Disruption hits the furniture trade

Published on the 13/04/2017 | Written by Newsdesk

Digital disruption

‘Digital disruption’ is a thing as taxi companies, hoteliers and media companies like iStart have discovered…

Multiple industries are being forced to change as tech-powered upstarts find new ways to invigorate tired old business models. What could be older or more tired than the furniture trade; after all, we’ve been buying pleather lounge suites and overpriced mattresses from the corner store since time immemorial.

That’s a gap which has been spotted by ANZ franchisor Vast Furniture & Homewares. It has developed a ‘just in time’ cloud business model which it reckons cuts big costs out of the setup and operation of franchised stores.

The point of departure is that resellers have traditionally operated in a two-tier distribution model: behind the store is an expensive warehouse with tons of stock, all of which consumes capital and limits product availability to the stuff in that facility, further hampered by typically large and infrequent stock movements.

Vast CEO Ross Clayton spotted the opportunity for disruption by realising that the accepted way of doing things was no longer necessarily the best way of doing things. “It’s one of those incredible situations where everyone follows the same practices in the furniture industry simply because that’s the way it has always been done,” he said.

“One day I simply questioned why we are spending so much money on storage, wasting time in terms of delivery and limiting our overall results. There had to be a better way.

The Vast model rests on a cloud system which records all inventory centrally, with a drop-ship style of accelerated logistics which provides direct manufacturer-to-customer delivery. No more warehouse.

The cloud nature of the system, said the company, means new franchises can be rapidly rolled out, with no need to build any systems from scratch. Presumably, those franchises put some spec goods on the floor, take orders, with the goods delivered by a jacked logistics provider.

Vast said the outcome of its approach is reduced delivery times by 80 percent, with the cost of doing business 70 percent lower than that of the traditional industry model.

Ross said the system means being able to give business-minded individuals a model for success and a product that reduces the work required to grow each franchise from three years, to just nine months.

He said the model has taken four years to develop and is ready to roll out on a greater scale. “The furniture business has not had a decent revolution since the introduction of flat pack products. The future lies in being more efficient, productive and cost effective.”

One of the challenges for many incumbents in established industries is the perception that things are generally done pretty well. The march of technology and the enablement which comes with it means this is probably no longer the case – and it falls to the disruptors to identify new ways of doing those things, whether it is hailing a cab or selling a dining suite.

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