More and more of the furniture category will shift to online sales. It’s simply more convenient. Wayfair has been very successful the past few years. However, Amazon is in a good position to absorb a lot of those sales, especially since they also offer assembly services.

There are big challenges in the furniture market for Amazon or any other online retailer because the cost of returns, meeting shipping expectation and the pick and pack are quite high. Given that Amazon needs to find a way to show profit in retail-like sales, furniture seems an unlikely candidate.

I’m told by furniture sellers that there is a particular returns problem. That the minute furniture leaves your warehouse, the value has dropped 10 to 20 percent because it doesn’t get returned in sellable form. That adds incredible cost to any return.

Of course, this is Amazon. Either they sort out a way to solve that or it is another mis-direction designed to keep retailers on their heels.

Still, register me as “doubtful.”

There will be more online furniture shopping in the years to come as more of us begin to rely on e-commerce. The busier we are the more we will be relying on online shopping, even for those larger ticket items. I have friends that swear by Wayfair, both in quality and cost. I have never thought of myself as a big-ticket buyer online. Yet I tend to use the internet to find the best bargain before going out and doing the actual legwork. I still have to “kick the tires” as the expression goes. The next step is finding the confidence to put my toes in the water and make that first larger purchase.

Most certainly! We should never underestimate the power of Amazon. Furniture is yet another frontier that Amazon may conquer with their relentless innovation and reach. However, unlike home goods, electronics or perhaps basic clothing, furniture shopping is a multi-sensory experience where the customer wants to touch, feel and see how the furniture will fit into their lives.

The mobile and desktop experience could be a good starting point. Especially when you integrate virtual reality and augmented reality capabilities, which enable the consumer to strategically place the furniture in their homes and determine the right dimensions, all conveniently from their smartphone.

This may also be another targeted category for Amazon to open furniture showrooms in strategic markets such as NYC, Boston, Chicago, Los Angeles, etc., as that would resonate well with consumers.

Wayfair, according to the Motley Fool, is chronically unprofitable. Gross margins are low, typically around 24 percent, far below its peers. Williams-Sonoma enjoys gross margins in the high 30s. And privately held IKEA generated a gross margin of 42.9 percent last year.

It’s a category I don’t know how is supposed to deal with returns which historically are high for online. Couple that with abusers who could simply buy it all and return within a few weeks and I don’t share the “gee-wow” of this announcement. But you probably knew that.

Let’s unbundle the question a bit. Will Amazon disrupt a segment of the furniture business? Yes. Will the size of that segment grow over time? Of course, the online share of every category will grow overtime. Could Amazon become a major force in furniture? I suppose so, if they choose to. So what’s to stop them? Well, it’s easier to ship a book than it is to truck around a fully assembled bookcase. You can leave a package with a CD by the door, but what do you do about a couch? How happy will third-party carriers be with hauling around large freight? And what about those nice bells and whistles like assembly, placement and — takeaway of old furniture such as bedding or appliances? So the answer is yes, they could take a bigger piece of the furniture market if they wanted. But the better question is, do they really want it?

They can disrupt once again for smaller, easily managed items, but not for large purchases. The risk of problems with quality, satisfaction, preference is too great for returns for larger purchases for Amazon to gain major marketshare. Plus, who handles large items when they drop ship them to your doorstep?

Wayfair has also struggled financially with the large item return policies (which have a higher return percentage than traditional retail items). For accessories, lighting, etc. YES!

The difference between Amazon and everyone else is that Amazon doesn’t start with the product. They start with the customer. They connect and understand the customer and how they behave and build the engagement around that. When you get down to it, Amazon really doesn’t sell products. They fit products into their connection and infrastructure. If they deem furniture fits, they will win, just like they do on everything else.

Others who focus on the product (furniture) first will always come in second to Amazon.

I commented a couple of weeks ago that Amazon had not yet made big inroads into the major appliance market — but obviously they are headed in this direction, along with furniture. To some degree IKEA has already figured out how to generate furniture sales not tied to its showrooms, so it’s clearly an opportunity for Amazon too. No doubt that they will figure out the logistics of bulky products but this still seems like a business where customers want to “kick the tires” — so perhaps Amazon ought to test showrooms in their early test markets.

IKEA disrupted the furniture business and is very popular with Millennials. A recent article said that Millennials are beginning to purchase homes. If that is accurate, then the furniture marks stands to expand. However, it will expand as business as usual. Millennials have different tastes than their parents. Amazon may well be able to take advantage of that.

Amazon must always be considered a threat, but this category will be a challenge for them, without question. I used to work with hundreds of furniture retailers in my days at GERS, and one thing they all told me, time and time again, is that furniture buying is an emotional process. While Amazon is perhaps the best on the planet at removing emotion from the retail transaction, and they will surely grab some share of the market, I am not sure their model translates at scale to motivate purchases that people expect to last for a decade.

With new competitors entering the fray of the furniture market — like Amazon and Alibaba — with an online approach, and several start-up companies, the competition is heating up. We will likely see some bankruptcies and/or consolidation shaking this industry in the next few years. While the online giants will take a chunk of the market share, the brick-and-mortar players that succeed are the ones that personalize and differentiate the shopping experience. Furniture purchases are often omni-channel shopping journeys with a combination of showrooming, webrooming and catalogrooming impacting the final purchase decision. Savvy retailers are focused on optimizing the cross-channel experience and capitalizing on the benefits of the physical store experience that can’t be replicated online. Just look at what RH Gallery has done. Building showrooms in major metro areas by leveraging fabulous real estate with truly amazing catalogs they have clearly differentiated themselves from the pack. Low end good looking furniture may be susceptible to disintermediation but touch, feel and smell is a must for higher end product. The end result may be an… Read more »