1、If home is where the heart is what happens when it also becomes the office,the school,and the gym?Answer:Demand for all-things“home goods”spike.Normally,high demand is a good thing.For the home furnishing industry,it presented a monumental challenge higher cost and lower margins.How can stores withi

2、n this vertical come out on top despite volatile market changes?To plot a course to profit,well be immersing ourselves in the 2Data,trends,and strategies shaping thestate of ecommerce home furnishings.1.Market:Home Furnishing Industry Statistics,Data&Size 2.Trends:Furniture and Decor Ecommerce Marke

3、ting 3.Strategies:One Formula&Four Metrics for Growth Part 1:Market Home Furnishing Industry Statistics,Data&Growth What is the home furnishing industry?Home furnishings encompass a wide variety of products ranging from commercial(B2B)to consumer(B2C):indoor and outdoor furniture;appliances and ente

4、rtainment;house-,kitchen-,and cookwares;bedding;toiletries and cleaning products;decorations,upholstery,and fabrics.For the purposes of this report,well focus primarily on ecommerce(DTC)furniture,housewares,and home decor.How big is the home furnishing market?Currently,worldwide online revenue for f

5、urniture and appliances is$415B.By 2025,its projected to hit$455.4B.Year-over-year(YoY)expansion has slowed considerably since the pandemic high.In fact,YoY between 20212025 looks like a grim countdown:from a 9.7%growth rate down to 4.4%.345China and the United States lead in total revenue.And its n

6、ot by a little.Its a landslide,both now and into the future.However,if we look at the growth rate by percentages,an entirely different story appears.Developing countries like Guyana,Niger,and Egypt are anticipated to grow exponentially.This disparity is likely due to three factors.First,an emerging

7、middle class at the global level.Second,improved logistics and shipping infrastructures.Third,the continued globalization of free-trade agreements.North America mirrors global totals on a smaller scale.Projections are expected to reach$98.3B by 2025.YoY changes show the familiar downward trend.As fo

8、r the e-retail economy,home furnishingtook a sliver of the cake at only17.1%in 2022 and its expected to slightly decrease to 15.7%by 2025.Currently,the industry nationally is slowly increasing and expected to reach$87 billion by 2025.678Does slow but steady domestic ecommerce make for a bleak outloo

9、k?No.The share of online home furnishing purchases continue to rise,inching up into the 30%mark from 2023 on.The United States has a consistent demand for home furnishing goods.Why?Three reasons 1.Larger homes and apartments 2.Advanced shipping infrastructure 3.Greater demand for property purchases

10、and larger living spaces 9Source:homescopes,shrinkthatfootprint10Two more bright spots:fragmented competition and low saturation.At the enterprise level,11 brands currently command 55%of the market mostly in retail.In comparison,only two brands control 40%of thepet industry.11Home goods fragmentatio

11、n speaks directly to lack of brand loyalty and,therefore,rich opportunity for disruption.On the DTC front,its essentially inverted:from a cluttered landscape to wide open(relatively speaking).Semisuperviseds study of 1,111 DTC brands identified 164 in the home space:14.8%of the total landscape.It al

12、so scored each categorys saturation level by dividing the number of startups by market size(*100).Below is a sample of the studys findings,which placed“Home&Garden”firmly in the least-saturated category.Especially when compared to industries likeecommerce beautyandonline fashion.Data viaSemisupervis

13、ed12Likewise,of the 464 companies tracked on 2PM,Inc.s DTC Power List,67 are in the housewares or home furnishings category.Thats 14.4%nearly identical to Semisupervised 14.8%.Top 25 Direct-To-Consumer Home Goods 1.Article 2.Serena&Lily 3.Grove Collaborative 4.Ruggable 5.Nectar 6.Blueland 7.Caraway

14、8.Lovevery 9.Made In 10.Our Place 11.FLOYD 12.Thuma 13.Yellowpop 14.Brentwood Home 15.Hill House Home 16.Koala Mattress 17.The Sill 18.Clare 19.GhostBed 20.Bloomscape 21.Brooklinen 22.Helix Sleep 23.Parachute Home 24.The Citizenry 25.Purple The opportunities are profound with no legacy leader and mi

15、nimal interference from upstarts.Even better,low barriers of entry and the absence of a major retail monopoly makes this industry perfect for DTC brands.13Part 2:Trends Home Furnishing&Decor Ecommerce Marketing What furniture and decor styles are trending in 2023?In efforts to support remote working

16、,home-office upgrades will continue to lead the way:desks,chairs,storage,and professional decor.This comes with an increased desire for goods to fill multi-purpose spaces and separate personal from professional.Other emerging movements include vibrant wallpaper,indoor plants,bidets,smart lighting,an

17、dgrandmillennialchic.Here,were discussing the top three trends home offices,livable luxury,and smart home appliances.As remote work continues to dominate many sectors,companies in thehome furnishing industry,like Article,have experienced a 200%increase in growth.How are retailers forecasting 2023?Ac

18、cording to Furniture Today,“We forecast demand to remain at 10%to 50%below the past two years and basically more in line with 2019 numbers.”“Were forecasting a little light now.Its easy to get goods.It wasnt easy in 2020-2021.”On average,the home furnishing industry relies heavily on consumer income

19、,new home purchases,and remodeling efforts.Millennials currently make up the majority of active consumers andwont change in the near future.141.New Home+Office,Who Dis?Remote work has given more people than ever the freedom to explore different locations.A new home doesnt just include buying a new h

20、ouse.It encompasses remodeling,redesigning,and redecorating to accommodate new lifestyles.The popularity of home offices ushers in the demand to adequately furnish these spaces.At the same time,work-from-home has given birth to a crying need toseparate personal-from-professional spacesand a far high

21、er usage rate of consumable home goods:staples like toiletries,cleaning supplies,and various paper products.For instance,whereBrandless stumbledas a DTC alternative to discount stores,Grove Collaborations has thrived.How?15By majoring on(1)sustainability,(2)email-centered customer acquisition,and(3)

22、increasing AOV through automatic cart building:2.Comfort But Make It Luxurious Gone are the days where luxury home items are synonymous with the rich.The look,feel,and even the cost of luxury home furnishings are pivoting.In the past,precious metals and expensively sourced materials were the go-tos

23、for larger items like beds and dressers.Cozy spaces were more about being“Instagramable”versus actual comfort.16These trends have dramatically shifted to buying smaller items as statement pieces,comfortable spaces that look and feel like luxury,and larger items that are eco-friendly.Think house plan

24、ts,responsibly crafted bedroom furniture,ethically sourced rugs.Likewise,the online shopping experience itself should be comfortable.While well assemble a mansion of examples in Part 3,on this trend,Joybirds ad-to-Messenger quiz towers above the rest.173.Kitchenware&Appliances That Have Brains Kitch

25、enware and appliances have not been immune to the radical changes of the past five years.The pandemic brought with it an increased demand for cookware and bakeware that rivaled the 1950s.Consumers are looking to add more smart appliances and all-in-one cookware to their kitchens to make simple tasks

26、 simpler.Brands likeSuviehave tapped into innovation.As a truly all-in-one system,its Kitchen Robot has features that allow multiple cooking tasks to be completed simultaneously.The bestsuper-techyfeature of all is the use of smart recipes where the robot receives cooking instructions by scanning sm

27、art recipe cards.18Part 3:Strategy One Formula&Four Metrics For Ecommerce Home Goods Marketing How do I market my home furnishing business?Strategies for marketing in the home furnishings industry start with top of the funnel efforts like ads and ends with a system for accelerating customer lifetime

28、 value.Home goods purchases are very personal and require a lot of effort to be put into visuals,content marketing,and long-term support.To grow profitably,youll need to optimize eachmetric of the growth formula.Previously,ecommerce options were widely available but limited by customer questions lik

29、e:1.What will this piece look like at home?2.How can this company help meenjoymy purchase?3.How long and how much will it cost to ship or make a return?This forces retailers to circle back to the customers experience and how that is translated to the internet.Even as the pandemic nears its end,the f

30、loodgates of ecommerce have been opened and theres no going back.19So,what options are available?One formula and four metrics Attract visitors who are primed forpurchase(V)Convert them using the latest technology(CR)Drive profit beyond the first purchase(LTV)Lower cost at every opportunity(VC)Its th

31、e cheat code.See it in action AttractMore&Better Visitors Paid Social Consumers want to“feel”the product before they can actually“feel”the product.Although,feel doesnt necessarily mean touch.In the cut-throat DTC mattress industry,Purple established itself through a savvy combination of science-meet

32、s-humor.Strong branding rooted in that throughline connected it to customers.For instance,its now classic“Raw Egg Test”not only led the brands accounts for years,it also spawned an army of user-generated content and“Goldilocks”continues as a character today:20Still,that kind of high-concept storytel

33、ling doesnt negate direct-response advertising.Farmore dominantin Purples current account are adsaboutthe product,the price,and seasonal promotions:Bringing those sides together storytelling with direct-response is where paid social comes alive.Organize your efforts around a consolidated account str

34、ucture built to scale.Three cornerstone campaign types should function as a blueprint:1.Full Funnel:Prospecting+Remarketing 2.Dynamic Ad Broad Audience:Prospecting 3.Dynamic Product Ads:Remarketing Product Catalog 2122First:For full-funnel campaigns,think through the angles that will shape your crea

35、tive Facebook ads.What events trigger customers to buy?For home goods,its likely one of three moments:Making an old space new Making a new space your own Making a personal space professional Then,identify the value propositions to highlight during those stages.Using the three moments above,the value

36、s could be Second:For prospecting,divide your campaigns into customer categories and lean hard on Dynamic Ads for Broad Audiences(DABA).Essentially,DABAs are a new-customer version of Dynamic Product Ads(DPA).They allow you to target a prospecting audience to reach people who have expressed an inter

37、est in the particular product even if theyve never visited your website.23The best way to do this isto categorizing your products by customer profile as it relates to usage:Indoor vs outdoor Male vs female Personal vs professional Etc.For ad creative,identify your most popular products by:First purc

38、hase Repeat purchases Related or similar purchases Third:Leverage at least two types of remarketing campaigns.(1)Special offers or creative angles based on your most successful full-funnel value propositions;(2)evergreen DPAs driven by Commerce Managers direct connection to your stores products.24Pa

39、id Search To catch consumers who may be looking to do more research from their desktop,Purple dominates search engines for keywords like“purple”and anything“mattress”related:The divide for search isnt prospecting versus remarketing.Its branded versus categorical.Branded search(just like it sounds)me

40、ans bidding on brand-name terms or owned-product keywords.25Categorical searchaims at termsrelatedto your products.For a pet-centric home decor brand like West&Willow(shown above)this would include search phrases like:pet portrait pet pictures dog painting custom pet canvas art puppy portrait draw m

41、y dog 26Here your account structure should be built aroundbudget rangesthat our Paid Search team likes to call the Search Engine Marketing Order of Operations Brand Search:60%Target more than 60%of total account spend.Clean,well-optimized data feeds and consistent product approvals in Google Merchan

42、t are the secret to success.Non-Brand Search:18%Use Dynamic Search Ads(DSA)targeting combined with Smart Bidding;search ads often have a lower return than Shopping due to higher CPCs.Aim for less than 20%.Video(YouTube):8%Begin by remarketing on YouTube then turn toward prospecting;mix the two appro

43、aches at around 8%of your budget.Smart Display and Discovery:5%Create multiple retargeting touch points within 24-72 hours after someone visits,views products,adds to cart,etc.Display Network should hang around 3%and Discovery at 2%.2728SmashConversion Rates On average,in-store makes up about 84%of

44、all home furnishing purchases in the United States.Shopping is a personal experience,requiring three of the five senses,simultaneously sight,touch,and,in some cases,smell.Increasing conversion rates centers on a variety of tactics that aim to replicate physical elements through onsite merchandising.

45、Augmented Reality Perhaps the most-promising bridge between the real and digital worlds between offline retail and online ecommerce is augmented reality.Apps like IKEA Place allows customers to virtually place true-to-scale 3D models in their home to visualize future purchases.Sadly,standalone apps

46、can be cost prohibitive,especially for growing companies.Thankfully,Shopify has developed its own nativeaugmented realitysolution.Not surprisingly,many of the early adopters have been from the home goods industry:29Instant Pot,Horne,and PupLounge Even less costly and a lighter technical lift is addi

47、ng interactive elements to product pages or taking advantage of mobile shoppers phones to“augment”still images:30Onsite Search&Navigation Unlike retail,where consumers have been conditioned to stroll through multi-level warehouses(think,IKEA or Costco),too many online options can be a conversion kil

48、ler.To solve this issue,onsite search and intuitive navigation can help.According to a study byEconsultancy,15%of consumers who use onsite search account for 45%of ecommerce revenue.Article,for example,places its search bar front and center.It mimics other search engines with autocomplete,autocorrec

49、t,suggested terms,and even minimal merchandising as you type:31Bloomscape,on the other hand,kicks off its search engine with preloaded suggestions&features a dramatically simplified,4-part navigationin its header.Why these differences?Furniture shoppers come with intent.You know what type,color,or r

50、oom youre trying to fill.For plant shoppers,assuming that level of knowledge could be a problem.Newbies usually dont know where to start.That same problem is also why,as an added value to customers,the site is packed with plant care guides to help enthusiasts at all levels.32Product Pages Next,produ

51、ct page design is critical for increasing conversion rates.The more information that is readily availableprior to and at the time ofpurchase,the better.Prominently displayed customer reviews Videos that show details or benefits in action Related products,recommendations,and bundles Compelling descri

52、ptions,instructions,and storytelling Lets look at each of those ingredients Caraways navigation bar expands to highlight reviews and ratings;product pages showcase in-action videos and animations 33(Above)Floyd makes use of two product recommendations:(1)“Grows with you”for built-in add-ons and(2)“Y

53、oull like these too”for cross-selling(Below)Articles bundles are presented like magazine spreads and also feature“Goes Well With”recommendations plus“Others also bought”within the cart 34Ruggables product descriptions focus on functionality and durability whileThe Citizenry leans into storytelling a

54、nd its social causes Check Out,Cart&AOV Increasing conversion rates can also be done in conjunction with increasing average order value(AOV).No one does this with more elegant sophistication than Grove.Grovesacquisition strategy centers on collecting email addresses and prebuilt bundles.Once an acco

55、unt has been created,the site automatically builds custom carts even for single item selections.35Many of the product pages shown above contain bundles as well as recommended products.Bloomscape,however,layers three approaches into one:1.“You Might Also Need”immediately before its add to cart button

56、 2.“People Also Browsed”further down the product page 3.“People Also Bought”embedded in the cart During itsholiday campaignlast year,Brooklinen took these tactics to an entirely new level.First,it led with a free gift at$150.Second,it integrated a percent-off discount tier 10%,15%,and 20%into its ca

57、rt.Then,the brand prompted shoppers with exact dollar-amounts and suggested products to hit the next savings threshold.36One pressing issue is that most consumers are still apprehensive about making big ticket purchases via mobile,so theyll use their cell phones for research and move to a desktop to

58、 make the final purchase.To alleviate sticker shock,offer quick and easy payment plans like Klarna,Affirm,or Afterpay.37Alternatively,in place of high AOV products,consider low-price-point funnels to win new customers.Chasing Papers Sample Packs shine on this front but dont assume larger SKUs cant b

59、e modified as well.Both Parachute and Purple have adapted this idea.The former sells$3 fabric swatches with free shipping and the latter,a$3 Squishy with this amazing copy to accompany it:“The best part?You decide its purpose.Use it as a resting place for your phone.A doll bed.A stress reliever.The

60、Squishys potential is only limited by your imagination.”38Up Your Lifetime Value,Faster Big furniture purchases arent made often and that poses a huge lifetime value issue for retailers.How canyou maintain profitability if a couch or bed is only purchased once or twice in a lifetime?Subscriptions Sm

61、aller home items can increase LTV by allowing customers to consistently purchase lower priced items that they love.In many cases,categories like cleaning,decor,and plants are ready-made for this approach.39Standalone items,like candles,are equally ripe.For example,ForvrMoodoffers subscriptions that

62、ship new candles to customers quarterly.Getting creative and cost-efficient,Art Crateships personalized art pieces to customers on a monthly basis for only$29 a far lower price point than normal online artwork,sustained by repeat purchases.40As Time Magazines“Best Invention”of 2020,Gardynhas capital

63、ized on numerous trends at once mixing grow-at-home DTC gardens with an app subscription that(at scale)ispure margin.Lastly,subscription doesnt necessarily mean products.Uncommon Goods paid-membership program unlocks numerous benefits,makescustomers want to come back,and is promoted to newshoppers t

64、hrough email which is where well turn next.4142Email Marketing&SMS Finally,leveraging email marketing and direct messaging texts or DMs via social platforms will always be go-tos for increasing LTV.What does a powerful retention program look like?As aguide to ecommerce email marketing,there are at l

65、east 13 automation types(flows)you should prioritize.Lets examine a few examples from the highest priority automations WELCOME SERIES:3-5 EMAILS Kick off by delivering the sign-up incentiveimmediately.Did you tell them theyd get a percentage-off coupon?Send it.Was it free shipping?Ship it.How about

66、a free introductory sample or a giveaway?Make sure it hits their inbox.Only after living up to the expectations you established should you move on to showcase products or categories.Show off your brand voice and ethos vibrant visuals,causes you support,and copywriting that breathes personality.Final

67、ly,round it out with custom content either through segmentation or with dynamic blocks separating purchasersfrom non-purchasers.43CART&CHECKOUT ABANDON:3 EMAILS EACH Though often used synonymously,there are key differences between cart abandonment versus checkout.When someone leaves a cart,its diffi

68、cult to know why.Did they need to do more research?Was it the price?Maybe shipping times?Or,quite possibly,they just got distracted?Your emails have toplay the spread addressing as many of those issues as possible,getting as personal as possible,and delaying discounts for as long as possible.For che

69、ckout abandonment,its predominantly the price.We know this because the final step in nearly all checkouts is entering payment information and clicking confirm.Here its fine to go straight to discounting.44However you decide to address these two flows,keep it simple!Focus directlyand onlyon the exact

70、 products your would-be customer left behind.RE-ENGAGEMENT:3 EMAILS Target subscribers who havent opened or clicked within a recent time frame(90-180 days)to attempt reactivation.Entice them to return by combining three elements:A meaningful discount of at least 15%or more Fun and friendly copy that

71、 speaks to the moment Useful guides and CTAs to help them shop,decide,and get inspired 45CAMPAIGNS&NEWSLETTERS Lastly,ongoing campaigns for special events and newsletters that provide a healthy mix of products and content are critical to keeping your list engaged.In the case of events,naturally you

72、should lean into traditional shopping holidays.But dont let a two-peaks calendar Black Friday,Cyber Monday plus one additional holiday limit you.Instead,carve out anecommerce marketing calendar with at least four peaks.As for your newsletters,above everything,provide value to your subscribers by edu

73、cating,entertaining,and(only after those two parts have set the foundation)selling:46Optimize Variable Costs Variable costs are expenses tied directly to order volume:COGS,platform and payment processors,pick-and-pack fees,fulfillment,shipping,etc.Fixed costs,in contrast,operate independent of sales

74、 volume:rent,utilities,payroll,etc.How do you measure and optimize variable costs?There are plenty of ways,but we strongly recommend you follow a four-quarter accounting matrix.Each represents a portion of your revenue that signals the health of that component as well as areas of opportunity:1.Cost

75、of delivery 2.Customer acquisition costs(CAC)3.Operating expenses(OPEX)4.Profit 47Ideally,aim at 25%of revenue going to each of these categories.One of the biggest issues that online furniture retailers face is shipping costs.With China being the worlds top furniture manufacturer,shipping can dramat

76、ically increase the price of goods.Even domestic fulfillment is pricey and can make online shopping a hassle.This eats away at your margins at both ends:first,getting it to you;second,getting it to your customers.One solution is to include shipping costs in the price.Most consumers are prepared to p

77、ay for shipping but absorbing it in the price makes for better optics.Another is to create free or discounted shipping thresholds.Mainstream furniture retailers,like WayFair,offer shipping on all orders that exceed$35.Adjust your own as needed.48The DIY assembly route can also help retailers save.Co

78、mpanies like Elephant in a Box use high-quality ingenuity in its design to ship products quickly and cheaply.Next,forcustomer acquisition costs,anchor your approach to growth in a clear understanding of yourbusiness unit economics:What does it take to get one click(V),acquire a single customer(CR),r

79、etain that customer(LTV),and deliver one product(VC)?A line-item breakdown of everything that goes into getting what you sell into the hands of your customers should be your starting point.With that,you can then setprofitablespend,budget,and ad costs.Finally,frame your overall strategy as a three-la

80、yered revenue“cake”with your most stable sources as the base.1.Existing customers as the foundation 2.Owned audiences in the middle 3.Paid acquisition at the top 49Volatility and variabilitymount as you move up the cake.That means revenue becomes more unpredictable.The goal is to focus on factors yo

81、u can control not only for healthy economics,but also forecommerce demand forecasting.What Does the Future Hold for the Home Furnishing Industry?The coming years show slow and steady growth for the home furnishing industry.But growth isnt the focal point here profit is.Where can you find more custom

82、ers?What products will they value the most?How can you make them stay?50These are all questions that every e-retailer in this industry should be asking.Findingyour own answers is the key to thriving.Evolving in such a way that bridges the gap between ecommerce and in-store retailwithout forfeiting t

83、he customer experience is by far the most effective way to claim your stake.For future references,it seems to be the only way.Common Thread Collective is an ecommerce growth agency.We help businesses break through to their next tier of growth by leveraging our formula:(Visitors x Conversion Rate x L

84、TV)-Variable Costs=Profit.As entrepreneurs ourselves,we know what its like to watch a business grow and thrive against the odds.The“common thread”weve found between successful brands is simple:they have a clear business goal and they know how to set targets that ladder up to that goal.With teams dedicated to growing and scaling brands across paid media,retention,and strategy were in the business of translating big-picture goals into concrete steps and transforming those steps into real-world outcomes.If youd like to learn more,connect with us here.