DFA Hosts a Spirited E-Commerce Summit Featuring Top Technology Brands from the Industry
The Decorative Furnishings Association (DFA) hosted an E-Commerce Summit in LA this week and invited some of the top technology brands in design to offer their insights into where they see technology going in this industry. Representatives from 1stdibs, Fuigo, Designer Inc, Houzz, Ivy Mark, and Dering Hall gave talks. These are some of the highlights from the summit.
The Internet is Changing Design
The internet is disrupting industries from travel to commerce, and while high-end design is slower than other industries to adopt to this change, it does not make it any less relevant. As Sarah Liebel from 1stdibs said: “The internet is changing things, and no one is going backward.”
Lindsay Pang from Houzz stated the design industry and home furnishings specifically are starting to catch up. Between 2011-2016 retail sales in home furnishings doubled and is expected to triple by 2021.
The group identified five main ways the internet is changing design:
1. Big purchases are now made online
From companies like Farfetch, whose gross merchandise value was $757.7 million in 2016, to Compass who closed an estimated $600 million in sales in 2017, consumers are growing less hesitant to make major purchases online.
Online purchases, like the one pictured above, are becoming common at higher price points.
In the design space, 1stdibs is seeing a similar trend. They launched e-commerce in early 2013 and now do $250M a year in sales. The average order value has increased 30% in the last five years to $2600.
While more consumers are going online, many manufactures have spent time in product development rather than in distribution. As a result, they will need to migrate to third-party vendors like 1stDibs to handle distribution or start investing in that aspect of their business in the coming years.
“Buying online is about more than convenience,” said Pang. “It’s about having a superior shopping experience.” High-end brands and manufacturers will be forced to adopt to this trend now that consumers are willing to make big ticket purchases online.
2. Designers and brands are going global
The internet gives brands and designers access a global market and international inventory. Brands willing to deal across borders offer designers unique products from around the globe. The internet makes interior design an international effort bringing fresh products and points of view to more projects.
Sites like Dering Hall and 1stdibs are seeing this trend firsthand. 18% of the online traffic at Dering Hall is international. The sellers on 1stdibs are from over 30 countries and buyers are from 141 countries. The internet has abolished many borders, making the days of regional sourcing and services a thing of the past.
3. Designers are Under Pressure
Watered down versions of design are putting more pressure on design brands to articulate the value of high-end products. Designers are also facing great pressure from the market to defend their pricing while dealing with more competition from retailers offering design services.
The design enthusiast who hires a professional has been completely transformed by the internet. Consumers today are more educated on design and generally want to provide more input. From social platforms like Instagram and Pinterest that constantly offer inspirational design images, to the DIY culture of HDTV, Google and YouTube, many consumers now believe they know design. They are both savvier and more demanding. While designers might not like it (54% of designers say their biggest problem is the meddling client, according to Sandow), it is a dichotomy that is not likely to go away. If consumers want to be involved in the process, designers might need to offer them the tools to do so. Technology can help.
4. Administrative tasks are being automated
Studio Designer, an accounting platform for interior designers, has 7,800 cloud users and moved $1.8 billion through their platform last year. Business management platforms from Ivy to MyDomaStudio are on the rise. And while these systems make designers more efficient, they are not a replacement for the personal connections made within design.
“Relationships are at the core of what this industry is all about,” said Lee Rotenberg from Ivy Mark. “Technology can make those relationships better and more profitable.”
5. Designers are spending more time sourcing products online, while showrooms and design centers are seeing decreased foot traffic
Many of the speakers discussed the trend of design professionals spending more time sourcing online. Houzz, 1stDibs, and Dering Hall all have thousands of members on their trade programs, with 1stDibs also claiming a run rate of over $100 million from the trade specifically.
“Designers don’t have the luxury to stroll around design centers anymore,” said Keith Granet of Studio Designer. “They sit in their office on their computer and they start purchasing and sourcing.”
According to the Dering Hall Spring Survey, a larger percentage of professional designers (84%) are sourcing products online compared to in-person at design centers (71%). Adam Sandow stated that not only are more designers sourcing online, they are spending more time doing it. He quoted the 2017 Universe Study saying 39% of designers time is spent looking at materials and products. The Dering Hall Spring Survey found design professionals and their teams spend an average of 34 hours sourcing product for each project. As more designers spend time online sourcing products, brands will migrate to digital to be where the designers are.
Consumer Expectations are Changing
Consumers, both end-consumers and trade professionals, are changing their expectations with advancing technology. Consumers expect immediate, responsive service in all aspects of their lives. 64% of consumers and 80% of business buyers say they expect companies to respond to and interact with them in real time, according to Salesforce.
Here are the three key ways consumer expectations are shifting and what it means for the design industry:
1. Transparency in pricing
Both professionals and their clients want the ability to research the costs of items and services. This is not unique to design, it’s simply an expectation that has evolved with the internet. On the positive side, this means that sellers have more buyers they can connect with.
More brands will move to two-tier pricing and more designers will be tasked with promoting their overall value. “Designers who are working on a markup model where there is not transparency into pricing are struggling with this trend the most,” said Liebel. It will not be an easy transition, but due to market demand and the influence from the internet, pricing transparency is something the design industry might need to embrace.
2. Access
Design professional want more access to more products, vendors, samples and materials from brands, but the industry is having trouble offering this access. As Maury Riad from Fuigo said: “A typical design project here in Malibu might take 200 purchase orders and 200 transactions from 200 places. It’s a bad experience.” Design professionals are stuck dealing with a fragmented marketplace while the internet is making this experience unacceptable. This is a challenge the industry will have to address in the coming years.
3. Speed
The internet has reset our expectations for speed of delivery and it is something that will have a more pressing impact on design as younger designers, who have grown up with the internet, become a larger force.
The Power of Aggregation
Consumers are expecting transparency, access and speed in their online experiences. Addressing those needs comes down to two key components. The first, aggregation, can lean heavy on the power of technology to pull together the disparate forces in design. Aggregation is the foundation of some of the most powerful companies in the US – from Apple to Google to Amazon – and it should be a driving force in the design industry as well.
Like Netflix and movies and Amazon and consumer goods, there is a need to aggregate products in high-end design. Pioneers like Dering Hall and 1stdibs are starting to pull together high-end designs into seamless, digital design centers, but the group at the DFA E-Commerce Summit felt there was still a long way to go.
Platforms like Netflix, pictured above, have mastered the art of aggregation.
The benefit of offering multiple brands under one digital platform is that smaller, underrepresented brands can be found by more designers. Dering Hall has an extensive artisan brand program to showcase products designers cannot find anywhere else. 1stdibs recently launched a New and Custom category on their site and have added 600 artisanal makers in the last 12 months alone.
These types of artistic brands often have custom elements and are difficult to distribute online. “The artistry of these brands must show through,” said Riad. There was some discussion around exploring a multi-channel or omnichannel approach to address this concern.
Brands like Dering Hall and 1stdibs provide a unique experience to registered trade users on their platforms by offering expedited service, insight into trade pricing, and more access to unique products.
A Surprisingly Non-Technical Solution
One element many of the speakers at the DFA E-Commerce Summit touched on was something that had very little to do with technology. When addressing the concern of battling questions on pricing or value, there is a need for designers to more effectively convey the value they bring to every project.
Designers are part visionary, part artist, and part project manager and that combination of services, which can’t be replicated online or on a mass scale, is what the industry must celebrate. Designers pull many moving pieces into a single process that creates more than just a space, it creates a spirit that is part of a lifestyle. Certain aspects of design can and will move online, but the aesthetic, talent and relationships a designer brings to a project must be a personal, full-service endeavor.
There is a void in the marketplace for a single voice to represent the market. The DFA and their new program DoItFor is starting to move in that direction, but with the added market pressures, a unified voice will help elevate the entire industry and clarify the value professionals and quality brands bring to design.
This is a business about trust and relationships and at the end of the day, no amount of technology will change that. If you are interested in learning more about how design is moving online, join us at our complimentary webinar next Thursday, May 17 at 1:00 PM Eastern.
You can enjoy all the presentations at the DFA E-Commerce Summit thanks to the Live Stream offered by Ivy Mark below.