The global e-commerce market is both expanding and consolidating. More consumers than ever before are buying online, and worldwide retail ecommerce sales are rising in a trends that we can consider as definitive.
Nevertheless, it is proven that some industries struggle as they try to move their business online. In one of his essays, Y Combinator’s founder Paul Graham made an example of the difficulties for industry players of bringing art collection auctions online. Another example is wine, whose online sales struggle to take a meaningful market slice out of the total market.
If an industry works in an old fashioned way, it is difficult to move it online. It can depends on several factors, such as the attitude of market players, the buying behaviour of consumers, what kind of experience they like to have, price policies, logistics and delivery, offline-online integration, the role of social media, etc. The markets can be huge but if you don’t take into account the above mentioned elements, success can be granted.
Among others, the furniture industry is a labour-intensive and dynamic sector dominated by small and medium-sized enterprises (SMEs) and micro companies with creative capacity for new designs and responsiveness to new demands. The sector recently faced a drop in the number of companies, jobs, and turnover and is now recovering. International trade of furniture is growing and, in 2015, Internet sales of furniture alone totalled an estimated $14 billion or 15% of industry sales, stimulated by e-commerce companies active and growing in the emerging countries (China, Brazil and India, over all).
Given this, in order to grow and consolidate, the global furniture industry needs to deeply understand the challenges and opportunities ahead.
On one hand, the main challenges faced by the sector are related to competition from countries having low production costs, weak protection of intellectual property rights, ageing workforce, and protectionist measures on international markets. On the other hand, opportunities include technological advances, and business model innovations.
Unlike shops, online retailers do not provide the touch and feel experience to customers as they need to select their favourite sofa and chair before buying. Given this, the success of companies which want to go on line (we refer to e-retailers and furniture specialists or non-specialists with a web store) resides in their capacity to customize products, offer advices from experts, provide call and email support, easy return policy, create payment options based on the needs of customers and execute orders on time and reliably.
In this dynamic arena, again, the growth of e-commerce makes the life of brick and mortar stores more difficult and represents a distribution question mark manufacturers needs to solve to continue to survive and thrive in the market.