selling furniture online

Madison Environmental Group: FullCircle Furniture Sales Channels and Marketing Research Andrew Bertschy Emily Carpenter Stephen Pigozzi Helen Shoemaker Gen. Bus. 600 Dec. 4th, 2006 1 Table of Contents Research and Recommendations  Introduction  Interior Designers  Furniture stores  Online Marketing  Art galleries  Conclusion Appendix A – Ad. Flyer Appendix B – Online Marketing Appendix C – Advertising Websites Appendix D – Art Galleries Appendix E – Art Fairs Appendix: Research Surveys 3-7 3 3-4 4-5 5-6 6-7 7 8 9-10 11 12 13-14 15-18 2 Introduction to Madison Environmental Group: FullCircle Furniture Madison Environmental Group, Inc. is an „interdisciplinary, team-oriented consulting firm assisting clients and communities to Build Green and Live Green.‟ Located on Capitol Square, the goal of their firm is to focus on environmental issues in the Madison area. In 2006 the Wisconsin Department of Natural Resources funded a two year grant for Madison Environmental to investigate two new businesses ideas: FullCircle Furniture and Interior Design. The goal of FullCircle is to reroute deconstruction and renovation debris from local landfills and reuse the waste to create affordable green furniture and interior spaces. FullCircle Furniture designer Christi Weber created four different furniture lines. The lines are titled Classic Cassandra, Artsy Annie, Loft Larry, and Urban Ulla and each line fits a specific style and budget. The styles range from traditional high-end to modern and contemporary furniture. All of the lines are based on five key design parameters: beautiful, functional, affordable, repeatable, and transportable. Prototypes of tables from each of the lines have been created by local builders. Salvaged doors are the main raw material used to make the tables. The doors are cut and used to have to have minimal if any left over scraps. Additional wood used on the tables, especially for the legs and support elements, came from sustainable birch forests in Wisconsin. All of the metal came from Simply Manufacturing in Prairie du Sac, Wisconsin. The finishes used on the tables are AFM Safecoat products which emit low VOC‟s. One of the tables used a special blend of carnuba wax, bees wax and linseed oil as the sealant. Two of the table prototypes have a marmoleum surfacing on the top. Marmoleum is mostly used in flooring and is made from natural products including linseed oil, jute, and limesto and has no harmful VOC emissions. The goal of our work with FullCircle is to help them develop a business plan to launch a successful business in sustainable furniture and interior design. The main focus of our project is the furniture side of the business and determining the best sales channels within 200 miles. Instead of creating a full marketing plan for FullCircle, we are doing the preliminary marketing research by identifying the target markets for each furniture line as well as where that furniture should be sold. We will be examining the pros and cons of selling through four separate sales channels: interior designers, local and chain furniture stores, selling furniture online, and selling through furniture galleries. While performing both surveys of possible target customers, different interior designers and retailers at furniture stores we have come up with a general idea of what the target customer would be and the best possible options for FullCircle sales (See Survey Appendix). Target Customer  A person with disposable income (can spend around $1000 on a table)  A conscious for sustainability  Age range: 28-60 Sales Channel: Furniture Specified by Interior Designers One sales channel we researched was the specification of FullCircle Furniture by interior designers and architects. With LEED certification becoming more prominent in building construction and the increased popularity of William McDonough‟s “cradle to cradle” philosophy, interior designers and architects seem to be a good potential source of sales. They are already familiar with sustainable practices and their industry is more amenable to sustainability than other businesses. 3 To discover if our assumption was correct, we developed a survey specifically for interior designers and architects to determine how they personally feel about green design, how they thought their clients feel about green design, and their process of furniture specification (See Survey Appendix). We surveyed both commercial and residential designers, from large architectural firms to individual practitioners. The results of the survey were somewhat mixed. Although interior designers and architects are primed for sustainability, selling FullCircle Furniture solely through designers would not be the best sales channel at this time. Designers at commercial firms were interested in using sustainable products, and did try to specify sustainable furniture in their projects when possible. However, they tend to use products from manufacturers that they know and have used before. Designers at one firm we surveyed did additional research to ensure that the products that they specify are truly sustainable, but they tended to fall back on tried and true manufacturers for projects with time constraints. FullCircle Furniture would have to do a fair amount of documentation of their sustainable practices and be ready to market their products to designers in order to have their products in the running for specification at commercial firms. In addition, it is uncertain whether the FullCircle prototypes would meet commercial furniture standards. The five prototypes developed would be better suited for residential use. Residential designers who answered our survey tended to feel that using sustainable products was desirable, but didn‟t currently specify it in their projects, and would only specify it if it was something the client requested, and most clients didn‟t. Also, the way design firms charge their clients has a negative effect on the ability for FullCircle Furniture to use designers as their primary sales channel. Residential designers tend to charge a commission on products purchased, from 10 – 50% of the purchase price, according to one designer we surveyed. Commercial firms do not typically charge commission, but do charge design fees up front. These can be either a lump sum, or charged as a billing rate for each person working on the project. In both cases, the amount adds to the overall cost of the furniture. A typical consumer may be unwilling to pay these extra amounts on an expensive piece of furniture for their home, especially if they are only getting advice on furniture selection, as opposed to full-scale design services. While designers and architects may not be the best sales channel for FullCircle Furniture, they may be a good market to sell to. Currently, there is a sustainable design trend in both commercial and residential design. Design professionals are more knowledgeable about sustainable products and have a more positive connotation of “green” products than the average consumer. In addition, the survey answers suggested that designers felt good about specifying sustainable furniture, but their clients weren‟t asking for it. They themselves may ask for sustainable furniture when designing their own homes. Looking ahead, if FullCircle Furniture marketed their products to architects and designers as consumers, not only would they sell furniture to those individuals, but they would increase awareness of FullCircle Furniture as a brand among professional designers, increasing the likelihood of specification in their projects. Sales Channel: Selling Furniture in Stores The most viable path for FullCircle Furniture to gain name recognition amongst consumers in Madison is marketing their items in established furniture stores in the area. This strategy will allow consumers to see FullCircle design personally. While speaking with local and chain furniture store retailers we found that it is extremely important for the consumer that they are able to sit in, test, and examine the furniture they are going to buy (See Survey Appendix). Unfortunately, if someone is going to buy furniture online or through an interior designer, they will not have that opportunity. One, consumers interested in environmental issues will immediately recognize FullCircle as a standout 4 company that provides products that meet their furniture needs in a sustainable way. These consumers will not only be inclined to purchase FullCircle product, but will mention the company‟s name to friends and relatives who share visions of a sustainable future. In addition, FullCircle is more than capable of competing with other companies solely based on its product‟s beauty, durability, and functionality. Customers not necessarily interested in environmental issues can be marketed to and potentially contribute FullCircle‟s mission. The marketing research team for this project surveyed and talked with numerous furniture store owners and managers in the Madison area. We looked at stores that sell products ranging from $800 to $45,000. Though FullCircle does not have their prices set yet, we assumed that the range of products would be between $900 and $3000. With that in mind, any of the local and chain furniture stores in Madison would be a good fit for FullCircle to sell their furniture. While there are many stores that would carry furniture from FullCircle, the common consensus between nearly all of the stores is that they were not familiar with sustainable products or their marketing appeal. However, many were enthusiastic about the idea. Six managers stated that if FullCircle‟s products were appealing to them and fit in with similar products offered they would be willing to display prototypes and test their market potential. This would be an excellent opportunity for FullCircle to get its name and products into the local market. However, a frequent concern voiced among store managers surveyed was the timeliness and reliability of supply. Such factors need to be ensured before any store would display a prototype. FullCircle needs to work with its builders to guarantee that potential orders can be distributed to stores in a reliable manner. The important exception to stores surveyed was Satara, Inc. Satara shares FullCircle‟s vision for a sustainable future. Specifically, it mission is “to offer products for the home and family that promote personal health and reduce environmental impact.” The representative contacted (through email) was enthusiastic and willing to promote FullCircle as a startup sustainable business. This would be a wonderful opportunity not only to advance name recognition for the company in environmental circles in Madison but to display products without the investment of having on-time shipping established. Satara is definitely a company through which FullCircle should build a relationship. Several investments are necessary before selling products in furniture stores becomes a viable market channel. Most importantly, more prototypes need to be made in order that store managers can view and display the products. Along with these prototypes informational flyers or banners as well as placards should be made. Such a flyer or banner would be displayed with the furniture and identify FullCircle as an eco-friendly company in order to attract customers who identify environmental issues as important (See Appendix A). Furthermore, a more detailed product information sheet should be given to store managers so that they can answer any questions from potential buyers. Our analysis points to great potential for FullCircle Furniture to gain a foothold in a growing market for sustainable products. Enthusiasm for environmentally friendly products is growing as these issues could be fully realized by store owners if prototypes can be introduced and displayed. We feel, once FullCircle has its foot in the furniture market they can expand their advertising elsewhere. Sales Channel: Selling Furniture Online After the dotcom boom of the late 1990‟s every company has felt that there is a viable market in the online category. Since FullCircle is a new company the internet would be a great medium for them to get their word out, but in the long run, selling furniture only online would not be the best way for FullCircle to go. Furniture is a very touchy subject in the online market because many people prefer to actually inspect the furniture before purchasing it. In the case of each of these pieces, we feel that the true quality of the product cannot be realized by only looking at a picture due to the high quality of the woods, 5 construction and beauty. But, as other furniture stores have done in success, a website to first inspect the products would be perfect. Many people do primary research of furniture online and travel to a store within the week (68% of all people who do look at furniture online) (furnituredealer.net). With that in mind, a website showing the products specs and prices would put FullCircle into competition in that market and would help with marketing against similar products (See Appendix B). FullCircle could have a simple interface located at the Madison Environmental Group page that links to a design page. Through that page there could be links to local furniture stores that carry the products or to an actual storefront that FullCircle creates. That could be a new space or even at the current location. When thinking about making the jump to selling furniture online there are a few things that must be kept in mind. There is a cost, however minor it may be, in creating an online infrastructure. Though you already have a website built, most sales online use specific package tracking systems and inventory counting software which can have a high cost. Also, FullCircle would bear the cost of doing their own sales, packaging, and shipping which brings in some issues with sending sustainable furniture in a sustainable way. Instead, we suggest that you focus your efforts into pre-existing websites that specialize in furniture sales and exposure. Appendix C has a list of websites we suggest for getting your name out. Each site has a short synopsis of how they function, what they specialize in, and what the cost will be to you. Two that stood out in particular were www.vivavi.com which is a website directory and store that specializes in sustainable products and design and www.wisconsincommonmarket.com, an online source for local artists to sell their products. When thinking about making the jump to the internet it is important to think about how available your products will be online and who will see them. Vivavi is the first search response when typing in “sustainable furniture” into google.com‟s search box. Even though the official store front is located in Manhattan, the website is a directory of over 30 interior designers and allows for great publicity. Also, with a cost of only $75 dollars a year and the ability to post up to 15 different pictures, Vivavi seems to be the best choice. Also, the founder of Vivavi host a talk show on Sirius satellite radio and their website is in a link at treehugger.com which all add up to Vivavi being the frontrunner in online marketing. The Wisconsin Common Market is a great way to get exposure locally. It is designed in the same way that the Vivavi directory is created, but this is a large market place for all sorts of locally products in Wisconsin. Unfortunately, this site does not specialize in sustainable products so trying to use that as a marketing ploy may not work here. The first three months are free to be a member and after that it is $25 a month. Either way, getting your name out on the internet is the first step in selling this furniture, because making people aware of whom you are and what your product is most of the battle. Selling through an art gallery While selling in furniture stores and marketing online seems to make the most sense for FullCircle, there is another opportunity to see through art galleries in Wisconsin. Whit McLeod Furniture is an example of a successful sustainable furniture business located in Arcata, California (www.whitmcleod.com). Whit McLeod has an excellent website in which you can buy furniture but they also sell furniture through art galleries across the country. One of the many art galleries that sell McLeod furniture is located in Ephraim, Wisconsin. „Fine Line Designs‟ sells art as well as custom wood furnishings and has both local and nationally recognized artists (www.finelinedesignsgallery.com). One advantage to selling through art galleries across Wisconsin is that many of them focus on local artists and craftsmen. Customers of these galleries are most likely looking for locally produced art 6 and furniture. Since FullCircle Furniture is made locally with local reused materials, it would fit in with the local galleries target market. After surveying several Wisconsin art galleries, the most difficult part will be finding appropriate galleries that sell furniture or are willing to sell furniture. Most seemed interested in selling sustainable, locally made furniture as long as the furniture was appropriate for their gallery (See Appendix C). „Fine Line Designs‟ for example chose to sell Whit McLeod‟s furniture not because it was sustainable but because the company makes beautiful furniture pieces. This seems like a common trend among gallery owners. If FullCircle were to enter the art gallery market focusing on the use of local builders and materials will be the key to success. The process for inquiring about selling art or furniture in art galleries varies by gallery. Usually the artist is required to send or bring in images of the work along with a statement explaining it, prices. If the correct art galleries are chosen, this could be a successful sales channel although it‟s not recommended that galleries be FullCircle‟s only market. Another similar alternative to art galleries is setting up a booth at arts and crafts fairs across Wisconsin. Appendix D lists possible art fairs in which FullCircle could sell and promote its furniture. Setting up a booth at the farmer‟s market on the square would also be an excellent option. Conclusion Just as it is laid out in the introduction, our target demographic falls into two categories of customers. One includes people who are aware of sustainability and make sustainable practices a factor in purchasing decisions. The other group is people that are less aware or unaware of sustainability, and have a negative image of “salvaged” furniture. Many people who are not educated on sustainable furniture view it as „kitschy pieces made from old household items‟– not exactly the brand image FullCircle Furniture wants to promote. It makes the most sense for FullCircle Furniture to focus their marketing efforts on the customers who have a better grasp of what sustainability means, as they most likely will have an open mind to the products. However, we think it is important to realize that the average customer will need some convincing that old commercial doors really can be made into something beautiful of good quality. With that in mind our first suggestion is to get your product into local furniture stores. That way, people will be able to look at your furniture and be able to compare it against other pieces. Also, we suggest that you have a small sign explaining FullCircle concepts and what you stand for as a company while still highlighting its high-quality and that it is made by local craftsman. Due to how beautiful the furniture is, we also see a viable market place for FullCircle in art galleries and local art markets. Since many people who are in a higher economic bracket chose to buy their furniture from art galleries, FullCircle would be able to get in touch with a different consumer demographic. Once FullCircle furniture is in place at furniture stores, begin to look online to advertise. Since most people, 58% of all customers use multiple sales channels when buying furniture it is best to get your name out on the internet. With that, people will be able to do research on your furniture before venturing out to furniture stores. This will also give the customer an idea for what they are looking for and what to expect with FullCircle products. Lastly, once FullCircle has found its identity and name stake in the furniture world, we feel it would be best for to find a place in the interior design market. Since many designers rely on trusted products with a strong history of sustainable practices, it may be hard to fit into this market initially, but after a few years as the market moves more towards sustainability, FullCircle will fit in perfectly with interior design. 7 Appendix A 8 Appendix B 9 10 Appendix C Here is a list of possible online marketplaces to advertise FullCircle Furniture: Wisconsin Common Market: Online sales opportunities for artists The Wisconsin Common Market is a grant-funded, e-commerce site that allows Wisconsin artists and crafters the opportunity to sell online at little or no cost. If you are interested in selling your products online, we would love to hear from you! For more information, please visit the Web link listed below. Type of Opportunity: Call for artists Contact information: Karman Briggs Wisconsin Common Market Manager 418 Wisconsin St. PO Box 540 Eau Claire, WI 54702-0540 Phone: 715-836-7511, #174 Fax: 715-836-7580 E-mail: kbriggs@wisconsincommonmarket.com URL: www.wisconsincommonmarket.com/ Vivavi Furniture: Vivavi, Inc. creates and develops forward-thinking ventures designed to enable modern green living. Founded upon the firm belief that environmentally smart products and services can enhance our lifestyles, Vivavi‟s retail arm offers distinctive contemporary furniture and home décor created with today‟s most innovative sustainable materials. Vivavi Showroom 644 Manhattan Ave. 2nd Floor Brooklyn, NY 11222 Phone: 866.848.2840 or 718.233.9033 Fax: 866.801.0486 Email: general inquiries info@vivavi.com customer service service@vivavi.com sales jfontana@vivavi.com (works with end customers and the trade) Treehugger: www.treehugger.com: TreeHugger is a fast-growing web magazine, dedicated to everything that has a modern aesthetic yet is environmentally responsible. Our goal is to make sustainability mainstream and to be the one-stop for the environment. If you want doom & gloom, this is not the place. We are looking for solutions, constructive developments and positive initiatives. Small Businesses (<1M) and Non-Profits Advertisement: TreeHugger supports small businesses and non-profits, check out our lower pricing options. a) Preferably contact advertising [at] treehugger [dot] com to request a digital ad package. Or call 212.941.4603 b) For rapid gratification, buy a text ad lower down in column 2 at AdBrite or buy a graphic ad that includes text, lower down in column 3 at BlogAds 11 Appendix D Art Galleries in Wisconsin: Artisan Gallery 6858 Paoli Road Paoli, WI 53508 (608)-845-6600 URL: www.artisangal.com Gallery 323 at Rubin’s 323 E. Wilson St. • Madison, WI 53703 (608)-255-8998 Wisconsin Union Galleries Memorial Union 800 Langdon St. Madison, WI 53706 (608)-262-7592 URL: www.union.wisc.edu/art Fine Line Designs 10376 Highway 42 Ephraim, WI 54211 (920)-854-4343 URL: www.finelinedesignsgallery.com For a list of all art galleries in Wisconsin please visit: Wisconsin Arts Board http://arts.state.wi.us/static/museums.htm Wisconline http://www.wisconline.com/attractions/galleries.html Portal Wisconsin http://www.portalwisconsin.org/location.cfm?loctype=4 12 Appendix E Here is a list of a few of the hundreds of possible art fairs across Wisconsin: 43rd Annual Summer Art Classic Baraboo, WI Saturday, Aug. 11, 2007 Well-publicized, juried fine art/fine craft fair draws art lovers and highly skilled artists, both local and from other areas Contact information: Diana Haertel Phone: 608-356-3192 E-mail: dhaertel@shopstop.net Sauk County Art Association P.O. Box 222 Baraboo, WI 53913 URL: www.saukcountyartassociation.org 49th annual Art Fair on the Square Madison, WI July 14-15, 2007 The Madison Museum of Contemporary Art (MMoCA) invites artists to submit slides of work for jury review to the 49th annual Art Fair on the Square Contact information: Wesley Taylor, Art Fair Coordinator, artfair@mmoca.org URL: www.mmoca.org Art on the Island Fond Du Lac, WI June 3rd, 2007 Over 60 artists/craftspeople representing a wide variety of arts and crafts fill a tree-lined park on Lake Winnebago Contact Information: (920)-921-0726 N Main & N Park Fond du Lac, WI, 54935 URL: http://www.fdl.com/calendar.iml Audubon Art Fair Madison, Wisconsin Saturday, May 13, 2006 Juried art fair of more than 100 artists held in the full splendor of the Gardens. Contact Information: Olbrich Botanical Gardens 3330 Atwood Avenue URL: http://www.madisonaudubon.org/audubon/artfair/default.htm 13 To find out more dates and locations of Wisconsin art fairs please visit: Wisconsin Arts Board http://arts.state.wi.us/static/fairs/directory.htm Wisconsin: Life’s so Good http://www.travelwisconsin.com/seasons/summer_art.htm 14 Survey Appendix Sustainable Furniture Survey-General Customers 1. Have you ever heard of sustainable furniture or salvaged materials that are made into furniture (i.e. an old door made into a table)? 2. How do you feel about this furniture? Is it something you would buy? 3. If a furniture store or interior designer recommended this furniture would you be more likely to purchase it? 4. Approximately how much did you spend on your dining room table and chairs (if you are unsure, approximately how much would you be willing to spend)? 5. Approximately how much did you spend on a coffee table in your house? 6. Would you be willing to pay more for sustainable furniture? If so, how much more? 7. Have you ever bought furniture on-line? If you haven‟t, would you ever consider buying furniture on-line? 8. Rank the following list in order of how you buy furniture. 1 being the most frequent way and 6 being the least frequent way. Local furniture stores Chain furniture stores (Ashley, Thomasville, Ikea, Pottery Barn etc.) Super Stores (Target, Wal-mart) Department Stores (Macy‟s, JCPenney) On-line Through an interior designer 15 9. Rank the following in order of importance when buying a piece of furniture. 1 being the most important and 5 being the least important. Quality Price Brand Name Aesthetics/ Style Sustainability/ environmentally friendly Sustainable Furniture Survey- Interior Designers/ Architects 1. How often do you specify furniture for your projects? Where do you tend to look for furniture? 2. Do you try to specify green products? 3. How do you feel about specifying green products? 4. How do you ensure that the green products you specify are truly sustainable? 5. What do you think of the quality of green products currently in the marketplace? 6. Do your clients ever request green products? 7. Do you think your clients would be open to green products? Do you think they‟d be willing to pay more for them if necessary? 8. What sort of mark-up /percentage do you charge your clients for specified furniture? 9. What‟s the typical wholesale price for furniture that you tend to specify? 16 10. What time frame do you use/need when specifying furniture? (How long does it take from ordering to delivery? How long of a time frame is acceptable?) 11. Typically, where are your clients? In Madison, in Wisconsin, in the region, etc. Sustainable Furniture Survey – Furniture Stores 10. Are you at all familiar with the „sustainable‟ furniture design? (salvaging materials from old buildings, specifically lumber or doors, and use it to make a new product) If so, what sort of products have you heard about (i.e. tables, chairs etc)? If not, what kinds of products could you envision selling? 11. How do you feel about this furniture? Is it something you would carry? 12. Have you ever had customers coming in requesting “sustainable” furniture (something that is not made from clear cut forests)? If so, have you been able to facilitate those requests? 13. What are the major factors that go into your customers purchases? (Rate 1-5) ___ Quality (Longevity, types of bracing used) ___ Price ___ Materials Used (wood, plastic etc.) ___ “Sustainability” ___ Aesthetic Design ___ American/Locally Made Similarly, what do you push the most when selling furniture? 14. 17 ___ Quality (Longevity, types of bracing used) ___ Price ___ Materials Used (wood, plastic etc.) ___ “Sustainability” ___ Aesthetic Design ___ American/Locally Made 15. Do you sell furniture online? If so, do you sell more furniture online or in the store? 16. What are the average prices of your furniture? a. For a dining table? b. For a coffee table? 17. What is the usually mark-up that you put on your furniture compared to whole sale cost? 18. In your opinion, how much more do you think customers would pay to have „sustainable‟ furniture? 19. In your opinion, what would the “ideal customer” be for sustainable furniture? 18