The April 2017 issue of Furniture World included a discussion of the
advances in home furnishings transportation and logistics that will
change our industry on a fundamental level. Topics included evolving
customer expectations for speed and transparency, delivery strategies
to meet these needs, the deluxing dilemma, the reverse logistics
challenge, and the influence of Amazon and Wayfair. If you missed the
article, find it at http://www.furninfo.com/furniture-world-articles/3674.
In Part 2, we look at the future of home furnishings delivery with a
discussion of commingled models, smart trucks, robotics, augmented
reality, innovative pricing models for furniture delivery, and more.
Commingled Delivery Model Possibilities
Christian Lafrance, the CEO of Clear Destination, a company devoted
to automating the home delivery process for home fashion goods like
furniture, appliances and bedding, envisions a new model for the home
furnishings industry. “At the end of the day customers simply want their
furniture, appliances and mattresses delivered to their doors by
professional teams at a date and time that fits their schedules” he
observes. “This has proven to be a huge challenge.
“Our industry has systems that drive everything in the background. These
include manufacturers’ systems, their supply chains, companies like
mine, and others involved in the process. These systems often do not
communicate well due to a lack of coordination. It’s my view that the
way it’s done right now, it’s not sustainable. There are too many ups
and downs in daily volume across the whole supply chain to plan and
deliver efficiently. Even if we just consider what’s done at the final
mile in large markets, it isn’t possible for most retailers to maximize
delivery efficiency and reduce cost in a standardized way.
“However, individual retailers share the same customers and deliver to
the same neighborhoods every day. This creates an opportunity because
their trucks are not full all the time."
Furniture World asked Lafrance if furniture retailers should adopt a model more like UPS.
“If I order a cover for my phone, from somewhere in the USA and have it
shipped to Canada,” he replied, “that cover will probably go through
seven terminals before it’s delivered, so that’s not an efficient model
either. But there is an opportunity to improve at the supply chain
level, to use common infrastructure to pack and move products in a more
integrated and consolidated way.
“Moving towards a model that consolidates shipping to create density
where you didn’t have density before is the way to go. This model
requires that multiple supply chains come together to get home
furnishings into customers’ homes.”
The supply chain of the future he believes, will give up delivery on
branded trucks so costs can be reduced by using a larger, standardized
“In the supply chain of the future, furniture will be shipped to a consolidator and commingled for home delivery,” he suggests.
Lafrance tells us that there has been resistance to, for example, brick
and mortar furniture chains mixing their home deliveries up with Sears
and BestBuy on white trucks in their home areas. That's because there
are real, benefits to branded home delivery. These include “free”
advertising on branded company trucks and the ability of individual
retailers to use branded last mile delivery to achieve customer service
and competitive goals.
Rob Davis, Vice President of Client Solutions at Diakon Logistics
explains the resistance to commingled delivery voiced by independents
and regional chains. “Many of the retailers we work with are family run,
multi-generational, and fairly regionalized. Their core competencies
are never on the logistics side of the business. From that aspect alone I
think it's important for guys like us to think about how to solve that
equation and find efficient solutions for them.
"There are pros and cons to consolidating shipments. Retailers can gain
efficiency by creating more efficient routes. But our experience is that
most home furnishings retailers are looking for individual white glove
delivery solutions. They have different product types and varying needs
for set up, installation, delivery windows, the customer greeting,
installation, follow-up, and how the guys on the truck should dress.
"With commingled trucks it’s difficult to manage how a retailer’s
customers are greeted or surveyed. From that perspective, white glove
home delivery may start to edge toward becoming threshold delivery,
depending on what’s being commingled on the truck, the price points and
volume being delivered for each retailer," Davis concludes.
“For these regional retailers who have doubts about a commingled model,”
Lafrance adds, “it may make more sense to run their own trucks in areas
where they have what they consider adequate density. But, for
e-commerce consumers who live far from a store and the delivery density
isn’t there, using shared trucks for this e-type of supply chain is a
no-brainer. For these retailers there is an opportunity to use a mixed
model with both white and branded trucks. This kind of mixed model,
however, only addresses the last mile. If last mile trucks are full, but
first mile trucks are half-full, it’s inefficient with added costs
across the supply chain all the way to the consumer. To address this
problem, we must look at the supply chain as a whole, all the way from
China, Mexico or Vietnam to the customer’s door. To run full containers
and full trucks efficiently at every point along the supply chain, to be
full all the time requires scale, and I’ve never seen any individual
company that can achieve that.”
A Third Way
Patrick Cory, CEO at Cory Home Delivery, thinks there is a third way
coming that will be a game changer for independent furniture retailers.
“The commingled model Christian describes tends to work for smaller
retailers with one, two or three stores in dense metropolitan markets,”
observes Cory. “These smaller stores tend to be very good at selling and
design, but not very good at warehousing and logistics. So, they may
outsource their entire back-end to a third-party company that
consolidates perhaps five or six retailers under one roof in one
warehouse. Each retailer gets the level of service they pay for, but
their products are all delivered on the same trucks. They gain
efficiency, productivity and density. If each one of those retailers ran
their own trucks, it would cost them at least twice as much to provide
the same level of service because individually they don’t have enough
volume. In places where retailers don’t have a lot of volume like
Wyoming or North Dakota, it makes sense to combine deliveries to achieve
more delivery frequency.
“Right now, the largest home furnishings retailers have enough density,
and do enough volume, that they want to have complete control over their
supply chains. It makes sense for them to have their own warehouses and
“But, there’s a new delivery model coming,” Cory forecasts, “It won’t
necessarily change what the big retailers are doing locally, but it will
affect what they do nationally. It will also, absolutely change the way
smaller retailers do business. Growth in the industry is not going to
be primarily from brick & mortar sales. It’s going to be internet
sales growth from both brick & mortar and internet-only retailers.
Driving Fundamental Change: Internet Sales
“Companies like Wayfair and Overstock,” Cory continues, “can afford to
offer millions of SKUs, because they don’t hold inventory. And, for the
most part, they have delivery networks where products go right from the
distributor or manufacturer to a home delivery center. In order for
local home furnishings retailers and even larger retailers to compete,
especially online, they will need to offer a product selection that’s
too large for them to hold in inventory. This is going to happen in the
electronics and appliance businesses as well. Retailers are going to say
to their product suppliers, “Look, we’re going to sell your product
on-line, but we’re not going to inventory it, either because we don’t
sell enough of it, or we don’t want to put it on our floor.
"They’re going to rely on home delivery companies and manufacturers to
provide what’s called end-to-end services. This is what Amazon does,
really very well through their Amazon Marketplace. For example, a
retailer that wants to expand selection from 1,000 SKU’s to 10,000 will
be able to send small items, those that are UPS-able, no problem. UPS
and FEDEX are the best. Big furniture items that UPS and FEDEX really
can’t handle, or are just too costly for them to deliver, need an
alternative solution. To address this need, home delivery companies are
starting to offer these end-to-end services.
“So, third party logistics companies like ours are going to scale up to
work with the trans-ocean shippers and with the manufacturers. We’re
going to provide drayage services from the port to the warehouse. We’re
going to either hire LTL companies or provide LTL or truckload services
to get products from point A to point B, then to our home delivery
center. And obviously, third party logistics companies are going to
provide last mile home delivery to consumers. Retailers will never touch
the product. It will be pulled directly out of the manufacturer’s or
the distributor's inventory. What retailers will do is to sell online
and make a profit. Everything else will be handled behind the scenes,
including customer service and reverse logistics with technology that
will provide transparency and complete visibility throughout the supply
chain all the way to the consumer. That’s going to be the future state
of our industry."
The Future of Delivery Technology
In addition to changes wrought by internet sales, cost considerations
and consumer expectations, advances in technology are likely to have an
"By 2020 or 2025," notes Clear Destination's Christian Lafrance, "we
will see computer-aided trucks that can self-drive. Orders will flow
directly to the truck’s IP address and it will adjust routing and make
stops on it’s own."
Diakon's Rob Davis also believes that self-driving vehicles will have an
impact, but won’t substantially change the nature of final mile
delivery. "Driverless transport will disrupt the long haul portion and
the way carriers look at this business, especially with regard to the
number and location of distribution centers.
“Many traditional, family owned retailers have a single distribution
center and are limited by their ability or willingness to invest in
additional DC’s," he explains. "Of course regional brands strategically
invest in DC’s that can service multiple markets.
“A big challenge, especially for independent retailers, is shipping to
customers over long distances. For many right now, it isn’t worth the
capital investment to build out additional DC’s, so these retailers tend
to focus on saturating their home markets to create delivery density.
Moving products across the country might take five DC’s, however, once
autonomous delivery vehicles that can drive 24/7 arrive, the economics
may dramatically change. If products can be moved around faster and more
efficiently using self-driving trucks, the necessary number of DCs
required to service areas outside of a retailer's traditional market
will change, and this will also change where and how the last mile is
Patrick Cory believes that other emerging technologies will have more
impact than self-driving technologies, especially in the shorter term.
“Self-driving trucks are coming, but it will probably take 20 years
because infrastructure and regulations will all have to catch up with
"It’s one thing to take a load of furniture from North Carolina to New
York on a tractor-trailer. That truck could drive itself from point A to
point B. That doesn’t really change the local delivery model. With
self-driving trucks you’re only covering part of that supply chain. Once
products arrive at the local market it may be possible to self-drive
the final mile. But unless we develop furniture that will grow the kind
of legs that can self-deliver, we will still need people to carry
products into customer’s homes.
"And of course, it depends on what a retailer's delivery model is, if
products going to a home delivery center will be opened, inspected,
assembled, touched up, whatever. So, self-driving technology is going to
have an impact on the supply chain. But right now the technologies
that potentially will have the most impact on our industry are the kinds
of warehouse robotics currently in use at Amazon.
"Today we depend on local labor to run warehouses. It’s an element that
can’t be outsourced. Labor is already tight and it could get much
tighter. Short term, likely changes in immigration policies, especially
in places like New York or New Jersey will have short-term negative
impact on furniture warehousing and delivery. Lots of our workers are
first generation here.
"Future warehouses," Cory continues, "even those handling items like
furniture and appliances will use much less labor. Self-driving lift
trucks will move palletized products where they need to go without human
drivers. Potentially this could have as much or more impact on our
business as self-driving trucks. A 500,000-square foot warehouse that
right now employs 100 people might be able to reduce that number by 50
percent. That’s 50 percent less labor costs using machines that can
operate 24 hours a day, essentially in the dark. This could have a
significant impact on costs. So, I think the first impact you’re going
to see is actually going to be inside warehouses, not necessarily on the
3-D Printing & Delivery
Another other big development on the home furnishings horizon that may affect home delivery are 3-D Printing technologies.
"There’s a foreseeable future," suggests Patrick Cory, "where a customer
might walk into a store, for example a retailer like Restoration
Hardware. Let’s say the shopper sees a product that’s the right product,
but it’s not the right color or it needs to be 12 inches shorter and
four inches wider. In this potential future, using 3-D printing, instead
of having furniture made overseas and waiting weeks for delivery, it
will take days to manufacture customized furniture. These machines are
going to be inside of distribution centers like ours. And when the
product is ready it will be finished, inspected and delivered locally.
Manufacturing will shift back to the U.S., not because our labor’s ever
going to get any cheaper, because it won’t, but because technology will
advance. The furniture will still have to get moved from point A to
point B, but instead of it making a trip from Asia to the final
destination, it will be all local delivery. It’s going to allow for
much more customization and cut down on the time between ordering
furniture and its delivery to the consumer.”
Augmented reality will almost certainly impact how home furnishings
retailers display and present their wares, but how might it affect
"A big challenge with home delivery,” says Diakon’s Rob Davis, “is not
knowing what environment we are going to encounter until we’re there in
the house. Any data we might gather and distribute with augmented
reality such as confirming addresses, measurements, stairs, elevators,
etc., would be insightful. I can’t say how augmented reality would have a
huge impact in terms of executing delivery, but it is an exciting
“Augmented reality like Google glasses,” adds Patrick Cory, “will
have less impact than advances in routing technology, or the ability to
have products, inventory systems and delivery trucks integrated in the
internet of everything. Right now it's most important that we find the
best routes, get faster inventory updates, load trucks for the next day
based on what’s coming in today. That can be done now through scanning
technology, but it’s still not 100 percent efficient. The idea of moving
to RFID (Radio Frequency Identification) tags or something similar in a
much more automated fashion is a more promising technology."
Advanced Delivery Pricing
"It's my opinion that every single customer should be charged a
different delivery price,” states Rob Davis. “It should be based on the
true delivery cost associated with the work that's actually being done.
The tendency, however, is for retailers to simplify delivery pricing.
"Today, retailers charge an average set delivery fee, bake it into their
cost of doing business, or charge based on a delivery radius.
"What we need in our business is a more dynamic model that takes into
account each item delivered in a way that best manages efficiencies and
“Such a model would take into account what’s being delivered, where it’s
being delivered, when it’s scheduled for delivery and the number of
deliveries,” he notes.
"Let's say that a retailer only has one delivery to make on a certain
day, it might cost $300. If information on future sales orders to be
delivered to that same zip code were available, that same retailer would
more easily be able to reschedule, fill the load, and bring down the
average delivered price.
"A good way to understand this is to look at what Uber is doing with UberPOOL.
”Riding Uber, the cost for a business traveler to get from an airport to
downtown might cost $35. But using UberPOOL, it’s possible for the
traveler to pay only 10 bucks. All the rider has to do is to agree it's
OK for the driver to take a detour of up to five minutes to pick up
another customer going along the same route. The passenger saves $25 in
exchange for a potential five-minute delay. It becomes a communal
experience based on an algorithm that can figure out how to make a route
“So instead of commingling goods from different kinds of retailers on
the same truck, a model like UberPOOL's would allow retailers to create
delivery efficiencies and pricing flexibility within a single retail
"Here's another example. A hypothetical furniture retailer has six
deliveries scheduled on a particular day, with the first delivery
located 80 miles away from the DC scheduled for 9 a.m., and the five
remaining customers scheduled for an afternoon delivery window.
Obviously this retailer doesn’t want to send out a truck 80 miles to
make the 9 a.m. delivery, then send out another truck to do the
afternoon deliveries. The obvious solution is offer the 9 a.m. customer a
later delivery time in exchange for cutting the delivery fee in half or
eliminating it. In environmentally conscious markets like California,
consumers might also be persuaded to take the offer if it were explained
to them that the change would greatly decrease the carbon footprint of
From the first mile to the last, furniture delivery will undergo huge
changes in the next five to 10 years to become faster, smarter, and
Questions about any of the topics discussed in this two-part series can be directed to the interviewees at email@example.com.
Russell Bienenstock is Editor-in-Chief of Furniture World Magazine, founded 1870. Comments can be directed to him at firstname.lastname@example.org.