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Furniture retail meets Amazon

An Amazon expert gives his verdict on this lucrative distribution channel

Growing numbers of furniture manufacturers are now focusing on e-commerce. We spoke with Gregor Arentz about the future of furniture retail. The expert on Amazon and marketplaces at Plan.Net Performance knows how the industry can leverage this channel successfully.

Gregor Arentz on Amazon as a lucrative distribution channel for furniture retailers (source: personal)

Gregor Arentz on Amazon as a lucrative distribution channel for furniture retailers (source: personal)

Amazon is also attractive for furniture retailers

The US e-commerce giant keeps on growing. Amazon’s sales rose by 40% during the coronavirus pandemic alone, making its position among the major players in online retail indisputable. How can the furniture industry leverage this growth? And what challenges are associated with selling on the world’s largest product search engine? Amazon expert Gregor Arentz has the answers.

Gregor Arentz, online furniture retail has grown enormously during the coronavirus pandemic. What role does Amazon play for furniture manufacturers in your view?

You’re certainly right about the growth: According to the German E-Commerce and Distance Selling Association ( BEVH ), the interior design and furnishings segment expanded by 19.5 per cent in the third quarter of 2020 compared to the previous year. Many online marketplaces have naturally benefited from this.

Even if Amazon is still less important in sales terms than platforms such as Otto, it definitely shouldn’t be ignored. As many as 61 per cent of online purchases and 23 per cent of physical purchases are influenced by Amazon according to a study by IFH Köln . What’s more, Amazon now offers a number of exciting features, such as 360-degree views of products and an augmented reality view that enables customers to see selected products in a particular room. These functions really help to make items of furniture more tangible and to reduce the numbers of returns.

What makes Amazon particularly attractive is the channel’s low entry barrier.

Gregor Arentz, General Manager Plan.Net Performance Cologne

What potential does Amazon offer furniture manufacturers?

Having a window display for your company’s brand on the most successful product search engine is certainly an important aspect. What makes Amazon particularly attractive is the channel’s low entry barrier and the agility with which businesses can operate on the platform. Manufacturers can start selling quickly on the Marketplace. This allows many sellers to respond dynamically to new situations, such as the coronavirus outbreak.

With just a few clicks, furniture manufacturers can establish their product range on the international market and generate growth. Probably the greatest advantage is the low risk – even if, in the end, companies don’t achieve the growth that they were looking for, they will have saved on the massive investment in an expensive store system or in developing custom solutions.

What do you see as the biggest challenges? Do furniture manufacturers risk losing sales in their bricks-and-mortar outlets by selling online?

Far from it. If it’s used correctly, for me Amazon is the perfect complement to the conventional channels. Of course, returns are a critical issue on Amazon. To counteract this problem, furniture manufacturers need to provide potential customers with sufficient information – compelling product images and detailed product descriptions are one way to achieve this.

But in fact, one of the biggest risks is ignoring Amazon. Your company can lose control of your brand very quickly if a third-party seller starts listing your products. Suddenly someone else decides how your brand is perceived and informs purchase decisions for or against your products.

One of the biggest risks is ignoring Amazon.

Gregor Arentz, General Manager Plan.Net Performance Cologne

What strategy should furniture manufacturers adopt when they are getting started on Amazon?

Amazon provides the option to start out with a few products and then expand the range if they’re successful – this keeps costs low at the start. The important thing is to follow a strategy that is tailored to your company’s business model and the channel. All parts of the company should be involved in drawing up this strategy because it will have specific implications for each department. In the ideal scenario, a dedicated team would be formed to implement the strategy and given a large margin for manoeuvre to take on this challenge.

How do you expect online furniture retail to develop in 2021? Do you think that the coronavirus pandemic will continue to drive growth?

That’s what I expect to see. But even without the coronavirus pandemic, it is absolutely essential for companies to develop an online strategy that is adapted to their particular business model. It’s a question of taking advantage of all the opportunities that new channels offer. Manufacturers that were well positioned at the start of the pandemic have been able to compensate for some of the difficulties because of their innovative models. One good example of this is IKEA with its Click and Collect service, which connects online and offline. Just recently, the Swedish furniture group reported significant growth of 74.5 per cent in its online business. I think that’s a clear signal that companies should invest in this sector now, if they haven’t already done so.

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