value to shoppers, as a place to experience and/or efficiently obtain a product, rebuffed early dotcom insurgents like WebVan, Pets.com, and, of course, my Furniture.com.
The First Furniture.com
As an attempted pure-play, Furniture.com was a perfect case study of a retail category stubbornly refusing to hop in an Amazon box.
With over 250 smart, committed employees and nearly unlimited financial resources, we developed amazing technology for marketing and selling furniture.
The economics of doing so, however, was horrendous.
Furniture isn’t easy for shoppers to understand online. As a result, we had to lower prices significantly to prompt “it’s so cheap, I’ll take a chance” purchases. And, once we sold a sofa, the expense of delivering it was punishing.
Our delivered margins were minimal, which when combined with the usual marketing expense of attracting shoppers online meant we lost hundreds of dollars on every order.
An early iteration of Furniture.com
When Furniture.com ultimately closed, I spoke to a number of top 25 furniture retailers who were unsurprised by – and somewhat happy about – our demise. But, they also hinted that we were on to something, sharing that they’d had hundreds of shoppers in their stores carrying Furniture.com printouts, ready to buy.
It wasn’t that Furniture.com hadn’t impacted furniture retail, it just wasn’t the same type of impact as the internet had on categories more readily suited for an Amazon box.
This Changes Everything. Again.
With ill-suited dotcoms closing in droves and VC funding evaporating in the “nuclear winter” that followed, it seemed possible that vast swaths of retail would remain unaffected by the internet.
Then, Steve Jobs relit the internet’s retail fuse.
The first iPhone was launched in 2007. Suddenly the internet wasn’t confined to a bleak-looking PC or laptop in your home or office. It was in your hand, it was personal, and it was everywhere.
Moreover, the iPhone unleashed two radical new capabilities. Its camera unlocked social media and democratized content creation. GPS finally anchored the internet in the physical world.
Suddenly, the internet was ready to disrupt two key pillars of traditional retail – Media and Location.
The Second Wave of Digital Retail: Enabling vs. Replacing Stores
Whereas the first wave of Digital Retail focused on replacing the store, these new capabilities made the second wave about enabling stores. As a result, this wave has had a far more profound impact on more of the retail landscape, particularly on big-ticket categories like furniture.
Furniture retailers’ tried and true tactics of attracting customers – TV, Print, and Radio – have been upended, with the internet both garnering shoppers’ attention and raising the bar for smart, personalized advertising that traditional media can’t match.
The internet is now in shoppers’ hands while they’re out shopping, raising the bar for synchronicity between the information they get online, and experiences in physical stores.
The New Retail Imperative
At one time, the internet represented little more than a cheap way to open another store. It was, for many retailers, optional. Most retailers in big-ticket categories like furniture sat out that first phase, deciding that Amazon-style ecommerce wasn’t for them.
Today, a great retail website – the first place people land after seeing a retailer's advertising, the means by which shoppers decide to allocate scarce time to visit a physical store, and a constant mobile companion inside that store – is no longer optional. Not just another store, a retailer’s website must now be their flagship store.
The Next Wave: Unique Solutions for Unique Product Categories
We are still in the early innings of the second wave of digital retail, as retailers adopt digital marketing strategies and point them towards increasingly powerful websites. For most retailers, there is a long way to go in both of these areas. In furniture, this transformation is just beginning.
At the same time, this transformation, nascent as it is, isn’t hard to predict. Other categories further down the internet adoption curve provide a playbook for how retail will evolve in categories like furniture.
Perhaps more interesting is how furniture will evolve differently from other categories once this baseline digital competency is established. How will the internet impact furniture retail and other big-ticket categories next? That has little to do with what the internet can do for furniture retailers, and everything to do with what shoppers want it to do for them.
The Ideal Furniture Shopping Experience circa 2018
When it comes to furniture and the internet, shoppers want something different.
A June 2018 survey asked 2,000 shoppers of all ages to describe their ideal shopping experiences on two dimensions:
- Whether they preferred shopping in a store or online
- Whether they wanted help shopping or wanted to go it alone.
The result was striking and powerful evidence of something that those of us in this industry have felt for some time: Furniture shopping is a uniquely omnichannel experience, on both of these dimensions.
Source: Blueport Analysis of June 2018 One Click Retail Survey of 2,000 shoppers
Future of Furniture Retail
80% of people prefer to shop in stores for furniture, and 50% want help when they do so.
It is in enabling and activating these shopping preferences that the internet will ultimately most deeply impact furniture. Just like Amazon did for shoppers’ simpler preferences for books way back when.
In furniture, that means making store visits easy and efficient – as simple as making a reservation with Open Table or getting a car with Uber. Engaging one of a retailer's biggest assets – salespeople, currently on the sideline of digital retail – in providing the assistance shoppers want, both online and off. It is meeting unique requirements like these that will unlock the internet’s true impact on furniture, and on the other 90% of retail.
Arguably, the internet’s only superpower is to get people what they want more efficiently. Thankfully for furniture retailers, furniture shoppers want a store and some help. To the extent that Amazon-style businesses (or Amazon itself) capture share in furniture, it’s because brick and mortar retailers have failed to deliver an experience that feels easy, relevant, and personalized. Those retailers who leverage the internet and do so will prove as disruptive to the future of retail as those first dotcom insurgents, twenty-five years ago.
Carl Prindle is the Founder and CEO of Blueport Commerce. To hear more from Carl, you can find him at this year’s Furniture Today Leadership Conference, where he will introduce a three-part conference module centering around the theme: Holistic Retail. Make sure to attend the Holistic Retail session to learn more or catch up with Carl directly at any point during the conference.
Blueport Commerce is the leading e-commerce platform for big-ticket retail, influencing over $4B in omnichannel sales annually. Brick-and-mortar retailers build their omnichannel websites on the Blueport Platform, providing better shopping experiences for their customers and driving sales online and in their stores. Contact us today to learn more.