Online retailer grows as shoppers change habits

Retail Profile

By Chris Gigley -- Casual Living, 2/1/2010 12:00:00 AM

Todd Arend has impeccable timing. After buying a collection of online casual furniture businesses in January 2009, one of them, OutdoorFurniturePlus.com, became the first online retailer to be included in Casual Living's annual list of 100 Powerhouse Specialists.

The recognition, based on estimated sales of between $1 million and $1.9 million in 2008, is about more than the numbers. It's a sign that the Internet is a viable retail channel for casual furniture.

Arend, owner of Tacom Limited, the umbrella company for his casual furniture sites, decided to jump headlong into the casual furniture industry while working at AC Marketech, a sales and marketing company he runs with his father Bob. AC Marketech distributes, sells and develops products for various mass retail and online channels including specialty retail, craft, hardware and home center.

“I saw the opportunity in outdoor furniture, just thinking about the market and where consumer buying habits are falling these days,” Arend said. “The migration of people online en masse has brought about a sea change in how consumers look for and acquire products for the home.”

DIY Network show crew member unpacks furniture from OutdoorFurniturePlus.com

Arend also noticed how the slumping economy was compelling more consumers to forgo vacations and put more money into their homes. The market was flooding with new and innovative products while the interest in outdoor rooms was growing.

“I just felt that the right move was to move online to give consumers a broad selection of what they want,” Arend said.

OutdoorFurniturePlus.com is nothing if not comprehensive, listing more than 15,000 SKUs of product, with another 5,000 due online this year. Arend said 2009 sales were up 15%, and product was the main reason why. He spent the better part of 2009 forming relationships with about 50 vendors and establishing criteria that ensured consistent quality, responsive service and quick turnaround from those vendors.

“You have to have really good vendors in order to offer the market what it wants,” he said. “All the other things have to be put in place, but you have to have good product to begin with.”

Arend is coy about the vendors he works with, a sign that many casual furniture wholesalers and retailers still view the Internet as a threat. But given its success, OutdoorFurniturePlus.com is more of a model, because the Internet isn't going away.

Arend appears to have figured out one of the biggest stumbling blocks of Internet retailing thus far — shipping. The business is an authorized factory/manufacturer online dealer of about 85 categories, using almost exclusively a drop-ship model.

“It's been a challenge to find good carriers, but we have it down to three consolidated freight companies that are extremely careful with our merchandise,” he said. “That's the bottom line. We don't want to have damages in transit.”

Arend uses refuse-shipment notices as a measuring stick for the freight companies. By the end of 2009, he said their combined efforts had whittled those incidents down to less than .5% of total shipments.

In the meantime, a comprehensive customer service strategy, which includes phone and e-mail lines and extensive follow-up, has helped allay consumers' fears and doubts about buying casual furniture online.

“The onus goes to the Internet retailer to show products in as many different lights as possible, from descriptions to testimonials to photos, to help consumers feel OK about online ordering,” he said. “But just as important, consumers should be able to pick up the phone and get answers to their questions so they know exactly what they're buying.”

Customer service calls often turn into educational opportunities. Most questions cover quality differences, Arend said. Consumers want to know why a material used in one furniture frame, for instance, is more expensive than a different material used in another frame. Arend and his staff are happy to tell them.

The learning goes both ways. While consumers tend to be more price sensitive online, Arend said he has discovered that personal customer service and a broad selection do hold value, and OutdoorFurniturePlus.com customers have shown a willingness to pay a little more for it. Other lessons have helped the site be more effective.

“We take feedback and make changes on the fly all the time,” he said. “If someone calls in with a question about how we're listing something, we'll make a change right away.”

Other feedback-related tweaks are more long term, he said. For instance, an avalanche of questions about teak furniture prompted Arend to add more teak SKUs to the site for 2010. That's one reason he thinks sales will be even stronger this year. Another is that all Tacom Limited Web sites will be redesigned to improve the overall look and navigation.

“We want customers to find what they want quickly, learn a lot about it, contact us if they want, and make a purchase as easily as possible,” said Arend.

Another boost for the retailer is likely to come from an appearance on the DIY Network show “Man Cave,” in which designers used OutdoorFurniturePlus.com as their furniture resource for a guy-friendly outdoor room makeover. Arend expects the episode to run in either June or July.

“Our appearance on the show will tell viewers they can come to OutdoorFurniturePlus.com to find whatever they need for their outdoor space,” Arend said. “We will position ourselves as the company you can call upon to select a wide variety of furniture for whatever space you have outside.”

Even though many consumers have already gotten that message, Arend is always looking for ways to grab more attention.

“We're dabbling with Twitter right now, and we will be utilizing a broader social media strategy in 2010 to communicate with patio furniture enthusiasts, whether designers or consumers, to tell them what we have that's brand new,” Arend said. “It's amazing what you can do on the Internet these days, in terms of finding out what people's interests are and catering to those interests.”

Given Arend's knack for good timing and decision-making, that is a strategy that bears watching.