Put furniture on the list. The list, that is, of items that people absolutely, positively and unequivocally do not want to buy online. That is the message, plain and simple, behind the collapse of Furniture.com.
The list has been fuzzy so far. A few items have been penciled in or listed with question marks alongside. Groceries? Maybe. Gasoline. Well, at least the name-your-price kind.
But this one we can write on the reject index in good old fashioned indelible ink.
Written in Stone
Sorry, folks, but there’s no wiggle room here. There are no signs that the company squandered its venture capital on shiny downtown offices or Super Bowl ad campaigns. No, they stayed in suburban Framingham, Massachusetts and brought eyeballs to their site with more low-key marketing efforts.
And while Furniture.com was a pure-play, it had its roots in the real world. In other words, it had warehouses and delivery schemes in place. It had a lot going for it. Above all, it had eyeballs. The site drew about a million hits a month, people who were coming to browse, get ideas, compare, contemplate.
Everything, that is, except buy. Now imagine if a million people or so walked into a brick-and-mortar store and didn’t buy enough to keep it up and running.
No one is really too surprised, of course. At least not e-commerce watchers, and certainly not the company itself, which had the good grace to divert customer payments into an escrow account as early as last summer.
To be sure, Furniture.com did make some mistakes. But the problems it ran into — slow or missed deliveries, return problems, unhappy customers — say much more about buying furniture online than they do the company itself.
Furniture.com also had some bad timing. The company announced an IPO and then watched as dot-coms got hammered in a sudden rush toward profitability earlier this year. An intended $50 million (US$) offering was withdrawn, supplanted by a $27 million propping up from the likes of incubator CMGI, Inc.
But money wasn’t the problem. Yes, another $23 million would have gotten Furniture.com into next year. And improved customer service might have made financial backers more willing to provide one last shot of capital. But so what? Is a prolonged death better than an immediate one? Not necessarily.
Plenty of Graveyard Company
Furniture.com is only the latest dot-com to land on the scrap heap for this particular segment, one that is already pretty substantial. Living.com, which enjoyed — however briefly — the backing of Amazon.com, is there. And the e-commerce effort of interior design site HomePortfolio.com is there as well.
Of course, people do want to buy furniture. It’s one of the biggest retail segments in the United States, a business with the kind of profit margins missing from a lot of dot-com enterprises so far.
But as of right now, at the end of the Year 2000, when e-commerce was supposed to solidify the gains it had made during its breakthrough year, people don’t want to buy it online.
Forrester Research says just 4 percent of furniture sales will be online by 2005, a paltry figure compared to more than half of all software sales and nearly half of music purchases.
Is it timing? Will people buy furniture online in 10 years? Maybe, if the technology evolves to allow them to sit on the couch or bounce their babies up and down on the mattress, at least in a virtual sense. But until then, furniture sales will continue to be a non-starter on the Web.
And that’s OK. E-commerce has to learn its limitations, and even though lessons like this one come at great expense, they should be taken to heart as well.