Digitalization for the Furniture Market / Get Ahead!
Digital transformation of commerce is one of the most important challenges that the furniture industry is going to face in the short term. Although people still like to buy furniture in-store, we can’t help but notice the growing interest in online shopping in this sector. Digital transformation involves a series of changes affecting every nook and corner of the organization – the implementation of e-commerce is one of those changes.
The furniture industry is particularly important to us, as we have the pleasure of supporting leaders of this sector in developing their digital solutions. In writing this article, we have invited experts from Black Red White and Mirjan24 to share their experiences with us, also on the top 10 sales development trends in the furniture industry.
The Importance of Digital Transformation in the Furniture Business
Digital transition is an important step in the development of the furniture industry. This is a direct result of evolving expectations of customers and the business community. This process includes the implementation of appropriate technology in almost every area of the company’s operations. It requires a thorough remodeling of production, sales, logistics and customer experience management. The overarching goal of digital transformation of business is to increase efficiency, boost revenue and adapt to new conditions and customer needs. According to a survey conducted by McKinsey among senior management, as many as 85% of the respondents see the need for digital transformation.
Digital transformation in our industry is critically important and applies to every unit in the company. It helps in planning production and calculating inputs for furniture production. It works great in commence, as it brings together orders from all sales platforms. It facilitates planning in logistics and transport. Without digital transition, all these activities would be time-consuming and would make it difficult to scale the business to new markets. Digital transformation has become an essential part of Mirjan24’s strategy,” says Łukasz Rabiega, CEO of Mirjan24, Mir-Tex24.
Online sales development is one of the elements of digital transformation. In developed countries, a significant 83% of companies operating in the B2B sector distribute their products online. The furniture industry is no exception here – accustomed to the convenience afforded by online shopping, partners are looking for similar experience in the business channel. As a result, trends from the B2C e-commerce sector are being incorporated into B2B. Data shows that as many as 52% of B2B buyers are frustrated with the online purchase process, and 90% of them are going to switch supplier due to a bad experience with the online sales channel. This confirms the observation that providing clients with the highest possible level of customer experience on the back of e-commerce increases competitiveness.
Digital Transformation in the B2C Channel
Since the outbreak of the pandemic, retail turnover in the e-commerce channel has almost doubled, with home furnishings and furniture being among the strongest growing categories. The “Home and Décor” segment ranks second in terms of share in e-commerce business in Poland. Tapping into the huge potential of digital sales by manufacturers and distributors is the next step on the development path. In 2022, the e-commerce sector is estimated to account for 16% of furniture sales in Europe, but by 2025, this share is expected to increase to 22% – so the internet will generate almost a quarter of the business.
Digital transformation is a key challenge for any business, as well as a vital element of our strategy. Even in more difficult times for the industry, which are certainly on the horizon, we’re not going to give up investing in digital solutions that will allow us to develop new sales channels, automate existing processes, improve customer experience and strengthen customer loyalty,” says Mariusz Nowak, E-commerce & Omnichannel Strategy Director, Black Red White.
The integration of new technological developments into the furniture industry helps reach new groups of customers, especially those from the Y and Z generations, very much immersed in the online world. Nevertheless, the personalization of the offer, the ability to configure products or presented them in an attractive way are digital approaches that fit into the latest trends in the development of the furniture industry and reach a wide range of consumers.
Personalization in e-commerce seems to be a natural choice – it increases the propensity to purchase in 88% of consumers. It involves providing unique content and tailoring the proposition to the customer’s taste. However, relevant information is needed to be able to offer consumers exactly what they are looking for. The information can be extracted from demographic data, trends, previous purchases, as well as search data. On their basis, recommendation systems can suggest customers products that could be of interest to them.
Personalization is a trend that obviously applies to all product categories. In the furniture industry, consumers have their tastes, and look for specified styles, colors and materials from which furniture is made. For this reason, preparing and presenting the offer to fit their individual needs is of critical importance. Recommendation engines will be used extensively. And this means not only simple frames with products similar to those recently selected or searched. Instead, we’re talking about inspiring, data-based sections where each user will find suggestions and ready-made interior design proposals perfectly suited to their taste,” says Mariusz Nowak.
When given a choice of two products, most customers will not hesitate to pick the one that has been recommended. Recommendation engines are currently the best way to retain customers and increase conversion in e-commerce. They use an algorithm that predicts users’ future choices. They can be compared to the best in-store service by a seller who is perfect at identifying the consumer’s needs and proposing a tailor-made solution. What’s more, the recommendation system is also able to suggest that navy blue pillows will perfectly go with the gray sofa you’ve selected. Customers who are not interested in personalized products are happy to use the “shop the look” option, which allows them to choose shoppable sets of well-matched interior design elements.
Personalization of Products
Customers are able to pay 20% more for a personalized product, and 48% of people interested in such product confirm that they are able to wait longer for delivery. As the society’s wealth increases, so does the demand for products tailored to individual preferences. How does it work in practice? It usually comes down to two solutions: products are mass-produced, and the manufacturer allows for the possibility of making some changes to them, or the goods are made to order right from the start.
Customers expect furniture sellers to offer them not only personalized suggestions as to the selection of a ready-made product that would suit their taste, but also want to have the possibility of modifying the product. It’s about being able to design furniture from scratch or make changes that will allow the customer to adapt all components to meet their individual needs. That’s why more and more brands are investing in digital 3D configurators. They can be used to choose the type and color of wood, veneer or fabric, legs or handles, as well as to decide where to put shelves and drawers,” Mariusz Nowak says.
Unique Product Presentation – 3D Commerce
Appropriate presentation of products in an online store is key for the furniture industry. High-quality visualizations with an interactive experience enhance immersion and allow customers to “feel the product” before buying. The 3D commerce trend has developed especially during the pandemic, but now is one of the key directions for the development of product presentation on e-commerce platforms. The use of 3D visualization and augmented reality takes the experience of furniture industry customers to a completely new level.
Replicating in-store experience online is still a challenge in furniture business. The answer is a virtual product configurator that can be implemented on the e-commerce platform and which makes use of AR (augmented reality) technology. How does it work? Images from the real world are recorded by the camera and then synchronized with computer-generated graphics and 3D animations. In this way, by means of a phone and appropriate application (or dedicated glasses), users can arrange their apartments in real-life settings: plan the placement of furniture, adjust its appearance and select accessories.
Many consumers still shy away from purchasing furniture online as they prefer physical contact with the product and need to see it before buying. For this reason, e-sellers are stepping up their efforts to provide appropriate content for product presentation, i.e. high-quality product photos and renderings, comprehensive descriptions and technical data. VR (Virtual Reality) technology, which became immensely popular during the pandemic, makes it possible to go a step further and bring virtual experience of the product closer to real-life experience. To use this technology today, you don’t need to install additional applications or use special equipment. That’s why I think it has a much better chance of being used in sales activities than VR,” Mariusz Nowak notes.
Sales in the omnichannel model are one of the development directions of the furniture industry in 2023. The model involves blending brand experience in individual sales and customer communication channels. Currently, the customer’s buying journey often begins at the stage of browsing the offer on the phone or computer. Even if the consumer finally buys furniture in a physical store, the decision is usually taken much earlier. You can go to a store to check the material structure, color intensity or even smell the wood. However, modern configurators and VR and AR solutions can to some extent replicate those experiences in online environment.
Implementation of E-commerce for the Furniture Industry
The success of any project is underpinned by a well-developed operating strategy, which also provides for scaling and further development. It’s worth remembering that the implementation of an e-commerce system is only one part of the process of the digital transformation of a business, which is why it’s so important to choose a flexible platform that will not hold back development. An important area for sales and distribution is also the management of products and commercial information, facilitated by PIM systems. On the other hand, pricing engines increasingly often replace or supplement ERP systems that cannot cope with calculating prices in complex, multi-variable scenarios. Manufacturers and distributors from the furniture industry also need to integrate those solutions with the entire architecture.
Efficient Product Data Management Using the PIM System
A PIM system helps in making improvements to the management of a large database of products from the level of one repository. But it can do much more. Mariusz Nowak says: Manufacturers and distributors engaged in multi-channel sales more and more often invest in systems for centralized management of product information. This is particularly important in the furniture industry, where digital information is extensive, and individual goods come in many colors, materials and finishes. Data such as the name of the product, its features, technical specs, marketing descriptions, photos and video files are aggregated in one place, from where they can be automatically exported to various sales channels (e.g. to your own online store and other sales sites). PIM systems support the management of product range and help in maintaining consistent communication.
Inventory and Process Optimization
Accurate demand and sales forecasting is a very useful skill, not only in the furniture industry. With proper data models, it’s possible to automate the ordering of the right amount of inventory. As a result, the company will maintain stock of only those products that are currently in demand. You also have no problem presenting them, as the system will plan the available space for you.
The fourth industrial revolution is happening before our eyes and you’ll be well-advised to join in if you wish to grow your business. Industry 4.0 is about system integration and networking. At Mirjan24, we know that this is an important step in optimizing warehouse processes, among other things. With the radiofrequency identification, or RFID, we’ll avoid manual scanning of products in the warehouse. To this end, all products will have digital tags that will be automatically scanned. RFID has much wider applications than just production, warehousing and logistics. It’s worth exploring this subject to find out how this technology could be put to use at the company,” says Łukasz Rabieg, CEO of Mirjan24, Mir-Tex24.
Barriers to Digital Transformation in the Furniture Industry
What is stopping manufacturers and distributors from stepping into the realm of online sales? More often than not, this is the belief that going digital will not work in the furniture industry (41%) and that there is no clear need to implement e-commerce (33%), as well as the fear that customers won’t use the online channel (11%). 7% of companies admit that they are not ready for digital transformation, and another 7% say they don’t have sufficient budget for it.
The main barrier that stops furniture retailers from entering e-commerce is the belief that an online store won’t enjoy any popularity in this sector. However, taking into account the generational shift in both purchasing departments of companies and among consumers, ignoring this channel will make it very difficult to sustain long-term business growth and sales momentum. Furniture industry leaders are using the e-commerce functionality with increasing success, both in domestic and foreign sales, which only strengthens their position in the industry. And they will derive competitive advantage not just from being present online, but also from skillful adaptation of digital tools to meet customer expectations. Our research clearly shows that digital transformation not only increases the number of customers, but also boosts their loyalty and frequency of purchases,” says Maciej Nałęcz, Sector Analyst, Strategic Sectors Department, Santander Bank Polska.
Digital transformation of commerce in the furniture industry is a natural and inevitable step in business evolution. The question is not if, but when you will embrace the transformation that is happening right now. In the face of many upcoming challenges, optimizing production processes and increasing sales efficiency across channels will become a priority. The resulting operational efficiency of manufacturers and distributors may be key to their survival in the market.