It is almost seven years since furniture e-tailer Made.com arrived on the UK retailing scene, and the company is now progressing overseas after establishing itself in its home territory.
The business's aim was always to take on the established furniture retailers with its digital-first model, while offering UK consumers contemporary design for affordable prices. Marketing new, up-and-coming designers' credentials continues to play a major part in the organisation's make-up, as it looks to stand out in an increasingly crowded furniture retailing market.
Essential Retail caught up with Made.com founder and CEO, Ning Li, following the company's annual Emerging Talent Award, which rewarded design duo Moon Kim and Tsewang Gensapa with first prize for their Asian-inspired space-saving stackable storage system.
The Cairn range beat five other nominees on the shortlist for the prize which is handed out annually and will result in the product being produced and stocked by Made.com in the months ahead. Li said that the awards are part of the Made.com brand DNA.
"A lot of retailers have become risk adverse when working with designers," he remarked.
"It's becoming a lot more difficult now for young designers to get themselves edited and promoted to the general public. We set up to address that issue because the model of very low inventory holding and the digital distribution nature of the business is a lot easier and lower risk to promote young designers."
He added: "The Emerging Talent Award is just another way we are attracting and promoting designers."
The awards are now in their fourth year and they continue to play a key part in the Made.com business proposition as it grows in terms of sales and geographical reach year on year. The furniture business, which launched in the UK nearly seven years ago, is now operating in six countries across Europe.
Expansion into France and Germany in recent times has seen showrooms open in Paris and Berlin, and the development of its international distribution network looks set to become even more important in the years ahead following recent changes to the UK political landscape.
"Our priority and the most important milestone that we are working on this year and next is the international markets – we launched Germany around a year ago and we're present in six countries in Europe," noted Li.
"Overseas is about 40% of the business and it will be 50% next year. It's important because we want to be a global brand. With Brexit and some uncertainty around the UK economy, the fact we're doing 50% outside the UK next year is a very important natural hedge for the business."
Made.com was founded by Li, Julien Callede and Chloe Macintosh in 2010 – backed by £2.5 million in funding from British entrepreneur and Lastminute.com co-founder Brett Hoberman. The founders are all people who are into design and they are effectively in the target market for the business itself, according to Li, and therefore new designers and their creative ideas are a fundamental part of the company's overall philosophy. This also means the retailer has positioned itself as customer centric since day one.
"When we run the business, customers are at the forefront and they are part of our thinking," he explained, adding that such a comment can often simply be a throwaway line for other retailers.
Social retailing and customer centricity
In 2014 Made Unboxed was launched – a social network run by the retailer to allow its customers to share interiors ideas and images of how certain products look in their homes. Made.com leverages the network to reassure its customers and views the portal as an extension of its showrooms, which are located in London's Notting Hill and Soho, and in Liverpool, Birmingham and Redbrick, West Yorkshire.
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Commenting on the Unboxed concept, which has thousands of users signed up who continue to share content, Li said: "It does a great job of reassuring other customers.
"We have an active and engaged network. People are posting their pictures and we find people ask each other questions – it's a more evolved retail review system. [On the market] today you have starred review systems but for me there's nothing better than a review with a picture of the product in the home with comments."
Li and the Made.com team consider their business to be a hybrid between retailing, design and technology, and the use of Cloudtags technology in the company's UK showrooms – which allows customers to use tablet devices and NFC technology to gather additional product information as they peruse the shop floor – is an example of this combination being put into practice.
Other technological features of note, according to Li, include staff using Facebook's enterprise messenger tool to communicate. He said it is a user-friendly way of keeping in touch with colleagues.
"In terms of internal communication we probably don't have the challenges of the other retailers, because we are quite a small organisation," the CEO added, saying the Facebook interface his staff use at work acts as a localised version of the global social network.
Top and bottom line and changing markets
Made.com reported in September that it made a small profit in the UK for the first time in the 12 months to December 2015, although its investment in overseas expansion and adding staff saw the group record a loss of £6.2 million. Sales were up 44% year on year to reach £62 million, and a recent round of funding led by Partech Growth Fund and supported by Fidelity Growth Partners and existing investor Level Equity saw $60 million raised.
When Made.com launched in 2010 there was nothing else like it on the market. The pure-play furniture retail market has evolved in recent years with the arrival of companies such as Sofa.com and Loaf. US-based Wayfair is starting to make inroads in Europe, too.
Verdict Retail Research from last year highlighted the changing market dynamics, revealing the average annual growth rate in UK furniture for the next five years to be at its highest level since 2002. It added that the rise of the pure-play retailers will make it a more challenging environment for independent specialists and the larger retailers which cannot offer a full multichannel offer.
"Whereas online was previously an afterthought for many specialists, it is now essential to maintain share," said Verdict analyst Matthew Walton at the time. For Li, though, it is the traditional furniture players who remain the major competition – the companies such as Ikea, Argos and DFS.
Commenting on the burgeoning e-tail-first furniture market, he added: "We are all trying to grab market share of the traditional channel.
"When I say the market has evolved, the customer takes it a lot more for granted they can buy online but six or seven years ago it was a new thing. A lot of people have now bought furniture online and we had first mover advantage."
Li says his team was able to build its brand with relatively low costs due to the unique nature of the business and lack of overheads as an online model, but he suggests it would "probably cost a lot more" to set up the same business in today's marketplace because it has evolved and is more mature.
In addition to the international push, there are plans to update the Soho showroom to maintain and optimise the customer engagement it was built to achieve. The showrooms are not viewed by the Made.com team as a channel – they are instead considered to be an extension of the website and a way of developing provenance with consumers.
There are no imminent plans to add to the showroom portfolio, according to Li. "We just opened Paris and Berlin in the last few months so that will keep us busy for now."