If you’re offering warehousing services to furniture retailers, you’re servicing a lucrative market. Today, the global furniture industry is worth an estimated $545 billion, and that number is expected to grow to $654 billion by 2025.
For all its rewards, serving the furniture warehousing industry has its share of challenges, particularly when it comes to furniture inventory management. As a result, many furniture retailers outsource their warehouse management to expert third parties.
If you’re a 3PL that offers other services like forecasting and outbound logistics, your furniture customers will lean on you more heavily for support managing their supply chain.
Your customers — the furniture retailers — have to keep up with trends, predict which styles will be popular, quickly sell products that are sinking in demand, and more. They also need to keep enough items in stock so they don’t lose out on a sale while simultaneously minimizing excess furniture inventory that ties up their capital.
A sophisticated warehouse management system (WMS) with an integrated furniture warehouse management features can help warehouse owners and effectively and profitably support furniture retailers.
The best practices we discuss here will also apply to furniture retailers looking to manage their warehousing and logistics needs independently.
In our 3PL guide, we’ll help you understand:
- How Can Furniture Inventory Management Software Provide Better Inventory Management?
- How Can Warehouses and 3PLs Add Value for Furniture Retailers?
- How Can Warehouse Management Systems Support a Retailer’s Furniture Sales and Marketing Strategy?
- The Semi-Dropshipping Model
- How Does Effective Furniture Inventory Management Software Help Furniture Retailers Keep Up With the “Amazon Effect?”
- A Warehouse or 3PL Can Help Furniture Retailers Achieve Greater Systems Integration With Enterprise Resources
- Benefits of Effective Furniture Stock & Order Management For Furniture Retailers Store Management
How Can Furniture Inventory Management Software Provide Better Inventory Management?
Furniture is large, heavy, and bulky, which makes it challenging to store and ship. A warehouse software allows a warehouse owner or warehouse manager to optimize their warehouse layouts and store furniture more easily. It does this by:
- Allowing data entry through sku barcodes by using mobile scanners, tablets, or desktop computers
- Centralizing all captured warehouse data in one easy-to-access digital location
When you’re dealing with large, bulky items, relying exclusively on human labor for the putaway and picking process is inefficient at best and a health and safety hazard at worst. A warehouse management system provides the foundation for other automation tools like a warehouse control system or warehouse execution system. In fact, many furniture warehouses use automated tools like forklifts or other warehouse technologies such as rail-guided automated storage and retrieval systems (AS/RS) to speed things up and reduce risks to their workers.
If your warehouse or 3PL business is interested in entering this niche, you’ll need a WMS and its add-ons to serve your customers properly and to keep your own operation running smoothly and safely.
How Can Warehouses and 3PLs Add Value for Furniture Retailers?
Furniture is a discretionary purchase. Not only does this affect consumers’ willingness to shop — furniture sales go down when money is tight — it also affects what they buy. Trends and styles in the furniture industry change fast.
In fact, this is how Wayfair, the multi-billion-dollar home decor e-commerce giant, made its mark. Unlike most furniture stores, it doesn’t carry furniture inventory. What made it successful was using data analytics to understand what consumers were searching for online.
It then used those insights to build relationships with hundreds of third-party websites that supply the products Wayfair markets. Eventually, the company consolidated its e-commerce presence and wrapped it into the Wayfair brand. Today, Wayfair works with 11,000 suppliers to execute its dropshipping model.
As a business owner, you have access to a wealth of data. With these insights, you can offer value-added services that give furniture retailers an advantage against their competitors. With the data generated from your software, you can provide detailed furniture inventory management reports that highlight which items are most popular and in which particular styles, colors, and materials.
Your furniture retail customers can use your reports to make smarter purchasing decisions like:
- Ordering more of a specific type of product. For instance, if dining chairs are extremely popular, a furniture retailer may simply order a lot of them in different colors and upholstery materials. On the other hand, if you can tell them that 60% of their dining room chair sales are for dining chairs with black leather, they can order accordingly.
- Setting granular reorder points: The best supply chain professionals set safety stock levels and reorder points based on data. But companies who either don’t have access to this data or are simply set in their ways tend to make guesses based on gut instinct instead. A warehouse facilitating furniture warehouse management can help clients by providing data-driven suggestions for reorder points, inventory turnover or safety stock levels as a value-added service.
- Producing stronger forecasts: The furniture industry is a seasonal, trend-based industry. A great WMS solution can take historical data from the furniture management system and generate demand forecasting reports on anticipated sales volumes for different items over the coming quarters.
- Flagging lagging demand sooner rather than later: You can also flag when items are lagging in popularity so that retailers can amp up their efforts to sell those products or plan to stop producing them altogether. This reduces excess stock by moving products before they’re impossible to sell.
That last point is particularly useful to retailers and their marketing teams, which we’ll discuss in the next section.
How Can Warehouse Management Systems Support a Retailer’s Furniture Sales and Marketing Strategy?
Recall our earlier use of Wayfair as an example. As discussed, Wayfair uses a dropshipping business model. Rather than carry furniture inventory, it partners with the suppliers whose products it advertises on its site. The Wayfair site uses advanced data analytics techniques to catalog products consumers are interested in. When a consumer places an order, Wayfair places an order with its supplier.
The pros of this furniture inventory management strategy are clear. Furniture is large, so it’s expensive to store, increasing a retailer’s warehousing costs. Furthermore, fast-moving trends make it difficult to predict what consumers want. Predict wrong, and you’ll be carrying a lot of expensive furniture you can’t sell.
Instead, with a dropshipping model, the upfront investment is minimal. You spend most of your initial capital on marketing and advertising and only pay for the product when you make a sale.
Let’s take a look at this model from the perspective of your customer: the furniture retailer. For them, there are cons to using dropshipping as a furniture inventory management strategy. The first disadvantage is shipping times. While Wayfair has the funding and the support to offer various shipping options, most dropshipping companies take weeks to deliver their products to customers.
There’s also the issue of quality control. Since they never hold the inventory, they don’t get a chance to inspect it. As a result, its customers may receive a bed or a sofa that’s not as advertised. This erodes customer trust and loyalty over the long term.
Finally, there’s the issue of vendor relationships. A smaller company doesn’t represent a significant amount of a manufacturer’s business. While a furniture manufacturer will work hard to satisfy a large company, they typically won’t bend over backwards for smaller brands. This means that your retailers’ manufacturers will be less likely to accommodate things like expedited deliveries, dispute resolutions, or returns.
The Semi-Dropshipping Model
That said, furniture retailers can still benefit from data analysis techniques. If retailers have access to granular data about which products have been sitting on the shelves too long, they can use it to design promotions.
Let’s assume a company has dozens of glass coffee tables in its warehouse. If it doesn’t have experts tackling its furniture inventory management, it may not realize this excess stock exists until someone in their finance department flags it. By that time, it’s likely too late to move the products.
On the other hand, a warehouse manager or a 3PL is constantly monitoring data. With the right tools, it can flag this decrease in sales of glass dining tables and much sooner. This information can be quickly transferred to the furniture retailer’s marketing team who can then create a campaign focused on selling that product as quickly as possible without losing too much money. Perhaps they’ll use digital ads, free shipping promos, and other strategies.
This approach can also be used to adopt a semi-dropshipping model.
Let’s say your furniture retail customers want to expand into a different product category, but they’re hesitant to adopt the risk.
As a warming up strategy, they could carry a limited supply of the product in their inventory and work closely with the marketing department to advertise the product and gauge interest.
If their furniture inventory management partner can provide data reports and visualizations, furniture retailers can direct their inventory partners to automatically order or ship more of the product once orders hit a certain volume.
BONUS: Before you read further, our team has put together a simple safety stock calculation excel that helps you identify how much inventory to carry for each of your products. Download safety stock calculator excel here.
How Does Effective Furniture Inventory Management Software Help Furniture Retailers Keep Up With the “Amazon Effect?”
Like most e-commerce industries, the furniture sector has been hit by what’s known as the “Amazon effect.” Customers buying a couch online expect the same enhanced customer service they receive when they buy school supplies from Amazon.
This includes fast delivery, free shipping, easy returns, and track and trace capabilities, so they can keep tabs on their product in real time. Despite the complexity and difficulties of tracking furniture, customers expect a similar experience.
Warehouse operators can help furniture retailers keep up with the Amazon effect by offering excellent furniture warehouse management. If you can quickly and efficiently receive orders, pick them from their warehouse locations, and ship them to the retail store or customer, your operation offers tremendous value.
How you structure your warehouse operations ultimately depends on the type of furniture retailer you’re servicing. Some furniture is ready-made, requiring automated solutions to move it throughout the warehouse, as discussed earlier.
On the other hand, some companies offer what’s called knock-down or ready-to-assemble furniture. This type of furniture is shipped to customers in parts and customers are required to assemble the product themselves.
In this case, your warehouse can use a combination of forklifts and manual labor and your WMS will help you optimize this process by enabling strategies like:
- Directed putaway: Once your product arrives from the manufacturer, you can use directed putaway algorithms to ensure your inbound shipments take the most optimized route to their putaway locations in the warehouse.
- Sophisticated pick methods: With a warehouse management system, you can pick your furniture inventory using methods like wave picking or zone picking. This strategy schedules your picks in shifts based on your transportation schedules. If you need to ship out an order by the end of the day, the WMS bumps it up to the first wave of picks for the day, ensuring you satisfy customers who expect timely deliveries.
- Cross-docking: If an incoming shipment corresponds to a pending customer order, your warehouse management system can flag it and mark it for cross docking. This means the shipment will automatically be transported to an outbound truck rather than entering your furniture inventory management system.
- 3D packing tools: Your order fulfillment software can support 3D packing software that simplifies the process of packing component parts, accelerating time to shipment.
A Warehouse or 3PL Can Help Furniture Retailers Achieve Greater Systems Integration With Enterprise Resources
Your 3PL or warehouse business can deliver additional value to your furniture clients by supporting integrations with their systems.
Whether its their in-store point-of-sale systems, online order management systems, or accounting systems, integrating your inventory data with their 3PL software can support more streamlined processes within their enterprises, adding up to significant boosts to their bottom lines.
This leads to greater partnerships with sales and marketing and increased inventory accuracy between the physical warehouse and the finance department’s records.
Benefits of Effective Furniture Stock & Order Management For Furniture Retailers Store Management
The online furniture market is full of inventory management challenges, but for those who overcome them, the pay-off is significant. Furniture retailers must manage unpredictable fluctuations in demand and consumer preferences. Moreover, they frantically try to keep up with the rising consumer expectations caused by the Amazon effect.
You can deliver significant value to furniture retailers by effectively managing the complexities of warehouse management and outbound logistics on behalf of their retail clients.
With sophisticated software, you can also deliver the data their clients need to make smarter decisions about purchase orders from manufacturers, inventory levels, and marketing efforts.
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Written by Ruthie Bowles
Ruthie is a content marketing consultant for Logiwa. Her specialties include small business development and inventory management.