Furniture has long lagged behind other product markets in e-commerce; while online markets for books and electronics have matured, the online market for furniture products remains relatively young. In recent years, though, the field has grown, led by e-commerce leaders Amazon and Wayfair. Key retailers whose sales are primarily online have driven growth both in e-commerce and furniture sales in general in the last ten years, and continue to grow more prominent in the market.
Year-Over-Year Growth in E-Commerce
The last five years have shown steady growth for both Amazon and Wayfair. Amazon’s year-over-year unit share has increased in 18 of the last 20 quarters, while Wayfair’s year-over-year has increased in 17 of the last 20 quarters. While total units and dollars online have increased across the board for Amazon, Wayfair, and all other retailers, the online retailers are cutting into the shares of traditional stores who have an online presence. From first quarter 2016 to first quarter 2017:
- Amazon increased its online unit share from 24.1% to 25.7%, and its online dollar share from 13.9% to 15.7%;
- Wayfair increased its online unit share from 7.1% to 10.2%, and its online dollar share from 8.6% to 11.9%; and
- All other furniture and home accessories retailers decreased online unit share from 68.7%, and their online dollar shares from 77.5% to 72.4%.
The shares of overall furniture and home accessory sales remains low for Amazon and Wayfair, but have increased over time. From first quarter 2016 to first quarter 2017:
- Amazon’s unit share has increased from 5.5% to 6.8%, and its dollar share from 2.1% to 3.1%;
- Wayfair’s unit share has increased from 1.7% to 2.7%, and its dollar share from 1.3% to 2.4%;
All other outlets’ unit share has decreased from 92.9% to 90.5%, and their dollar share has decreased from 96.6% to 94.5%.
Understanding the Online Surge
Furniture sales have lagged behind other markets in e-commerce growth, but its growth in recent years has been significant. In the fourth quarter of 2016, the percentage of total furniture and home accessories purchased online sat at 26%. A market that once depended on showroom displays is moving inexorably into the online domain.
For traditionally brick and mortar stores, the increase in online significance, combined with their slipping shares in that channel, presents a challenge moving forward. They still dominate overall sales, but they need to assess how to more effectively incorporate e-commerce into their overall sales models. Bolstering e-commerce capabilities and marketing will be critical in the future.
There will likely long be a place for brick and mortar furniture and home accessories stores. The concept of the furniture showroom has not yet slipped away, as evidenced by the still-small overall share of market that Amazon and Wayfair command. But as the consumer market continues to evolve, managing the right hybrid between showroom and online sales will be critical for continued success.
E-commerce will only continue to grow in the furniture and home accessories market. Brick and mortar retailers are learning to become online retailers as well, but they must move up the learning curve to compete effectively with purely online retailers like Amazon and Wayfair. Their ability to do so will help determine the direction of online furniture markets in the coming years.