Just a click away from riches? Not quite

Web retailers' visions of gold tarnish as the hard reality of trying to sell furniture online sets in.

By JULIE V. IOVINE, New York Times

© St. Petersburg Times, published July 1, 2000

A year ago, the idea of selling furniture on the Internet seemed a stroke of genius. What could be cooler than clicking up a couch?

More than a dozen Web sites sprang into action, all promising to take the schlep out of shopping and the fear out of fabric selection. After all, the furnishings industry was huge, with more than $190-billion in sales in 1999, by the estimate of the Bureau of Economic Analysis. Moreover, there weren't a lot of household names dominating the marketplace. The gold rush was on.

New companies like Furniture.com, GoodHome.com and Living.com popped into view and were quickly valued at hundreds of millions of dollars.

"It was the hottest thing since sliced bread," said Seema Williams, a senior analyst at Forrester Research, a new-technology research concern in Cambridge, Mass.

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Starting early last year, an estimated half-billion dollars was invested in home furnishings Web sites in a little more than 12 months, said Lester Craft, editor in chief of e-Commerce Business, a 2-month-old trade magazine.

The pressure on established brands to start selling their furniture online was relentless. "It was considered blasphemy not to have a Web site up and running," said Shelly Hale, a senior research analyst in home furnishings and a managing director at Banc of America Securities. "The world was going to come to an end if you didn't sell online."

Then the gold rush turned into a soap opera, as Web entrepreneurs discovered what a tangled web the home furnishings industry can be. Trying to satisfy customers with products they hadn't seen in person was only the beginning. There were also shipping and warehousing, and the need to come up with private labels. (Most large manufacturers didn't want to provide their brands, especially not on someone else's Web site.) There's a big difference, it seems, between ordering a $15 book from Amazon and ordering a $1,500 sofa.

Still, attracting customers wasn't difficult, especially those searching for good prices on small items, like designer sheets with 200-plus thread counts, or on known entities like the Aeron office chair. Then it turned out that what people wanted more than low prices was pain-free shopping. But they weren't getting it.

A woman in California ordered a pair of bookcases from HomePoint.com in Greenville, S.C. They arrived damaged. She sent them back, taking advantage of the company's free return policy. Another set went out and arrived damaged again.

"It was a real challenge to get that order out," said William Herlong, interim president and acting chief executive of HomePoint, who related the story. "I know we sent it back two times, maybe even three. You know, I'm not sure if she was ever satisfied. And I know she wasn't the only one."

Last month, HomePoint closed its online consumer retail operation; its founding chairman, president and chief executive resigned.

Other online companies are making adjustments, both subtle and wrenching. On June 2, Fortune.com, the Fortune magazine Web site, reported drastic reappraisals of the potential value of various furniture Web sites. By Fortune.com's estimates, Furniture.com, the mother lode of home furnishings on the Web, which sells more than 20,000 products online, slid to a $20-million valuation in May, from $255-million in January. Living.com dropped to $140-million, from $600-million in December. Recently, Living.com also laid off 13 percent of its work force, even as it announced an exclusive deal to become the home furnishings Web site of choice on Amazon.com.

Now that the Web sites are faltering, the causes seem all too obvious. "Personally, I kept thinking the furniture industry is the last place I'd look" to sell directly to consumers, said Hale, the research analyst. "What a hard way to make money. I kept shaking my head."

Web sites are simply not touchy-feely. Customers still want to bounce on the mattress, touch the fabric and otherwise feel the product.

Online consumers are often faced with images murky enough to be featured on The X-Files. Just try to decide whether you like the grain of a cherry sleigh bed, or whether a gingham sheet is actually checked. Hit the zoom-in button, and you are still looking at murk -- but close up.

"You can't tell the difference in quality between something that's $3,000 and something that's $10,000," said Bill Sibbick of Stanley Furniture in Stanleytown, Va. "That's our biggest concern."

Stanley, a leading manufacturer, agreed to put its furniture on Living.com but pulled it off less than two weeks later after complaints from retailers who felt they were being betrayed. They said that they had to invest in floor samples and advertising, then watch while customers stopped by, kicked the tires, then went home and ordered the items on the Web.

As it dawns on companies that the question is not "Who is going to be the Amazon.com for the furniture business?" but rather "Who is going to survive?" the focus has also shifted from Sell! Sell! Sell! to an approach that could better be described as service . . . service . . . service. Now the goal is escorting site visitors through a bewildering array of choices into the waiting arms of retailers and manufacturers, the people who physically possess the furniture.

"Everyone's tired of bloodying their foreheads against the walls of existing distribution channels and against such meager rewards," said Brian Carroll, the e-commerce editor at Furniture Today. He noted that Web sales of furniture don't even approach 1 percent of all furniture sales.

Technology may have gotten the Web sites into their predicament, but it is also being promoted as a way out: New systems will offer rotating 3-D views, virtual reupholstery and on-screen room makeovers.

Analysts still expect e-commerce to grow, if perhaps more slowly than initially expected. By 2004, they say, 5 percent of all furniture sales will be made online.

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