Direct-to-consumer (DTC) furniture companies have been capturing market share from traditional retailers for a number of years, with the segment becoming the sector’s largest in the 2020s. With corporate giants like Amazon and Wayfair driving continued growth in DTC furniture, the tactics and strategies employed by innovators in this space are having a profound impact on the shape of the industry.
What is DTC furniture?
In the DTC business model, brands sell directly to consumers, eliminating retail stores, wholesalers and other middlemen from the supply chain. As such, the brand manages every aspect of the product and sales cycle, from design and production to sales and customer service. The removal of these extra layers enables brands to sell at a more competitive price point, one of the major appeals for consumers, but also creates an opportunity for the brand to create and nurture a direct relationship with their customers.
The evolution of DTC furniture sales
In the traditional furniture model, manufacturers and wholesalers would sell their products to retail outlets, with transactions taking place via customer store visits. The evolution of the internet disrupted that ecosystem, giving rise to ecommerce and the DTC model. In the furnishings category, mattress firms were among the first to leverage the new approach, but DTC steadily gained traction right across the sector.
While COVID-19 lockdowns drove millions to shop online more extensively in 2020 and 2021 – and to invest in upgrading or remodeling their home spaces – DTC furniture was gaining ground even prior to the pandemic. Data from Bloomberg shows that DTC sales touched 40% of the market in 2019, averaging 36% across the full year – indicating that it is a segment with strong fundamentals and consumer appeal. By 2023, DTC had captured around a third of the $89-billion US furnishings market.
Advantages of DTC furniture
For consumers, price is undoubtedly one of the major appeals of buying DTC furniture – but it’s far from the only one. Some of the segment’s leading attraction points include:
1. Cost savings
DTC furniture brands take intermediaries out of the equation, selling directly to customers. By removing retailers and wholesalers – and their associated profit margins – DTC brands are able to sell products at a more competitive price point. Affordability has been a key component of the segment’s rapid capture of market share, particularly in the face of global economic pressures that have forced consumers to tighten their belts.
2. Convenience and accessibility
With the internet as their shop window and proximity to a physical store not a constraint, DTC brands offer customers broad accessibility and convenience. In addition, the web-based nature of their platforms enables them to showcase a wide range of products, variants and configuration options – enabling shoppers to browse a far greater selection than would be feasible in a physical store, all from the comfort of their own homes. With 52% of consumers saying more than half of their purchases are influenced by convenience, and over 60% of all buying journeys beginning on a mobile device, these are powerful factors helping DTC furniture brands win customers.
3. Sustainability
A recent study by NielsenIQ found 78% of consumers rated sustainability as important to them, with 80% willing to pair more for sustainable products. Today’s buyers demand sustainability, and to stay relevant, brands must cater to them.
A study by MIT found that traditional shopping generates double the carbon footprint of online shopping, in part caused by the logistics of transporting products from factory, to wholesaler, to retailer, to customer (and possibly other stops in between) and in part due to the emissions generated when consumers travel to stores. While facets of the DTC model such as priority delivery and higher return rates can offset this advantage somewhat, it remains the case that DTC sales likely represent a more sustainable purchase option.
4. Customizable offering
Unlike traditional counterparts, many DTC furniture brands employ a zero- or minimal-inventory approach, manufacturing products to order. This enables them to offer customers the opportunity to customize and configure products as part of the purchase process, leveraging the trend for mass customization that has been shown to boost conversion rates significantly.
By creating an interactive and personalized customer journey, brands drive higher engagement, instill a sense of agency in buyers, and foster an emotional connection to the product. What’s more, by incorporating innovative sales tools such as 3D viewers and product configurators, DTC furniture firms make the customization process instant, intuitive, and immersive – all of which combine to drive conversion rates, sales, and customer satisfaction.
Live personalization and product visualization are key tools offered by DTC brands | Furniture: Cocowolf
5. Enhanced customer experience with augmented reality
Augmented reality (AR) technology is another powerful sales tool for DTC brands. Lifelike product visualizations enable customers to see how furniture pieces will look in their own spaces, bridging the gap between digital and physical shopping experiences and taking convenience and purchase confidence to a whole new level.
AR visualizations enable DTC brands to bring customers closer to their products, without the need for physical stores. By enabling try-before-you-buy product previews where buyers can gain a realistic view of the item and how it will look and fit in its intended space, DTC firms can help ensure buyers have full clarity on their intended purchases, minimizing the anxiety of buying online and reducing return rates by up to 40%.
DTC furniture brand examples
While the segment is defined by certain characteristics, DTC firms come in all shapes and sizes, with variances in scale, setup, and approach. Some examples include:
1. Wayfair
The second-largest DTC furniture brand (ranking only behind Amazon), Wayfair is a giant in the sector with estimated sales of $7.9 billion. With a product range of around 14 million items and a significant global presence, the homewares ecommerce innovator has achieved a notable prominence since its founding in 2002, showing that a lack of physical stores need not be an impediment to brand-building efforts. Nonetheless, while the company’s operations remain overwhelmingly online based, it has experimented with a limited physical retail presence in recent years, opening a flagship store in Philadelphia in 2022.
2. Beyond Inc.
Beyond Inc. is the new name for the DTC furniture pioneer formerly known as Overstock. Long a mainstay of the segment, in 2023 the company purchased the intellectual property assets of bankrupt big-box retailer Bed Bath & Beyond and rebranded under the banner of Beyond Inc. With Overstock and the recently-acquired Zulily operating as separate brands under the company’s umbrella, Beyond continues to expand within the DTC segment, with revenues in excess of $1 billion, and has enjoyed notable success by incorporating technology into its operations.
3. Kave Home
Kave Home has blossomed from its beginnings as a local, family-run firm to become a leading international furniture manufacturing and distribution business with a presence in more than 80 countries. Design is carried out in-house, resulting in a distinctive product range focused on durability, sustainability, and style, key elements in the company’s efforts to build a strong brand identity. Allied to this is an innovative use of technology to elevate customer engagement, including the use of product configurators that allow buyers to customize items in real-time, integration of 3D models on product pages that allow shoppers to zoom, rotate, and view pieces from all angles, as well as in-home previews via augmented reality. This intense focus on both product quality and customer experience, along with a genuine commitment to multichannel selling, has seen revenues grow from 25 million euros to more than 200 million in less than ten years, with 30% growth in 2023 alone – all achieved with their own capital.
Challenges faced by DTC furniture brands
Despite the success of the DTC segment in recent years, challenges remain for companies in this space, both in terms of their own operations and consumer perceptions.
1. Limited physical presence
While some DTC brands have branched into bricks-and-mortar retail in recent years by opening a limited number of showrooms and physical stores – as seen in the examples above – most are limited to an online presence. This can limit their appeal among consumers who want a tangible shopping experience, where they can appraise products in person. Bridging this gap has led many DTC firms to integrate immersive technology into their platforms, using high quality 3D models to bring products to life and enable immersive visualizations in the buyer’s own space.
2. Customer trust issues and purchase confidence
Determining the exact look and feel of a product is one of the key issues customers face when buying online, with poor product representation or inaccurate descriptions leading to unmet expectations and, ultimately, returns. Return rates for ecommerce sellers are as much as double those of physical stores, highlighting the challenge faced by companies in this space. Among the ways DTC furniture firms counter this is by ensuring that product descriptions are both realistic and appealing and by enabling lifelike product visualizations, both onscreen in 3D and in augmented reality, ensuring customers gain full clarity on what they are buying.
3. Product quality control
With DTC furniture brands competing at a lower price point than many traditional retailers, doubts can persist among some consumers about the quality of the products on offer. To combat this, as well as ensuring that product standards are maintained, brands should ensure that product pages emphasize product quality and use premium visual formats to communicate the message to shoppers.
Where is DTC furniture headed?
The global furniture market is forecast to reach a value of $921.75 billion by 2029 with a CAGR of 3.8%. DTC furniture brands are expected to contribute significantly to this growth and are uniquely placed to leverage technological trends to meet the changing expectations of the modern buyer.
By offering consumers a more convenient and engaging shopping experience, DTC brands can benefit from a superior offering for customers which, when coupled with buyer-friendly returns policies and advantageous pricing, represents a powerful and compelling model. With DTC brands already taking majority share in the furniture market, continued investment in the customer journey, user experience, and technologies such as 3D, AR and AI should see the segment continue to enjoy a robust future.
