Can Selling Furniture Online Produce the Next IKEA?

To become IKEA, you have to sell a lot, and sell it cheaply. Does doing it through e-commerce give you any edge over a physical store?

Five years ago Li Ning, a businessman from Foshan, China, joined Brent Hoberman, Chloe Macintosh, Julien Callede and others from the founding team of the British online travel retailer lastminute.com to start the furniture e-commerce site Made.com in the UK. They post exclusive furniture designs on the site and let shoppers vote for their favorites. The winning designs are ordered straight from factories in China, then shipped by sea to customers around the world.

By 2014 Made.com was counted among the fastest-growing technology companies in the UK. It has since opened two physical showrooms in London and is now preparing to list on the London Stock Exchange.

Made.com's website promises "original furniture design at affordable prices." Four months ago, when we interviewed her, Shu Wei, founder of the original-furniture platform Zaozuo, said much the same thing. Her target customers are people born after 1985 who are making their way in China's top-tier cities, such as Beijing, Shanghai, Guangzhou and Shenzhen: "Two or three years out of school, when they were still renting, they bought a lot of IKEA. Now they're reaching the age of getting married and buying a home. Their taste isn't bad, they appreciate design, they've grown up under the internet's influence, and a small household earns about 200,000 yuan a year on average."

Zaozuo's model is almost identical to Made.com's, though Shu Wei stresses how much more she invests in design.

On the evening of June 15, Zaozuo relaunched its redesigned website under the slogan "Say goodbye to your old life," and spelled out what "old life" meant: outdated, crude, overpriced furniture. Alongside the new site came 13 home products, including chairs, bookshelves, a modular bed and storage shelves, custom-designed for Zaozuo by six international designers, among them Luca Nichetto, Max Gerthel and Sarah Böttger.

For a company less than 10 months old, what stands out about Zaozuo is not the furniture e-commerce model but the big-name designers it has won over and the work they produce. Before launching products at scale, Zaozuo announced it had signed leading European designers including Luca Nichetto, Tim Power, Sarah Böttger, Form Us With Love, MUT Design and Max Gerthel, along with the Japanese designer Keiji Ashizawa and the Taiwanese studio chiandchi. Their work regularly appears on the lists of top international awards and publications such as Red Dot, iF, Elle Décor, EDIDA and Wallpaper.

Zaozuo announced the news on its WeChat official account, and it spread fast through design circles. Liu Yunlong, founder of the website Dahao Design Landscape, said what drew him most was Zaozuo's business model of combining Chinese and Western strengths. "Of course some things may not translate well to local conditions, but with thorough communication and market research, good design is still well worth looking forward to. Many of those foreign designers are working with a Chinese client for the first time, and on that score Zaozuo is ahead whatever happens."

At first glance Zaozuo's products recall those of the Danish design brand HAY, with their emphasis on line, color and function. But Shu Wei does not simply accept whatever a designer hands over. She insists that every product fit the habits and practical needs of Chinese users.

Take the Eight O'Clock Chair. Its rounded shape departs from the usual office or dining chair. Legs of hard walnut joined with mortise and tenon support a backrest that follows the curve of the lower back and a foam seat cushion. It is comfortable to sit in, and its simple lines don't tire the eye.

(The Eight O'Clock Chair)

Or take the Surfboard Shelf by the Swedish studio Form Us With Love. Its frame was inspired by the Chinese folding screen and opens and closes smoothly. With its clean form and dividers shaped like surfboards in five colors, it does away with the heavy, dreary look of the traditional bookshelf. It makes storage flexible and gives you more choice about where to put a shelf or bookcase.

(The Surfboard Shelf)

Shu Wei told QDaily that although the 20-odd designers each bring the design language of their own region, they share "simplicity and purity, a concern with function and with mass production, rather than pure art." Getting the products right starts with finding designers whose languages are alike. Just as important, she brought in Luca Nichetto, an Italian who has led hundreds of furniture and industrial design projects, as Zaozuo's strategic design adviser.

"He's my walking dictionary. Luca has been in the business for almost 20 years. He can pull out things from the past 50 years and tell you what this piece might resemble, what might count as copying and what wouldn't. So he helps me a lot in keeping the brand's products distinctive." Nichetto also advises Shu Wei on other aspects of design. "For example, we spend time discussing what kind of designers we actually want, what design elements, and how to control the color palette and the use of materials."

Zaozuo's website prominently displays the words "Global exclusive designs." Shu Wei met the designers behind these products when she hauled a suitcase to Stockholm Design Week. She says she can win people's trust quickly. Having worked as a graphic designer, she knows what designers care about most and how to "protect" them. Perhaps more important, Zaozuo holds two strong bargaining chips: it is willing to try e-commerce, and it has a huge Chinese market behind it.

Selling furniture online is not as simple as switching sales channels. One big problem Made.com solved is customer trust: it lets you watch how your furniture is made and how far along it is, and track every step online, delivery included.

This matters because most people don't think of buying furniture the way they think of buying clothes. A rendering on a shopping site does not reassure you. Before you pay to haul something that big home, you want to touch the real thing. That is why the model rooms are always packed whenever you visit IKEA: people sit on the sofas, run their hands over the cabinets, and some simply lie down on the beds.

The internet has changed this traditional, asset-heavy industry slowly, and most of the change has come in sales channels. At first glance, e-commerce giants such as Taobao, Tmall and JD.com all sell furniture, and there is no shortage of specialist furniture sites such as Meilele and Kuka Home. More and more independent furniture designers also open Taobao shops to sell their own work.

But most of them have not solved the trust problem. Nor have they solved value for money. Most people choose IKEA not for its looks but for value, a judgment that weighs looks and price together. In Zaozuo's early research, the three biggest complaints were "can't afford it," "looks ugly once I get it home" and "can't trust what I'm getting."

You may also have wondered why a sofa in a furniture mall so often costs more than 10,000 yuan. Shu Wei told us: "In China, furniture gets made by copying something, tweaking it and sending it to the factory. From the first copy to the floor of a physical mall, the full test cycle for one category takes two years. The time cost is far too high. If a sofa sits in the mall for 12 months without selling, the retail price we finally see may be four or five times the original, or even more."

Here the Made.com model has a huge advantage, and Zaozuo knows it. Take the Guige shelf, designed by the German designer Sarah Böttger and launched this April. Users could join in from the first sketch, ordering at the low price of 99 yuan. As the product moved through the model, voting, specification and sampling stages, the price rose from 99 yuan to 499 yuan, reaching a final price of 599 yuan once it went into production. Throughout the 60-90 day cycle, users voted on details such as color and material: should the lacquer be glossy or matte, the non-slip pads black or gray? Every user can vote, but votes from those who have paid for an order count more. An ordinary user's vote counts once; a buyer's vote counts nine times.

(The Guige shelf)

"This way I can really pass all the savings on in the price, and users get something good. In other words, I've squeezed the time cost back out," Shu Wei explained. Zaozuo calls this way of bringing users in "Republic." The idea is that design should be democratic and dynamic, the business of every user rather than a designer's solo show.

But after trying it on a few products, Shu Wei decided to change how "Republic" works. She collapsed the original six stages and let users vote directly, instead of running a long race stage by stage. "We'd thought about it too much like professionals. We found users were often baffled. It was too complicated. After all, users don't judge a product very accurately by intuition. Show them a color chart or a sketch, say, and they may not be able to picture what the product will look like."

(A design sketch)

When I visited Zaozuo's headquarters four months ago, my question was whether they could really make good design that people could afford. Four months on, the steady stream of new products has answered that. But it raises a new question: can Zaozuo's system really scale? As it grows, will it become a company like IKEA that can furnish a whole home?

After all, you don't run 10,000 meters the way you run 50.

Before answering, Shu Wei gave an example. When Zaozuo's first products went online, the Eight O'Clock Chair, simple as it looks, took four months from start to finish to get a sample made. The newest release, the COFA sofa, is far more complex in craftsmanship and structure, yet its sample took just over four weeks. "We're getting faster and faster at sampling. Our quickest sample now takes about six days." Behind this speed-up, as Shu Wei describes it, is the team's command of all the materials, techniques and development processes. Add cooperative manufacturers, and they can now move faster and produce in volume.

A mature design brand typically puts out a little over 100 products a year. Shu Wei plans to reach 200 this year and 500 in 2016, and more than a thousand once she adds lifestyle goods. "By then I think our range will be about complete. So if I ran this like a 50-meter dash, I'd definitely be running it wrong."

Looking further ahead, Zaozuo will not stop at furniture and home decor. It will probably try lifestyle ZAKKA goods, small simple items such as stationery. But even if its range one day rivals IKEA's, Zaozuo will play a different game. IKEA already sells a vast range, and Shu Wei admits: "I can't win on low prices and volume the way IKEA does." For wardrobes, say, Zaozuo might make only 10 models, make those 10 well, and naturally price them somewhat above IKEA.

But Zaozuo has only just started, and its real test may still lie ahead. Gao Yiqiang, a furniture designer, told QDaily that among people he knows who have made furniture for decades, the biggest headache is still after-sales service. Like many independent furniture design brands, Zaozuo relies on OEM (contract manufacturing). "That raises the question of who handles after-sales," Gao explained. "If you can't build your own production line, it's hard to guarantee quality. The better you sell, the more you should worry. Two years later, when the repair problems surface, they'll crush you."

Many independent furniture brands now claim it is normal for the wood in a piece you bring home to crack. Gao calls that an irresponsible claim. "It's because they find it hard to treat the wood thoroughly. By thoroughly I mean kiln-drying and air-drying it, and if you're still worried about warping, maybe carbonizing it too. A carbonizing kiln is huge; some small factories aren't even as big as one."

Take Zaozuo itself. As its range grows to include wood-and-board pieces, wrought iron and solid wood, it has to work with different factories. In Gao's words, "In the end you may work yourself to death, but it comes back to what I said at the start: who do I go to for after-sales?"

Max Gerthel, the Swedish designer Zaozuo has signed, has raised the same issue. "What China needs is entrepreneurs who can build their own factories, with their own means of production and their own design. That would let them make a much wider range of products and explore more possibilities."

But he also said: "A company like Zaozuo, which I work with, is at least trying to show the general public something about the value of design itself, and to introduce a simple, contemporary, functional way of living. It won't be a revolution, but it is at least heading in the right direction."

For now Zaozuo is still a small, focused team of 40, and its core product development department has only six people. Shu Wei keeps saying she is short-staffed, because making a single product involves so many steps. Zaozuo is a system that fuses traditional manufacturing, the internet and e-commerce. As Shu Wei puts it, "If we survive and keep going, the ideal size would be several thousand people. It takes a team of thousands to do this well, and the market is big enough. This is a market worth trillions of yuan."

In the end, the furniture industry's move toward selling online is now a clear trend. The American furniture site furniture.com may offer a better model. Gao Yiqiang told us he has followed the site since 2008. "Even then I thought they were doing especially well. At least back when I was following them, they were selling 75,000 pieces a year."

Here is how furniture.com works. When a customer wants to buy a piece of furniture, it mails them samples of all the materials in that piece the next day. It also offers round-the-clock online support and 8 hours of video consultation with experts, and every product comes with a 360-degree view so shoppers can see its structure and look from every angle.

This is really an attempt to improve every step of buying furniture. The aim, in the end, is to dispel customers' doubts: the uncertainty and unease that arise only because they are buying through a screen. Only then can we talk about design, price and quality, and about the after-sales problem that troubles furniture insiders most.

It has been just over two months since Zaozuo's first product launched, and one thing puzzles Shu Wei. Each unique visitor (UV) to Zaozuo's website comes back four times a month on average, about once a week. "I was shocked. Sometimes we joke among ourselves: there are only a handful of products online, so what are they looking at?"

Shu Wei drew two lessons from this. First, the focus can't be on marketing for now: "If we market and users come, we don't have enough samples or finished products to meet the demand. That's a waste, and it hurts users too." Second, the company's growth is now held back by how few products it has, so her most urgent job is to get that number up.

Cover image courtesy of Zaozuo