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The most noticeable change in the furniture industry today has been the ability for suppliers, producers, distributors, and consumers to access information almost instantaneously via the internet.
Overall, the internet has played an essential role in one of the most significant changes in furniture trends, revolutionizing retail and how the public accesses furniture.
The internet has also encouraged the globalization of furniture markets, particularly opening up South-East Asian manufacturers to large global markets like the USA in new ways.
In today’s blog, we aim to explore the current global furniture trends, the tech-driven opportunities for South-East Asia furniture makers, and the predictions for the furniture market going forward.
The current state of the furniture industry in South East Asia
As mentioned earlier, the internet has provided the public with access to a broader variety of uniquely designed furniture than they ever had before.
A quick search online can reveal many artisans and retailers, near and far, all skilled in creating the bespoke furniture pieces we all covet.
The Philippines, Singapore, Malaysia, Indonesia, and Thailand are fast-growing South-East Asian furniture makers and suppliers. In fact, the furniture export and production ratio for the South East Asia region is approximately 66%, more than double the world average of around 30%.
Furthermore, furniture manufactured in this region satisfies about 5% of total furniture consumption in the USA and 2% of total furniture intake in Western Europe.
eCommerce Adoption in the Furniture Industry
Furniture e-Commerce refers to the use of online marketplaces or ‘web stores’ to sell furniture that comes assembled, partially assembled or needs assembly on arrival. Such furniture can range from couches, beds, desks to even smaller decorative items, like light fixtures, throw pillows, and window treatments.
The two main giants in the e-retail furniture space are Amazon and IKEA. These two companies have set the pace, blowing out all the competition by employing techniques like hyper-personalized marketing, augmented reality, and contextualized marketing to revolutionize how furniture is sold online.
Fundamentally, e-Commerce is quickly becoming a crucial channel for furniture businesses globally as it opens up local sellers to a wider market of international buyers, with various shipping avenues available.
As a matter of fact, with this access to wider distribution channels, many South East Asia manufacturers with unique products can compete favorably in the global marketplace.
eCommerce furniture industry stats
According to Statista.com, online furniture and home ware sales will continually see an average yearly growth of 10.86% worldwide. Overall, this means that the growth driven by e-Commerce outperforms the overall market growth nearly three times!
Statista also predicts that by 2022, furniture sales in the USA will account for 14% of all eCommerce transactions. Since this already seems promising, let’s share more statistics that make a case for furniture eCommerce:
- Online sales represent over 90% of the growth in the furniture industry.
- Approximately one-third of customers prefer to purchase furniture online
- 47% of furniture shoppers bought using a mobile device
- B2B sales in the furniture e-commerce industry make up 30% of annual sales.
- 66% of in-store purchases came via consumers looking for information on furniture
- 53% of customers say they would buy a couch online, while 80% of customers say they would buy a mattress online
- 45% of consumers say Pinterest facilitated their home furniture purchase decision
- 88% of furniture brands market on Facebook while 60% use Pinterest and Twitter
eCommerce trends in the furniture industry in 2021
1. Visual search and Visual commerce
One of the major challenges of running a furniture e-Commerce store is selling to consumers who have no chance of physical interaction with the furniture. Visual commerce helps resolve this problem by offering the next generation of state-of-the-art static visuals.
Instead of simply leveraging product photos to market one’s business, visual commerce incorporates other types of visuals like consumer-generated media, interactive content, engaging videos, and augmented reality.
Additionally, it constitutes a visual search that is slowly replacing text-based search, inevitably disrupting the way people search for furniture in the upcoming years.
In 2019, after Facebook bought GrokStyle, an A.I. company that powers the visual search for IKEA, retailers started talking about visual search more than ever.
This only indicates that this trend is here to stay as social media platforms are making plans to make visual search an integral part of how people search for products.
2. Advancements in Augmented Reality
Augmented reality (A.R.) has infiltrated the furniture industry and is here to stay! Since Furniture shopping is by nature visual, the A.R. hype train will keep going as a way to bridge the gap between in-store and online shopping experiences.
Furthermore, since furniture can now be overlayed within the consumers’ environments for immediate visualization via A.R., buyers have a good level of assurance about the fit, size and aesthetic of what they are buying.
So, the opportunity to virtually try out new furniture is an unmatched offering, as the Place app by IKEA has demonstrated. This groundbreaking app exploits A.R. to give furniture shoppers a dynamic view of different products in their homes, scanning a room for clear dimensions before accurately depicting how it would look and fit.
In 2021, we shall see more applications of A.R. in the furniture space via more smart glasses that are becoming more accessible and affordable.
3. Enhanced personalization
In today’s eCommerce sphere, most shoppers expect furniture brands to personalize the experience for them before they even engage with the brand. With advances in artificial intelligence, we expect the level of personalisation to get better in 2021.
However, to meet this demand for customer personalisation, furniture brands need to collect as much data as possible, exploiting product information management (PIM) systems so that the interests and behaviors of consumers can be appropriately aligned with the right furniture products.
4. The continued rise of Direct-To-Consumer (DTC)
Direct to Consumer is a relatively new trend where brands sell directly to their end customers, without going through a retailer, distributor, or wholesaler.
DTC has continually grown and evolved as a new sales avenue, diminishing the need for a retail ‘middle man’. Instead, DTC relays a more personal approach, where a furniture brand provides an emotional connection, shared principles, and values, over time to shoppers.
DTC also allows brands to better understand their consumers’ desires and wants, reduce costs, and increase flexibility in how they advertise, trade, and distribute their furniture.
In 2021, we shall see traditional retailers competing for market share with more DTC brands and e-commerce marketplaces as consumers have more choices than ever.
5. Availability of end to end fulfillment agencies
While manufacturers around the world are considering using e-retail platforms to sell their products across the globe, lucrative markets like the USA are not easy to breakthrough.
Multiple hurdles like the involvement of intermediaries who take a substantial cut, lack of knowledge on tariff structures, custom clearance issues, no access to warehouses and inventory management in offshore lands, etc are often encountered.
Various fulfillment agencies that specialize in working in large countries like America provide easy and affordable solutions for these small scale manufacturers to get their first break in the US.
Effects of the COVID-19 pandemic on the furniture industry
Undeniably, the biggest threat and opportunity for eCommerce trends in 2021 will be the persistence of COVID-19. In 2020, the spread of the COVID-19 forced over 100 countries worldwide to impose either full or partial lock downs, affecting billions of people who were forced to change in part their consumption habits.
However, lock downs also delivered an opportunity for consumers to adapt their spaces to work from home. Thus, creating new opportunities for furniture makers to concentrate their efforts on the online space since most brick-and-mortar stores were closed.
CSIL estimates that world furniture consumption in 2020 decreased by 10% to a value of approximately $400 billion at factory prices, and $700 billion at end-user prices.
However, the furniture e-Commerce space reached a double-digit increase (10%) for furniture consumption at end-user prices on a global scale.
The most notable e-commerce furniture sales growth was registered in the United States and Europe, then China, representing over 90% of global e-commerce sales of furniture.
Generally, COVID-19 drastically changed how consumers shop. For example, for single product categories, the fastest-growing category during lock down was outdoor furniture, then office furniture, whose online sales increased due to the pandemic, representing a 4% share of total segment consumption in 2020.
Additionally, inventory challenges were experienced with overseas supply chains impacting manufacturers’ ability to produce more furniture. With constant changes and delays in production cycles, retailers typically had fluctuating shipment information for the consumer, thus disrupting the consumer journey.
Predictions on the future of the global furniture industry
- Since multiple companies seek to adopt hybrid remote policies in a post-pandemic world to capitalize on the profitability and flexibility offered by remote work-forces, the focus on home furniture will continue to stay prevalent.
- Furthermore, with social ‘distancing’ remaining the norm, different furniture accessories such as shields, isolators, and dividers will be employed to ensure team members maintain a healthy distance amongst themselves.
- We also expect the modular furniture segment to continue growing in 2021. Since most consumers will spend more time at home, they won’t want their home spaces to be occupied by carpentry tools. As such, they will seek out modular furniture that can be made elsewhere and simply delivered to homes for assembly.
- Moving forward, we shall see more advanced chat-bot solutions that became popular after the advent of COVID-19. In 2021, chat-bots will become more full-fledged and intelligent, almost serving as 24/7 ‘digital sales people’ during a consumer’s shopping journey.
- The role of reputed fulfillment agencies in providing easy solutions for regional manufacturers (like those in Southeast Asia) to venture into global markets is predicted to grow.
Opportunities for furniture makers in South East Asia
Global e-Commerce platforms like Amazon, TMall, and specialized furniture websites like Wayfair and Home24, accounted for half the market share in 2020.
Prior to COVID-19, few manufacturers operated their online furniture shops and almost solely in North America with residential brands like Ashley, Ethan Allen, or La- Z-Boy.
Due to the growth of e-shopping for furniture, it’s only prudent that South East Asia’s strong local furniture markets seize the opportunity to expand to more global markets.
Furthermore, as many furniture manufacturers continue to partner with fulfillment agencies, furniture makers in South East Asia can also invest in having their presence in the online world to strengthen brand awareness and increase customer interaction.
South-East Asia manufacturers should also exploit opportunities for mergers with American and European players seeking to expand their own retail stores and online sales.
For instance, high-end Italian furniture players like Poltrona Frau, Dada, and Calligaris who launched their own websites can be approached for partnerships.
Final thoughts
All things considered, the future of brick-and-mortar furniture stores is not necessarily bleak, but furniture eCommerce trends will continue to incrementally rise and become more innovative.
Although it will remain vital for furniture brands and retailers to survive in a post-pandemic world, e-Commerce will not continue steadily growing at the rate it did in early 2020.
Still, it will sustain a good level of consistency to support South-East Asian manufacturers seeking the USA and European markets and partnerships.
In the end, manufacturers should continue seeking ways to sustain their online growth to supplement the brick-and-mortar retail experience.
Consequently, the value of omnichannel business plans and country specific fulfillment services will be seen by furniture makers as customers will continue venturing into the e-space for the furniture buying process.
