The Internet disruption on retail is entering a new phase, that of ‘online-only brands’, as TNW’s Allen Garnett recently outlined. One company surfing that wave is US-based Deal Décor and the furniture-specialist is showing its potential after raising $1.2 million from a number of angel investors, including Rick Thompson, the man behind startups Playdom and Flycast.
The funding — which comes five months after TNW reported that the firm was seeking investors — will be used to further Deal Décor’s aim to disrupt the furniture industry. Taking its cue from Warby Parker and others, it says it can up-end the $80 billion market by cutting out middlemen and traditional retail processes to furnish customer needs (pun intended) with “shocking price tags”.
The price savings range from 30 and 70 percent on physical and online store retailers. That markdown applies to high-end brands like Pottery Barn and Crate and Barrel, which, it says, will make top-end products available and affordable to more.
The company uses a group buying approach to offer the low prices. One deal is posted each week and assuming that enough people sign up, offers are activated, credit cards — details of which are submitted when registering interest — are charged and the product is shipped.
The company calls the approach ‘collective bargaining power’ but it also offers touches of traditional services. For example, once shipped, items can be picked up from the depot or delivered direct to customers’ houses at an extra cost. Initially shipments and transactions are for US-based customers only.
The San Francisco-based company details its proposition with this explanation:
Most retailers offer the same products 365 days a year, carry inventory, drop ship from warehouses in the middle of the country and work through a middleman or two and– all at the buyer’s expense. Deal Décor is vertically integrated from customer to factory, cutting out the middlemen and sourcing and monitoring the products, handling the logistics and delivery, and marketing directly to consumers, saving hundreds, in some cases thousands of dollars.
Citing the success of other online-only companies in the consumer space, Ed Cluss, Deal Décor chairman, believes that the company can bring new affordability to the furniture space:
The success of companies like Gilt and Warby Parker has proven that consumers are savvy, decisive and receptive to new ways of meeting their needs. Deal Décor’s founding team has deep relationships with the factories producing furniture for hundreds of retailers…and is demystifying furniture buying and bringing the most sought-after styles into affordable reach.
Online retail has been an option for product purchasing for some time now yet consumers still enjoy the comforts of buying from physical stores.
Deal Décor has realised that an offline approach is necessary too and, aside from the libraries of videos and images on its site, the company says that it will “have a few locations in each [US] market” where customers can see and touch products that are available through the site.
Coffee shops are mentioned as one possible location for these ‘touch points’ and a physical location would certainly go some way to bridging the gap between online and offline. While buying razors and other everyday goods is one thing, consumers (that are anything like me) are likely to want some kind of assurance about one-off purchases that they make through the Web.
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