50 years ago, when Bob and Ray Bookout opened their tiny storefront in Niles, Michigan, they probably didn´t have anticipate that Bookout Furniture Inc. would grow to become southwest Michigan´s largest furniture source.
They certainly couldn´t have foreseen that this success would be, in large part, due to the invention of the Internet.
From humble beginnings, Bookout Furniture Inc. has launched Furniturefind.com, one of the leaders of online sales in the furniture category.
Although furniture isn´t generally considered a traditional holiday gift, furniture benefited from a record-breaking online holiday shopping season.
Jupiter Media Metrix recently ranked furniture sites #1 for increased site traffic over the holiday season. The number of hits these sites received had climbed by 59%. Jupiter´s index states that for the week ending Dec. 16, traffic climbed to 52 million unique visitors, up 50% for the same week in 2000.
Steve Antisdel, chief executive officer of FurnitureFind, wasn´t surprised. Furniture sales at his site "have been very strong, beyond our expectations."
Over a quarter of a million people a day are going online to a furniture-related site, and this traffic increase puts FurnitureFind´s share of the market in the double digits.
Steve began working for the family company in 1968, while still in school. Having nearly thirty years of furniture retail management and executive experience at Bookout Furniture, Inc. gave him a practical frame of reference when FurnitureFind was launched in 1996. Stephen and company worked through numerous supply chain, fulfillment, marketing and channel conflict issues while growing the online division of the bricks and mortar retail operation.
"The whole genesis of this started out when we built a brochure site for our store. It gave a map to the store, it told about our brands, it gave a virtual tour of the store, it talked about our history and policies, and that was it! It said nothing about buying furniture."
"But back in 1996, there was so little in the way of furniture content online, that people were using search engines and coming into our site and asking `How do I buy from you?´
At first we said `You can´t buy furniture online!´ but they kept calling and emailing, so we realized that the market was trying to tell us something. And that´s what lead to the development of Furniturefind.com in late 1996."
"Since then, we´ve always had this understanding that search engine positioning was important, being where people can find you. And that´s why we´ve done considerable work on optimizing our sites for search engines."
They´ve also extended their reach by creating a strong affiliate program and adding a Strategic Online Marketing division to the company. To date, Furniturefind.com has 23,000 affiliate partners.
These affiliates are all family-friendly sites hand-picked by the Strategic Online Marketing division that display a Furniturefind.com banner in exchange for revenue shares. Steve´s brothers Jeff, Ed, and cousin Alan Rosenhagen are responsible for managing these relationships.
While they represent the 2nd generation in the business, they are the senior generation when it comes to online business.
Furniturefind.com has taken a unique approach to growing their family business: they have included outside investors. By 1998, the venture capital world had begun to take notice of furniture as a growing category in the online environment.
Remember Furniture.com? They received investor funding of some 40 million dollars. Furniturefind wanted to take advantage of this growing interest in their industry, and sought private placement in 1999.
"We had been growing this organically, bootstrapping it, out of the back room of our family business, and we were growing it nicely! We had quarter after quarter growth, but by 1999, we looked at the competition and decided that maybe we needed a little more dry powder to compete with them! So we got with an investment banker, and did a small private placement, and as a result, we have over 70 outside investors. And we´re still privately held."
"At the time, we had 1 corporate entity, and when people bought in, they had a piece of the enterprise, which was `clicks and mortar´: in other words, they were getting a piece of furniturefind.com and the bricks and mortar. Subsequently, we were approached by a larger company's online furniture site - looking to merge with us. We ended up spinning off the online business, merging with them."
The merger didn´t go exactly as they had planned— the year 2000 saw the beginning of the end for the Internet gold rush. Dot.com after dot.com stumbled and fell, the confidence of the VC world faltered along with them. Furniturefind, however, was determined to turn this situation to their benefit.
"By mid-2000, the original company's board of directors realized that the markets were not going to reward an online e-commerce company- even a successful online e-commerce company- with a huge multiple in an IPO, so they decided to take their company back to their roots, which was software!
We bought our assets back and distributed them pro rata to our shareholders. Now, all of our original stockholders own Bookout stock and FF Holdings stock, which refers to the Furniturefind site."
While Steve feels that the decision to bring in outside investors was the best one for Furniturefind, he warns that it´s not the easiest, or the best, solution for every family business.
"For most family businesses, going through the expense and paperwork involved in a private placement, my recommendation is don´t do it. Unless you have a very clear path to going public, and the amount of bookkeeping and paperwork doesn´t represent a significant part of your revenue, it just doesn´t make sense."
Their experience proves once again what we at Family Business Strategies have believed all along: the businesses that can make their own decisions without needing to cater to the demands of outsiders will be the leaders in their fields.
Steve believes that a major reason for their success is that, beyond simply selling furniture over the web, they offer customer convenience. They conceive of the site as a catalog that has used Internet technology to go a step further than traditional paper catalogs.
"We´re not so far removed from the first Sears catalog that went out 120 years ago. People were also constrained, in that case, by virtue of physical distance in the rural areas, living too far from where there were stores. [The catalog] provided a convenient solution. We´re providing the same thing today for people who are constrained by time."
"The limitation for people in the paper catalog business is that there´s so much selection that your paper catalog ends up too heavy to mail! And given the economics of printing and mailing, when you know darn well that 98 or 99% of the catalogs aren´t going to result in a sale, that the economics aren´t there. And that´s why Sears got out of the catalog business, and why Montgomery Ward tried to stick with it and they´re gone!"
"The Internet has become the substitute for paper cataloging, and in the furniture business, where there are so many selections, so many styles, so many finishes, so many fabrics…. This fills a real need. From a consumer standpoint, for someone who´s in the market for furniture, they would physically have to go out and visit a lot of stores, because it takes up a lot of physical space to display furniture.
To compare, you´d have to do a lot of traveling around. Our customer, and our customer is a `Soccer Mom´, has the convenience of being able to search online, see what she´s looking for, pick up the phone, talk about it, and get a credible, clear, straight presentation of what it is, get a value price, and get it delivered. It´s a convenience in a space that needs convenience. We´re filling a real need there."
But while the logistics of selling furniture online are as straightforward as the logistics of selling other products online, Steve was aware that customers might balk at investing money in furniture after only seeing a picture on a website. Furniturefind has tackled this issue by creating specially trained employees called Certified Home Furnishing Advisors.
Customers can contact the store with any questions they might have about any product on the site. These advisors are given intensive "in-store" product training with the manufacturer´s representatives, and additional education on the technologies needed for customer service.
Prospective Home Furnishings Advisors must then pass an oral and written examination in order to obtain Certification. The quality and depth of FurnitureFind´s Certification process is such that their Certified Home Furnishings Advisors are eligible for college course credits upon completion of the program.
The success of Furniturefind, and other online furniture merchants suggests that consumers are doing a heavy amount of research and shopping online before visiting the brick-and-mortar stores for their purchases.
Jupiter Media Metrix analyst Jared Blank believes this is an important trend to note: "Steady traffic to many brick-and-mortar sites indicates that consumers are researching online with the intent of buying in the actual stores, highlighting the need for retailers to integrate their online and off-line operations."
Given his experiences, we asked Steve to provide us with some sage words for other businesses looking to benefit from an Internet presence.
"Remember that a web site in itself has about same utility as a Yellow Page ad, and it may work as a good supplement to a Yellow Page ad.
Maybe you can afford to downsize your Yellow Page expenditure, and put a smaller ad in with your URL, stating `for complete details go here.´ And then you build a site that really tells your story.
That was our original vision in 1996. That´s exactly what we were intending- that we could put the URL in our ads and instead of trying to tell it all in 30 seconds, we could show the URL and really tell them the story. That´s the starting point."
We asked Steve where he saw e-commerce heading in the next few years. Does he think a revolution in online business is at hand?
"The revolution online won´t be in a year, and I´m not sure there is a revolution in the making. There IS an evolution coming, by virtue of broadband connectivity."
"When the critical mass of the public has broadband connection, I think we´ll see increased functionality from online businesses.
For example, rather than showing a static image of a sofa, I can foresee a time where it would make sense to do a live presentation video clip of the product just like we would in our store, but that´s going to be broadband dependant, and we´re nowhere near that now. My gut says 5 years from now, we will have moved toward this."
"People are getting caught up in the hype of what the web is "supposed" to do. My word of advice is that unless you figure out how to do something that best fits the customer from their perspective, in a way they clearly understand, don´t bother making it any more than a brochure. Lowering your transaction cost is not immediately perceived by the customer as a benefit!"
"I´ve seen a lot of attempts at technology for its own sake, and the customer doesn´t see what the value is to them. Why bother spending the money if it doesn´t enhance the experience of your customer?"
