Listen: Modern Merchant Podcast EP 2 – Home & Furniture Industry Roundup

Below, you will find a transcript of the episode.

Austin Rose:

Hey everyone. Thanks for joining. This is Austin with Inventory Source and Flxpoint coming at you with another episode of The Modern Merchant Podcast. Today’s going to be a great one. We’re going to do another episode on an industry roundup of a specific market and niche that we see with a lot of our customers and people out there selling really, one of the biggest markets out there, and that is furniture and home decor.

Austin Rose:

What we’ve done is we’ve actually brought on one of our supplier partners with us, HomeRoots. I believe they’re actually now our number one subscription and integration with Inventory Source. And we have a whole bunch of sellers selling their products. And I have Gil here, he is the president of operations and logistics over at HomeRoots. Hey Gil, how’s it going? Thanks for joining.

Gil Bar-Lev:

Hey. Hey, Austin. Thank you for having me here today. I’m really excited to join you guys.

Austin Rose:

Yeah. Yeah, absolutely. We’re super pumped about this. I’m just going to be talking about the industry, getting a lot of insights on what you’ve seen and your experience obviously, being in that market and obviously with us and the E-commerce realm. And to get us started, why don’t you just give us a quick little overview about you and HomeRoots, and then we’ll get into some of the topics.

Gil Bar-Lev:

Sure. About myself, obviously, I’m coming more from the technical background and the logistics. I joined HomeRoots as part of the vision that HomeRoots is to enable access to all the players or any signs of a player that wants to basically sell furniture to the consumers, to make it affordable for them and make it accessible for them to sell those products onto the market, without being concerned with all the barriers that the industry has and to make it easy. Give them the experience. And our motto at HomeRoots is making the B2B shopping experience as simple and as pleasant it is with B2C experience. This is really what HomeRoots is and this is going great so far.

Austin Rose:

Excellent, excellent. We were chatting earlier and I was chatting with my CEO actually as well, just going over what is something that… Some of the stuff, some of the challenges, some of the great things, about selling online, specifically selling furniture and home decor. And I have a couple topics up here and I think you hit the nail on the head about HomeRoots being so unique, is making just a better experience with shopping from a B2B perspective and it being relatively similar to the B2C side. Obviously, your inventory source and with our new platform, Flxpoint, we help automate as much as possible from the B2B perspective. But you guys definitely make it a lot better user experience. Is there anything more specific on that side or even maybe on the logistical side of things that sets you guys apart?

Gil Bar-Lev:

Sure. Majority or traditionally, most of the wholesaler of furniture in the industry will try to stay away from the logistical part of this industry, meaning it will be on to the drop shipper to be responsible for coming up with the FedEx or UPS account carrier, or if it’s a heavy item that require a truck to collect like a sofa or a dining table or whatever it is. Everything falls on the buyer side, on the drop shipper side. As you start a new business, not to mention that just the beginning of a new business is very overwhelming and very challenging, now you need to deal with trucks or negotiating with FedEx or UPS. And they don’t know you. You don’t have any history. It becomes so difficult. There is a gap between what the wholesaler is willing to do for the buyer, for the customer, for the business customer, versus the business customer really needs, and HomeRoots was formed specifically to bridge that gap.

Gil Bar-Lev:

And so, we’re actually offering our assistance to our customers with all their logistical needs to make it easier for them, whether items are small and can be parceled to FedEx or UPS or whatever it needs to be put on a truck, or whatever… It’s even going overseas, just to make it easier. Just buy the items without worrying about, “How I’m going to move them from point A to point B,” or “How much it’s going to cost me to do without having any surprises?” You think that the bill is going to come up to a certain dollar amount, and then you ended up getting a bill in a different dollar amount. I think those are the challenges that are really overwhelming and really suppressing the customers, the business customers. And we, at HomeRoots, solve those problems for them.

Gil Bar-Lev:

Now, in addition to that, what makes us unique is that we’re e-commerce… I’m not just saying e-commerce friendly because every wholesaler will say, “Yeah, of course, we want to sell to Hong Kong, e-commerce.” But the question is how compatible you are with e-commerce. Are you really working with partners, such as inventory source to make the product accessible to the market? Are you really solving those problems or your first thing is, “Just let me get into the store. Let me get into the store,” and discount everybody else.

Gil Bar-Lev:

First thing that I want to mention is that I like to see HomeRoots as more to… Yeah, we’re business to business only, but in that essence, we also to the public, meaning, if you want to run a business. You want to sell furniture. We’re going to make it an easy experience, an easy as possible experience, for you to be able to resell furniture and we treat you with mutual respect as opposed to… What we’ve seen when we were on the buying side, when we were trying to sell wholesale product furniture, is that if you, from my own experience, if you did not represent one of the biggest guys out there, usually you’ve been discounted. You’ve been put aside, never got the proper attention, never got the proper support. There were a lot of opening questions that were never answered and it was really up to you to figure it out.

Gil Bar-Lev:

HomeRoots, we said, “Okay, we understand that those are challenges. There’s many, many overwhelming aspects of this business and we just want to solve it and we want to address everybody with mutual respect that they deserve and really help them.” And every company that we helped actually… It’s a mutual help. If we help a company, they help us and vice versa. It’s a give and take type of relationship, but together, we’re building. It’s all about building the community of customers that each one has their own dedicated niche of products and they really excel in selling those products. And we help them, they help us back and we all benefit. And life goes on. That’s how it is.

Austin Rose:

No, and that’s actually a really good point that you bring up there because we have… I know personally, I’ve dealt with retailers out there that are selling furniture. We actually have a couple customers that, based here locally, and then obviously, some around the states as well that have brick and mortar stores and are selling through their retail operations and retail sites and they’re trying to find a way to go online. But those people usually do have that rapport or that relationship with the big box, with the big guys, and it’s just easy for them to get access to products. But what’s funny is, I feel in the world of online, you don’t have to have this brick and mortar store. You don’t have to have this huge background of selling furniture, millions and millions of dollars in revenue throughout the year of selling furniture, to be able to sell those types of products.

Austin Rose:

I mean, in the day now, a lot of these guys that are absolutely crushing it online, they’re just great with marketing. They’re great with marketing. They understand the tech side of things and it doesn’t matter if they’re selling furniture or outdoor gear, right? It’s all about the marketing side of things. It is funny seeing that distinguish between the two different companies like yourself and maybe some of those other Ashley Furniture or maybe some of these other guys that open up drop ship. And it’s funny because the tech side of things too, like you hinted on, they’re still old school, right? They’re still EDI. They’re still… You have to pay this massive custom dev fee to get integrated and start selling online.

Austin Rose:

And I know you guys made it just super simple for us to integrate to which, for us, I mean, it’s like you’re speaking our language. This is very easy. We could get it knocked out. And for other devs out there that might not want to use our services, it’s not going to be hard to do, right? It’s not going to be hard to do. It’s not going to be harder to build to your specs. I think you guys definitely have a massive leg up in that regard. And I know specifically, with the whole new accounts getting started and not just being super restricted on, “You got to have all of this to be able to work with us,” it’s just massive. I mean, that’s awesome to hear and a lot of e-commerce tellers I think would highly appreciate that.

Austin Rose:

Honestly, I think that segways nicely into the second point that I wanted to talk about too is, being in the furniture side of things, it used to be all traditional wholesale, right? Brick and mortar stores, going into that in-house, feeling the mattress, feeling the couch, looking at the tables and things like that. And now, it’s online and now it’s easier with drop shipping, especially with you guys and other suppliers out there. What would be your thoughts on wholesale versus traditional or sorry, traditional wholesale versus drop shipping? Is it smart to start with drop shipping first and then get into wholesale? Is it vice versa? What have you seen with a lot of your, maybe new accounts, or even your seasoned accounts in regards to the two different types of fulfillment?

Gil Bar-Lev:

Sure. I mean, personally, I recommend… Since we’re dealing with products that are not… They’re not products that you put in an envelope and you can easily ship across the nation or outside. Those are usually heavy, more expensive. What we tend to see, the successful ones, successful customers [inaudible 00:11:09] coming from inventory stores, and we recommend as well is, start off with drop shipping. Start off with drop shipping because it gives you a wide access to different products you can choose from without worrying too much about holding inventory at this point. And you don’t have any data. You don’t know what sells good, what’s not for you. You start off with drop shipping. You test different products.

Gil Bar-Lev:

And then if you’re [inaudible 00:11:36] or reading your own reports and your own e-commerce systems and you what’s being ordered more frequently and where those items are being ordered from, then you can start going into the traditional wholesale or more the wholesale, I won’t say traditional, more wholesale play where you actually can stock in the goods and have more control over the inventory. Yeah. One of the challenges of drop shipping… There’s two challenges. Okay. [inaudible 00:12:05], you share the inventory with [inaudible 00:12:09], even your competition, right? It’s basically first come, first serve. If someone else beats you to it, you have to give up an order. You can’t do anything.

Gil Bar-Lev:

But if you know that the product is selling for you quite well, I recommend stocking those goods, but not just stocking those goods, but try to find… a distribution center that is nearby to where your demand is. Let’s say for example, you sold, I don’t know, a certain vase. And we, at HomeRoots, we’re shipping this vase from California every time. Okay. Guess what? Most of your customers, for some reason, are going into New York. Now shipping is coast to coast, coast to coast each time. Just ship it, just order in bulk in a wholesale. If you have a warehouse to team up with the New York area or New Jersey, anywhere in the East Coast… If you need Northeast… You bring those things in bulk. Now at that point in time, you have control over the inventory… And in addition, you’re going to reduce your [inaudible 00:13:20] on transportation because you don’t need to ship it coast to coast and that’s significantly cheaper.

Gil Bar-Lev:

And at times, you will be saving about 20 to $30 on the shipping alone per order… And offer to the majority of your customers or a bulk of them and next day, delivery. And that’s a little bit stealing the thunder from how to compete with Amazon or Wayfair, but that’s actually the way it is. You’re looking at your demand. You’re looking where the products are. You’re bringing [inaudible 00:13:51] closer… And there, you offer the second day, the next day, even the same day delivery. It depends on your capabilities and it just gives you a different ability to, like I said, to your customer, a different shopping experience… a competition not necessarily offering that. And actually, and I can tell you that in this industry specifically, 99% of it doesn’t offer it.

Gil Bar-Lev:

By offering that, you’ve already got yourself a major advantage over the competition. And the beauty of it… you know that the product is selling well for you. And when you ship it remotely from the other side, from the other coast… it’s very minimal because going back to the traditional wholesale versus drop shipping and concern where to start off with… That is when you do a traditional wholesale without really having any type of…. you’re taking a higher risk… You don’t know whether it’s going to work well or not.

Gil Bar-Lev:

You may sit down on the inventory in a warehouse quite some time and it costs money and there’s no guarantees. You’re taking whatever risk and those items are not cheap. You’re not looking at $5 items or $10 items… [inaudible 00:15:18]. You’re going to be sitting there in the warehouse, raising dust… But personally, my take and from my own experience is leverage data. See what works well, what’s not. If it’s one of our items and you’re drop shipping, leverage that. You don’t take any risks on inventory, just… the marketing. Put your money into the technology. And then once you gather data… That’s my take on it.

Austin Rose:

Yeah, and that’s a really good point that you make in. And it’s funny, because I’ve said this actually a few times to some customers is, “Don’t blast your website with 30,000, 50,000 products and just think everything’s going to work. Take 10, take 50, take a hundred of those items. Take maybe a specific niche or a specific category and sell that. See what works and toy around with it.” And that’s what’s the best part about… You guys have a really big offering. Pick certain stuff and just see what works. And I know you guys have good margins, so whatever works the best there, go with that and do exactly like you said, right? Then start doing wholesale because then it will even start saving a little bit more money getting out of the drop ship model and then really starts to expand and scale your business, starting with drop shipping and making sure that you have the automation in places is key. And that’s definitely a huge thing.

Austin Rose:

Really going off of that, you made a good point too about competing with Amazon and Wayfair and selling on those marketplaces. There’s definitely the give or take of what type of experience are you offering with your website to be able to compete with them and is it the right thing to sell on those marketplaces as well? I think that there’s definitely pros and cons on each side. You could get lost in the likes of Wayfair. I know I’ve personally done that. Moving in a bunch of different houses or apartments and things like that and getting in the Wayfair and Amazon and seeing what’s cheap, seeing what’s available, seeing what’s not just honestly, bad products, right? Always looking at product reviews and things like that, that’s huge in the furniture industry. Even another tidbit there is trying to get reviews on your website or wherever you’re selling or even on the listings that you’re selling on is another big thing as well.

Austin Rose:

This segue ways me into another topic that I feel is just almost so important to talk about. Logistics and shipping challenges is probably the number one thing that I think of for furniture. But right now, COVID is just… It’s an interesting market that furniture and home decor is when it comes to COVID challenges, just because people still… It might not be viewed as essential, but people still need furniture. People still need home decor. People are still moving. People still want to shop these things, especially because they’re at home now more so than ever. What’s some challenges and issues you guys have been seeing, maybe on your end, as well as the retailers end with the current times and with COVID and shipping issues and challenges and everything?

Gil Bar-Lev:

That’s for sure. I could tell you, COVID-19 definitely did… I mean, put aside the tragedy that went on in the world and everything else, but as far as it goes to wholesales and specifically, into this vertical [inaudible 00:18:53] if went quite well [inaudible 00:18:59] and to our customers during those times because the demand has spiked up I’d say, by at least 40 to 60%, sometimes even from one week to another.

Austin Rose:

Wow.

Gil Bar-Lev:

By far, even on the marketplaces, this is, I think, the second… From the growth or from demand-wise, this is the second category of [inaudible 00:19:24]. And I can tell you that the punches that we’ve faced is that the demand has spiked up so much, barriers such as FedEx or UPS just had delays in picking up the goods… Was okay, they’re… Humanity is like, “It’s like you’re in Cyber Monday, every day, and on steroids.” It was crazy and… distributors are not catching up with the pace of the amount of orders… Customers up to date with the delays… And I think we’ve seen the same even from the market leaders again, like Amazon or Wayfair, where even they had to push their Prime Time delivery to a week or over two weeks, three weeks, even a month later. Again, because everybody’s relying on the same carriers at the end of the day… Move from point A to point B.

Gil Bar-Lev:

Besides the delivery challenges, another challenge is the inventory whom, as a home seller, you do inventory planning… based on demand, potential growth and everything else. And out of nowhere, like I said, it’s like a Cyber Monday, but not one time a year. It’s just every day and it’s even double or three times that of Cyber Monday… Keep all the inventory available. I think whoever was the big winner in that case… was the wholesaler or the e-commerce companies that actually stopped all the items and bought them in-house, they were able to preserve those items. Maybe when the rest of the competition is gone… more wiggle room to make the money that they need to make and basically, come out as a reliable source of products and gain more loyal customers as a result…. That we’ve seen, at least I’ve seen, from my side of the [inaudible 00:21:44].

Austin Rose:

Yeah. Yeah. Another really thing that’s important to talk about on COVID is again, everybody’s at home. I mean, I’ve even been guilty of looking at Wayfair and looking at all this stuff and saying, “Man, I’ve spent so much time at home.” I’m looking around like, “What can I buy now? What can I add to my house?” It’s a gift and a curse, is what I’m trying to get at. A lot of these sellers are just seeing an unbelievable amount of sales. We saw this with… I had an episode with a supplier, one of our supplier partners that’s in the firearm and tactical industry. And obviously, with everything going on, that’s again, the demand is skyrocketed. Like you said, every single day is like a Cyber Monday and it’s just absolutely wild and it’s a gift and a curse because I am seeing, and we are seeing here, a lot of retailers that are killing it with the orders and just absolutely struggling, trying to get things shipped out and trying to get things to the customer in a timely manner.

Austin Rose:

But the best part about it, that really helps, is it seems that a lot of consumers are very understanding of the longer logistical and shipping times. I know I am. When I go shop somewhere online, I go to somebody’s website, say I’m buying coffee or something, and they say, “Fulfillment time’s taking a little bit longer than expected. Two days, three days a week, two weeks.” I still understand that, right? We’re all going through this together as a country and as a human race. And it’s nice because people can get away with the longer logistical times and then they’re just benefiting so much from all these orders coming in and all the revenue coming in. And it’s Cyber Monday every day but when business is good, it’s a good problem to have, right? And… Yeah.

Gil Bar-Lev:

In a way, it’s a good time for new customers who want to get into… Regardless of this industry and any industry, right? And the major challenge of competing with Amazon, it was always the delivery time. They always have this PrimeTime delivery and you use the e-commerce company, you face challenges, especially as you rely more on drop shipping. It always has been a challenge but now that the delivery time has been moved aside… competitive advantage of Amazon, you sell it online, you have a better chance of possibly gaining some momentum. And everybody’s playing on the same level, so… delivery time. Whatever they offer, you offer the same, maybe you can offer better, but you’re not offering any worse right now. And I think that really took away one of Amazon’s and Wayfair’s [inaudible 00:24:45], one of their competitive advantages.

Gil Bar-Lev:

This is a great time to sell online. It’s not just now. I don’t think it’s a… If somebody hears us now, I will say, even if you start in a month from now… The effects of COVID going to echo… well into 2021. Just the research that I read yesterday, and again, it’s a different vertical, but just to illustrate what it really does to online shopping… Wasn’t the uptick of more than 30 something percent in new customers that never bought their groceries online and are now buying groceries online. They got used to it and they will get used to doing it because they’re going to keep on doing it for months… They’re not going to go back to a hundred percent just going into a supermarket and buying it. The convenience…. And I can tell you the same thing is happening with furniture, with home decor items, with lighting. It’s the same issue.

Gil Bar-Lev:

Once you got used to buying it online… You’re not going to go back. Your mindset has changed. You’ve been opened to a new way of shopping. And it doesn’t mean that you’re not going to buy from a brick and mortar stores. You may go in there, but if you’ve been … to just brick and mortar to look at what you want to buy… Those days are over. It’s very hard to find a household or an office that for a complete year, are not buying any piece of furniture or lighting products or decoration products… Within a year, year and a half, it’s going to be almost unlikely to find someone… To find those products, you’ve got to go online. I think that it’s a great time. Even if you haven’t started, even if you think that everybody’s already there. Everybody’s already selling whatever I got to sell… There’s enough room for everybody to make money.

Gil Bar-Lev:

And if you have a good… partner such as inventory source [inaudible 00:27:15], really enabling it to customers, not worrying about the technical details, not worrying about the integration and operations. And as an online e-commerce, you just focus on marketing. You’re focused on… you can crush it. You can make very good money out there. I don’t want to say without any effort. There’s always effort. Nothing is done from sleeping all day. I don’t tend to believe those commercials and stuff like that. Sorry, from my experience never happened, but you can really crush it. You can really make… by doing it. And it’s now, even in a month from now, even two months from now, you’re going to hear this podcast… You can make money. Don’t be shy. There’s enough room. And don’t be worried about a company such as Amazon and Wayfair.

Gil Bar-Lev:

And just to touch on one more thing about them, about how to compete with them… The thing with… I’ll touch upon Amazon as obviously, with Amazon, I have more personal experience with competing with them versus competing with Wayfair. But what I’ve seen with Amazon, one of the advantages of Amazon if we can put aside… We touched upon the logistical thing… The thing is that with Amazon, they rely a lot on third party sellers. If you look at yourself, you look at the listing on Amazon, in many cases, when the third party seller is not Amazon themselves… It’s being listed on the listings on an Amazon web page… Very lacking. Just telling you from our experience working with other retailers or other big box stores… [inaudible 00:29:19] in order to make a smart buying decision as a consumer. Most likely in the case of Amazon, you will not find it because many Amazon sellers who just either stick around through existing listings or that they take the bare minimum information that they need in order to be in a listing on their own and just sell… the sales will come.

Gil Bar-Lev:

What I’m trying to say that the data that’s been offered to the consumer is they… Is really lacking and you have an opportunity on your own website, is really to provide that information, provide your ethos. And here at HomeRoots, we really try our best to fit in as much as detail, as much as specification as possible about the products. When you convey it onto your customer, rest assured that one, the conversion rate will go higher and second, you’ll face less returns because the customer will say, “Oh, okay, sorry. I made a mistake. I wasn’t aware of this feature or I wasn’t aware of that feature or… that median….” Just put all those things aside. I think the ability to compete with Amazon is having superior content, being able to combine something that… Many Amazon sellers don’t tend to do that… but even if you sell on Amazon and the logistics here is the way.

Gil Bar-Lev:

If you test different products and you see what works for you via drop shipping, as I said earlier, you can go into the wholesale game and now have those products… two different locations… Imagine a situation that if you buy from HomeRoots product and HomeRoot’s shipping from LA…. We’re shipping it from LA. And as I said, you have many customers that are buying it from the East Coast. Are you ordering that in bulk to one of the East Coast facilities? Now you actually have two different locations. You have one, which is California, which is us. Plus, we have one from the East Coast… Cover almost all the country in about almost two days delivery… Almost 90% of the country. Two days, worst come to worst, three days delivery…

Gil Bar-Lev:

Offer those things to your customers and many of the third party sellers on Amazon, they don’t offer those things. They don’t tend to do those things. And one of the challenges with Amazon specifically, products that need to be LTL, meaning needs to be put on a truck, a sofa, sectional, dining table, bed, those products are too bulky for FedEx or UPS [inaudible 00:32:33]. And setting those things up on Amazon without going through customer dissatisfaction with the delivery times and everything like that, it’s another advantage that you can set on your own platform, you’re own store, that the set up for that on Amazon is very, very complex and I don’t think that Amazon or even Wayfair have figured out a good way to do it on their own… Yeah.

Gil Bar-Lev:

And you have a good advantage over there with the amount of service that you can have, the notifications that you can set, just delivering better customer experience as a whole. And this is so important in not just this industry, but… In this industry because of the fact that those are not cheap items. It’s not a $5 item. You’ve got to make sure that the experience is superb because people will expect that.

Austin Rose:

And that, real quick on that note that you made earlier on the product listing side of things. We’ve seen good titles, good descriptions, attributes, dimensions, wave length, height. I’m always looking at the height, the depth, the length, because I got to make sure my end table fits next to my couch or something like that. And if you don’t have that information on a website, I mean… And I’ve seen it. They don’t even have it on Amazon on certain occasions. And I’m like, “Well, what’s the point? I mean, there’s no need to be selling this product if you’re not going to tell me how big it is.” And having those actual product images, a good quality, legitimate, product image is not some aliexpress coming out of China, product image. That is what sets a standard.

Austin Rose:

And I think having that user experience on a website is really going to set that relationship with the customer and really get that buying trust. Everything has to line up perfectly and then he got that buying trust and you’re going to have that repeat customer, and then you’re going to have that sustainable business, that brand. That’s a good point that you made there and obviously, the last point that I definitely wanted to make too is, getting the brick and mortars online. Obviously, we help out with that and you guys help out with that with your data and your logistics. We’ve seen a lot of brick and mortar stores. They start an online presence and they only do drop shipping off of their online presence. And if you want to come in and buy in the brick and mortar stores, you’ve built that rapport in the community than we have that too. I mean, obviously COVID’s affecting that, but I would definitely suggest taking a look at HomeRoots if you are trying to go online, right?

Austin Rose:

I mean, brick and mortars need to go online if they want to survive. That goes off of your other point of that customer that’s now buying groceries from delivery online, right? That was never a thing and now it is such a huge thing I know plenty of people are doing. Definitely would say that’s my tidbit there as well and I’ve talked about this with other supplier partners. But yep, we’re coming up actually on our 30 minutes and coming up towards the end of the podcast. To be honest, Gil, I think we talked about a lot of really good stuff today. I think a lot of people can get out of this podcast episode, whether being a new seller or a seasoned seller and in these crazy times, but I really want to thank you for joining me. I think it was a great conversation and definitely looking forward to a lot more partnership opportunities that we’re going to be doing with you guys. And yeah, thanks a lot. I really appreciate it.

Gil Bar-Lev:

Thank you, Austin, for hosting me. I really appreciate our partnership.

Austin Rose:

Yeah. Excellent. Excellent. Yep, that was our episode today with Gil over at HomeRoots. Thanks everybody for joining the podcast and watching it and listening where you’re at. Stay tuned for the next episodes coming your way.

Gil Bar-Lev:

Thank you.