Home Textiles Finding Shelf Space Online
November 28, 2005,
New York —They say when one door closes, another opens.
These virtual retail doors are ajar and waiting to burst open to take a piece of the steadily growing home textiles retail business online.
Internet retail sales this year will hit $1.4 billion for linens and $2.6 billion for home décor/craft goods, which include accessories like rugs and decorative pillows. So says Forrester Research Inc., which in September released a U.S. e-commerce forecast report that forecasts the progress of retail sales for the various product categories from 2005 through 2010.
Online sales will continue to climb into 2010, the report says, with linens growing to $1.8 billion and home décor/craft goods reaching $3.9 billion.
The numbers suggest the Web is rapidly becoming a true shopping destination for bedding, bath, rugs and other home textiles. Unrestricted by limited square footage or space for cross-merchandising, dot-com stores typically offer as many pages as needed to display a supplier's wares. And usually dot-coms are willing to include in their assortments most or all of a supplier's line.
But because so many dot-com retailers rely on suppliers to drop-ship orders, the suppliers are forced to carry the inventory and, thus, the weight of most or all of the risk. It's no wonder many are admittedly reluctant to sell their goods online.
Newport/Layton is still “finding our way” with the way dot-com retailers manage their business, said Corey Faul, president. Newport/Layton works with Overstock.com on closeouts. “For a lot of these places, you aren't shipping them product they pull from. They are pulling product from you. ... I do address closeouts, but to make my business more profitable I also need the Amazon.coms out there.”
That is because Amazon.com's approach to the business is a traditional one.
Chris Nielsen, director of home and garden for Amazon.com, said, “We do carry inventory in our fulfillment centers, which are spread out all over the U.S., and ship out directly to customers.”
Amazon.com launched its home and garden division about a year-and-a-half ago. Its bedding and bath sections came soon after and have since then “really ramped up,” he said.
“Bedding is absolutely a strong area for us both in terms of designer as well as the core goods,” Nielsen explained. “On the fashion front, home textiles overall are playing an important role in home decorating, and that is one reason that area has done well.”
To encourage future growth, Amazon recently significantly upgraded its technology, “so we can present not only the merchandise from designers but the feel to convey that. Some of (the new technology) has to do with imagery and graphics, and a big part is related to brand statement and passing that to the customer so they really understand what it represents and why it is appropriate to their lifestyle and interests,” he said.
Dale Talbert, vice president, Veratex, noted that improved technologies — specifically broadband — have played a major role in cultivating home textiles sales on the Internet.
“With products like bed coverings and rugs and pillows, where you need to see the product better, broadband has made a big difference,” Talbert said. “If someone is selling me a book, I don't need to see it.”
Mix this theory with price compression issues and fewer retailers in the brick-and-mortar landscape, and Talbert said the perfect recipe for increased Internet retailing of home textiles is brewing.
“People are looking at retailers they didn't years ago and they are seeing they have more to offer,” he said.
While more consumers use the Web to research products rather than buy them, “their behavior illustrates how quickly e-commerce becomes part of their everyday lives,” noted Carrie Johnson, vice president and research director of Forrester Research and the author of a 2005 to 2010 forecast report. Sixty-five percent of North American online households have researched a product online versus 58 percent that have bought.
Mohawk Home is one supplier that has researched the market. While it recognizes that online retailing is still in its early stages, Mohawk has found a niche on the Web for its Mohawk Select branded rugs on sites like www.RugsDirect.com, said Jodi Crawford, Mohawk Home brand manager.
“Just like many other e-commerce purchases, customers need another comfort level before they'll start to buy (rugs) regularly online,” Crawford said. “A lot of product categories are seeing this evolution. Mohawk Select is a different line, and we inventory those rugs in a different way than we do for our mass retailer customers, so they work well for e-commerce.”
For suppliers still leery of the Web, formats like those of auction sites eBay and eBid and closeout stores like Overstock.com offer some advantages — albeit while still requiring suppliers to stock and ship their own wares.
“EBay really allows the suppliers to take greater risk with their assortments,” explained John McDonald, eBay director of home and garden. “On eBay, it is the odd colors or sizes that do very well. It is a place people come when they cannot find something easily at retail.”
The U.K.-based eBid auction site, which last month launched its U.S. arm, has seen its home department climb the ranks to third and fourth place most recently up from 15th in popularity among users, said Gary Sewell, CEO.
“Back in May, we got a large retailer who asked us to expand our (home textiles) offerings,” Sewell explained. “We added room-specific things for the bathroom and bedroom categories. Before we had it all listed under a single category. We soon found once every few days we got e-mails from customers asking us to add new home categories.”
A year ago, eBid hosted “maybe 500 auctions” in home and garden. Today, that figure has shot up to 5,000. And the goods are split 50-50 between individual sellers and major retailers, many being brick-and-mortar stores, Sewell added.
Overstock.com continues to build its business in home textiles closeouts, but its model is evolving to also include more products from bankrupt companies, overproduction from overseas and other sources, said Tad Martin, senior vice president, merchandising and operations.
Also different today for Overstock is its product selection focus. Like the auction sites, Overstock has found its shopper — 60 percent being 35- to 54 year-old females — is not looking for the basics.
“We started out thinking the basics are the source where all of our revenues would come, so we tried to stay deep in basic colors, sizes and qualities,” Smith said. “But whereas those products do very well, there is now more demand on the fringes, the harder-to-find products the customer can't find at the stores but uses the Web to find.”
Specialtylinens.com is one of the longest-running “pure play” home textiles e-tailers, and it has withstood the growing online competition by centering on unique product offerings.
It was 10 years ago that founder, owner and president Bob Schappals bought himself a computer and a sewing machine and got to work teaching himself two new trades — how to make high-end satin bridal sheets, and how to sell them on the Internet.
A decade later he runs a $2 million operation from a 15,000-square-foot facility in Spokane, Wash.
His site's 4,300 offerings are all bedding-related, spanning opening price point to high luxury linens. His core business stems from custom, specialty items, which he stocks at his headquarters. Everything else works out of five warehouses throughout the United States with which Specialtylinens.com has partnerships. And several customers drop-ship their orders.
“If I had a store, I could never offer this assortment,” Schappals said. “We're able to carry a huge range of people and their needs, and almost everything we have is customizable. We like to find the hard-to-find and offer it to our customers. The Internet allows us to do that.”
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