How important is speed to market?
Ask Target, which last month acquired Shipt for $550 million, one of the largest acquisitions in the retailer’s history, to facilitate its entry into the same-day-delivery business. Ask Home Depot, which was recently reported to be discussing a potential acquisition of XPO Logistics, partially as a defensive move to keep it from being acquired by Amazon.
Ask Amazon, which has made speed to market such a critical differentiator over the past two decades that today it’s the cost of entry for those looking to compete in e-commerce.
While none of these moves have furniture as their ostensible impetus, the implications for the furniture industry are profound. Ashley proved nearly two decades ago that furniture is a logistics business, that the ability to minimize cost in the movement of goods from point A to point B and ultimately to point C (the consumer) can be a critical differentiator. The nation’s largest furniture retailer, and manufacturer, has since turned that into an art form, giving dealers the ability to order LTL quantities of virtually anything in the Ashley catalog and have it in time frames that few, if any, can match on comparably sized items.
The two fronts on which the next furniture war will be fought and won will be technology and logistics, with intersection between the two forming a critical salient.
Ask Wayfair, which has made massive investments over the past 18 months enhancing its in-house logistics operations and enhancing the performance of its remaining third-party providers. In September, the e-tailer launched a live tracking feature for furniture in 10 markets and is scaling its logistics team so rapidly that it is among the key contributosr to the company’s most recent third quarter results.
“Scaling our teams is essential in our three key investment areas, namely building out our international capabilities, developing our proprietary logistics network and increasing penetration of priority product categories,” said Niraj Shah in a statement explaining the company’s third quarter 2017 loss.
None of this is intended to suggest that e-tail is the future and that brick and mortar is dead. Just the opposite in fact. Every other retail channel is rushing to achieve capabilities that furniture stores have had for generations.
What’s different this time, however, is the time frame. No one is building the capability to deliver furniture in six to eight weeks. This time success will be measured in days not weeks.
Gallery Furniture’s Jim McIngvale once said, “How do you do same-day delivery? You put it in a damn truck and follow the customer home.”
And while it was said facetiously, Mack — as only he can do — captured the essence of furniture stores’ greatest strength.
Source: Furniture Today, “The battle for furniture’s future will be won or lost by logistics“. (http://www.furnituretoday.com/blogpost/15215-battle-furnitures-future-will-be-won-or-lost-logistics/). Bill McLoughlin, January 4, 2018.
Image source: Property Discuss