Could Your Next Chair Come From Amazon?

by drjim on November 12, 2018

Could Amazon become the next big furniture seller?

Could Amazon become the next big furniture seller?
Image Credit: Buck Lewis

At some point in time we all have the need to get some furniture. When this happens to you, what do you do? Where do you go to get furniture? If you are like a lot of us there is probably some local store that runs a million ads on TV or in the newspaper that is the place that we all start our search at. However, what if you could start your search someplace where you already buy a lot of things? What if you could go to Amazon and buy that chair, table, or dresser that you’ve decided that you need?

Why Amazon Is Getting Into Furniture

Amazon, the company that started out sending you books in the mail, has decided that it wants to be the place that you go to buy furniture. This means that they are gearing up to change their product development definition and make a big push into the furniture and appliance market. What this push means is that Amazon has gone ahead and built four of their massive warehouses just to hold bulky furniture items.

This means is that Amazon is preparing to go to war with the two firms that currently dominate the online furniture business: Wayfair Inc. and Williams-Sonoma. The reason that Amazon has become interested in this new market is because online furniture sales is one of the fastest growing segments of the online market. This segment grew by 18% in 2015 – competing in this market would look good on anyone’s product manager resume. That growth makes it second to the fast growing online grocery business. Right now, roughly 15% of the 70B U.S. furniture business has moved online.

What makes the furniture market segment so interesting for product managers is that there are not yet answers for all of questions that currently exist. There are big issues that all of the major players are still struggling with. Other markets like books, videos, and clothes have well established rules for how to sell these items online. However, the world of online furniture is so new that nobody has all of the answers yet. Basic questions like just exactly how much variety should be offered to customers is not yet clear. The biggest open question has to do with trying to find the most efficient way to deliver furniture to customers.

Why Amazon Thinks That It Will Be Successful In Furniture

Amazon has been selling furniture for a number of years. However, they have recently noticed that furniture has become one of the fastest-growing retail categories at Amazon. This is the reason that they have now decided to move more completely into this segment. Not only will the Amazon product managers be selling popular furniture lines such has Ashley furniture and Johnathan Adler, but they will also be offering custom furniture design services.

In the broader home furnishings category, Amazon already has a 17% market share. One of the things that the Amazon product managers need to be aware of about the furniture market is that it is different from all of the other markets that they are currently competing in. A key factor is that it is going to cost Amazon a lot more to deliver a couch or other large furniture item in part because such items take up a lot of space and so a driver will be able to make fewer deliveries. An additional factor is that furniture customers often want the furniture brought into the house, unpacked, and then to have the trash taken away.

Right now shoppers are indicating that they are still willing to pay for shipping of large furniture items. However, more and more they are indicating hey are not willing to wait for delivery – it has to be fast! Right now Amazon is offering free shipping on all orders over $25 and on all orders for Amazon Prime customers. Note that items that ship from 3rd party providers may have a shipping fee associated with them.

Initially Amazon is expected to rely on 3rd party logistics providers to handle distribution centers and to make deliveries of furniture and appliances to customers. Over time, Amazon is expected to bring more of its logistics in house. As the sales of furniture items goes up, the cost associated with delivering the furniture goes down. The reason that these 3rd party providers are becoming so important to Amazon is because both FedEx and UPS have been complaining that large and bulky items tend to clog their distribution centers which were designed to process millions of smaller packages.

What All Of This Means For You

Furniture items are big. They are awkward to move and they are a real challenge to deliver to customers. These facts make it all the more amazing that Amazon, the company that became huge by delivering books and DVDs, has decided to become a big part of the online furniture market. This is going to change everything both for customers and for the established players in this market. Looks like their product managers are going to have to go back and take a look at their product manager job description in order to figure out how to be successful.

In order to prepare to deliver more furniture, Amazon has gone ahead and constructed four large warehouses. They will now be competing directly with Wayfair Inc. and Williams-Sonoma for the online furniture market. The online furniture market is growing rapidly. There are still a number of questions that need to be answered like how much variety to offer and how to deliver the big, bulky items. Amazon will be selling popular furniture lines like Ashley furniture and Johnathan Adler. The Amazon product managers need to realize that furniture deliveries cost a great deal and customers often want a lot of delivery service. Shipping costs may be an issue with large furniture items. Amazon is going to start thing off by relying on 3rd party firms to manage their furniture and make deliveries.

The online furniture market is so large that there was no way that Amazon could keep ignoring it. Their entry into this new market is going to fundamentally change how it operates. The Amazon product managers are going to have to realize that the furniture market is fundamentally different from all of their other markets and make the necessary adjustments. If they can do all of this, then the next time you need some furniture, you just might find yourself going online to Amazon to get it!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: What can Amazon do to make their online furniture offerings stand out?

Click here to get automatic updates when
The Accidental Product Manager Blog is updated.

P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

Hopefully by now we are all aware that Amazon has purchased Whole Foods and has gotten into the grocery business in a big way. However, what a lot of product managers may not be aware of is that Amazon’s grocery dreams don’t stop with Whole Foods. Instead, they have their own plans about changing their product development definition and finding out what an Amazon grocery store that they built from the ground up would look like. What lessors are product managers going to be able to learn as we watch Amazon expand even further into the grocery business?

{ 0 comments }

Product managers attempt to get customers to shop for toys all year long

Product managers attempt to get customers to shop for toys all year long

Image Credit: bygloricom

Product managers for stores that sell toys have an interesting problem on their hands. Sure, when Christmas swings around, their stores are going to be filled with parents who are searching for the next hot toy for their children this year. However, once Christmas has come and gone, just exactly how are the product managers supposed to get people to come into their stores? A new type of product, called tiny collectables, just might be the thing to do the trick.

Product Managers Celebrate The Arrival Of Tiny Collectables

Tiny collectables have arrived at toy stores. The tiny collectables go by many different names including Shopkins, Num Noms, and Tsum Tsum. Although they have only just arrived in toy stores, sales of products like these accounted for US$142M in sales last year. It turns out that this is actually a very small slice of the $25B U.S. toy industry. However, it is these toys that are causing people to seek out and come into toy stores.

The tiny collectable products generally have low price points. Often between $2 – $5. This allows shoppers to treat them as collectables. Retailers are seeing shoppers return to their stores over and over again to get more of the tiny collectables. The reason that they are returning is that they want to purchase the tiny collectables that they need in order to complete a series.

Toy stores make roughly half of their money in the months around Christmas. The reason that tiny collectables are so important is that they are bringing in customers throughout the year. When a customer buys tiny collectables, they are generally buying what are called “blind packs”. This means that the customer does not know what tiny collectable characters are inside. One of the things that makes blind packets attractive to retailers is that unlike pricier toys they generally don’t have to discount them and so this can keep their profits steady.

How Tiny Collectables May Save Toy Stores

As the popularity of tiny collectables has grown, toy store product managers have started to devote more shelf space to these types of products. As their popularity has increased, more brands of tiny collectables have been launched. Blind packs are now available that feature characters that are based on children’s movies and well-established toys such as Legos.

The people who study toy markets believe that there is still room for the tiny collectable market to grow. They believe that some of today’s well established tiny collectable brands, such as Shopkins, may end up losing market share in the future as the shelves become more crowded with more varieties of tiny collectables. When customers are presented with more choices, it’s only going to be natural for sales to become more fragmented among multiple brands.

The tiny collectable market was originally created by the Australian toy maker Moose Enterprise. They are the company who created the Shopkins line of tiny collectables which put them on the map starting in 2014. The figures that they created were simple and based on items that could be found in a grocery store such as ketchup and butter. The company has expanded into larger dolls, playsets, and has established licenses for apparel and accessories. This has allowed the company to record over $1B in sales.

What All Of This Means For You

Product managers for toy stores have always had a problem. They have no problems getting people to come shop at their stores at Christmas time; however, they’d like them to drop by during the rest of the year also. Their prayers may have been answered by the arrival of a new type of product. Tiny collectables don’t cost a lot, but because people are collecting them they will be willing to drop by the toy store multiple times in order to collect new items.

Although tiny collectables only represent a small part of the very large U.S. toy market, they are they toys that are causing people to visit toy stores over and over again. Tiny collectables don’t cost a lot and this allows people to start collections. When people buy tiny collectables they buy them in “blind packs” and so they really don’t know exactly what they are buying. The popularity of tiny collectables has meant that they are now getting more and more shelf space dedicated to them. This market will grow, but the established players will probably lose market share. One of the most popular lines, Shopkins, was created by the Australian company Moose Enterprise. They have expanded their product lines and are now making a lot of money.

In the toy world, product managers always have to be careful about fads. Toys can be hot one minute, and the sitting on the shelf the next. Tiny collectables appear to have a great deal of life in them because of the customer demand and the fact that there are so many different varieties of them. Product managers need to use the popularity of these toys to get customers to come into their toy stores more often and to buy more toys when they do come. The opportunity has been presented to them, now toy store product managers just need to make the most of it.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: Do you think that a toy store could ever have too many different types of tiny collectables?

Click here to get automatic updates when
The Accidental Product Manager Blog is updated.

P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

.At some point in time we all have the need to get some furniture. When this happens to you, what do you do? Where do you go to get furniture? If you are like a lot of us there is probably some local store that runs a million ads on TV or in the newspaper that is the place that we all start our search at. However, what if you could start your search someplace where you already buy a lot of things? What if you could go to Amazon and buy that chair, table, or dresser that you’ve decided that you need?

{ 0 comments }

Google Product Managers Look For The Next Big Thing

October 29, 2018

I’m going to assume that by now we all have some form of a smartphone in our possession. No matter what type of smartphone you have, they can all do a lot: take pictures, surf the internet, and run countless apps. However, what comes next? Over at Google, the company that become famous for making […]

Read the full article →

How Can Product Managers Help Tiffany Once Again Become “Cool”?

October 22, 2018

What makes a jewelry store cool? The 183 year-old Tiffany’s jewelry store has been cool for a very long time. They’ve been associated with very, very cool people like the actress Audrey Hepburn and that has made them very successful. However, as of late they seem to have lost their cool factor. What can the […]

Read the full article →

Product Managers Start To Understand The Power Of Online Reviews

October 15, 2018

When the customers for your product go looking for products online, how do they decide which one they are going to buy? As more and more of us become comfortable shopping online, we are starting to look towards people who have bought a product before to tell us if it’s any good. What this means […]

Read the full article →

Apple Product Managers Change When They Release New Phones

October 8, 2018

Let’s talk about the product that you are responsible for. How many different versions of that product are you currently offering? Most of us have a big, medium, small version or perhaps a simple, better, and fancy version. When you create a new version of your product (e.g. version 2.0), what does your product development […]

Read the full article →

Can Apple’s Product Managers Win Back The Movie Market?

October 1, 2018

So just in case you didn’t realize it, Apple makes a lot of money from both renting and selling movies. This is all part of their iTunes empire that has been around for a while and has become sort of the defecto go-to location for a lot of people when they are looking for new […]

Read the full article →

How To Best Meet The Needs Of The Connected Consumer

October 1, 2018

How to best meet the needs of the connected consumer isn’t just a product managers dilemma, nor just a marketing executive or UX design professionals. To delight the modern consumer your product management, UX design and marketing departments need to work together! At the 10th Annual Open Mobile Summit (November 27-28, SF) we’ll be bringing […]

Read the full article →

Can Product Managers Find A Way To Make A Better Burger?

September 24, 2018

I’m pretty sure that we’ve all had that feeling: it’s the “I want a burger” feeling. I’m not sure if I can really describe what it is, but there is a sudden need that we have to be filling our mouths with the rich satisfying feeling of consuming a big burger. The folks over at […]

Read the full article →

How Product Managers Can Get Kids To Smoke Again

September 17, 2018

There are many different types of product manager jobs. One of the more, shall we say delicate of these jobs, is that of being a product manager for a major tobacco company. It is your job to get people to consume more of your product – that means smoke more. It turns out that you […]

Read the full article →