Made.com launched in 2010 with the help of £2.5m in venture capital, and quickly caught the industry’s attention. The furniture industry’s trailblazer in digital disruption, the UK-based vertical forged a new path of simplicity, exclusivity and fair prices – and despite the changes that have beset the market since, it continues to play by its own rules. CEO Philippe Chainieux tells Paul Farley why Made’s model is fit for the future …
A successful £40m funding round and relocation to a spacious office in Shoreditch signals the start of a new phase for Made, says Philippe.
A former online business and telecoms executive – as CEO of Meetic, he oversaw Match.com’s European online dating portfolio – Philippe joined Made in 2013 as COO, before being promoted to CEO in 2017 to replace co-founder Ning Li (who remains on Made’s board and a major shareholder).
Today, he’s clearly enjoying the brand’s new home – a five-floor building which runs from basement breakout room to office space, up to a loft showroom flanked by installations presenting some of Made’s best work in situ.
Despite the size of the space, this display is just the tip of the iceberg. In one of many parallels with the fashion sector, Made releases new products on a seasonal basis, or as limited-edition capsule collections, and it does so on a prodigiously rapid cycle that averages two new collections each week – amounting to some 2000 SKUs a year.
For the rest of the industry, developing a new range typically involves considerable time and expense. It’s a model based on long-term projections, bulk buying and high initial outlay – and in Philippe’s opinion it has made the entire sector incredibly risk-averse.
“The best way to find out if a product is going to get traction is to make it go live,” says Philippe, whose supply chain is so advanced that it can respond rapidly to emerging trends, throwing hundreds of ideas at the wall to see which stick.
Made works with more than 100 factories, which manufacture each order on a just-in-time basis. Once on sale, each range is reviewed after just four weeks. Many are discontinued, while some, like Philip Colbert’s Rodnik armchair, survive to create more of a legacy (although Made’s most enduring product is just two years old).
There’s also significant cost implications for the consumer, which was clear in Made’s promise to ‘cut out the middleman’ all those years ago.
“Choice, trend, deals, price … when you’re developing new ranges, you can’t get everything right. The established fashion and furniture players tend to offer huge discounts on their end-of-line products each season,” says Philippe, and explains that the consequences are twofold – firstly, the consumer always expects a bargain, and secondly, the losses incurred from those poor performers have to be factored into the initial pricing.
Essentially, this gamble means that prices rise across the board, and the consumer ends up covering paying for the retailer’s margin of error.
“That’s not how we work,” affirms Philippe. “Our agility makes us different to anyone else – we can take huge risks, because our products have the capacity to fail.”
It’s taken substantial effort to reach this point. At the outset, Made lacked any ability to buy in volume, so had to convince would-be manufacturing partners of its vision.
“The way we work with factories is quite unique,” says Philippe. “Some retailers buy their product directly from the factories – but that doesn’t mean they’re developing their own. We are, and I believe ours is the only way forward.
“Since day one we’ve had people on the ground, developing products and checking the manufacturing status of each range. From drawing to technical specification, it’s a collaborative effort. Our manufacturing partners’ capacity to understand how things are done, where the raw materials are coming from, and how the manufacturing process is set up, is absolutely critical – that’s where you win or lose when you’re developing new products.”
As a young company, Made was able to scratch-build its technology to suit its needs, unburdened by an inflexible legacy IT platform. It could easily integrate new functionality and compensate for any inefficiencies.
“The way the IT architecture has been designed is specific to us,” explains Philippe. “Everything, from ordering to merchandising, is fully integrated. We can sell in-store, online or direct from the factory, and we can see what is happening with each individual product at every step of the supply chain.”
Made has invested a great deal in analytics and machine learning to learn from and exploit the data this model generates. “Our founders were clear from the start that we would not allow supply chain inefficiencies to end up in the product price, and that the accuracy of our margins must be controlled at every step,” says Philippe.
Thanks to the clarity of that initial vision, Made’s ethos has held up surprisingly well.
“There’s no need to deviate from our core philosophy,” says Philippe – at a time in which many UK nationals are opting to rebalance their own-brand offer, one way or the other. “It’s absolutely critical in the way we define ourselves. We are a brand first and foremost, not a reseller or retailer. Yes, we probably could’ve grown faster through third-party distribution, but at what cost?”
As it stands, Made’s appeal is such that investors have flocked to its cause time and again.
Catalysed by its launch capital, it raised a further £6m in 2012. The following year, Made went Continental, in its first foray into a European conquest which, to date, has come to encompass France, Italy, the Netherlands, Germany, Austria and Switzerland.
Amid rumours of an IPO, Made raised £38m in growth capital in 2015. It became a profitable business – no mean feat for any big ecommerce player these days – in the UK in 2016, then in France and the Benelux in 2017, when it made £127m in revenue (up +40% YoY), and, on a wider group level, broke even and reported positive cash flow by the end of the year.
“We’ve been profitable in the UK for the last two years, despite the adverse impact of Brexit,” says Philippe. “In Europe, it’s taken a couple of years of investment in each market’s infrastructure to make them work, but they’re generally tracking the same trajectory we’ve seen in the UK. Our capacity to build a brand and a unique proposition, then replicate that in new markets, proves the long-term sustainability of our business model.”
In April this year, Made announced that it had raised a further £40m. However, this latest funding round is different to those previous efforts, says Philippe, “as we didn’t technically need to raise the money”.
So, why go to such efforts, and why now?
“The transition from the high street to online retail is accelerating,” says Philippe. “Just look at how much the fashion industry has changed since 2013, thanks to ecommerce – the landscape is unrecognisable. And I think we’ll see a similar thing happen to the furniture market, in a meaningful way.”
With its intuitive sales channels, design pedigree and price points already resonating with younger audiences, Made is well positioned to capitalise on the emerging opportunities – at home in the UK, and across the entirety of Western Europe, which will soon come under its sway thanks to that £40m investment.
“We have a unique window of opportunity before us,” says Philippe. “Millennials are not the core target group for furniture, but they will be in the next five years. We are uniquely positioned to grab that shift in demographic composition, and we want to do it on the largest possible scale.”
According to Philippe, Made’s lofty ambitions – “which were probably questionable a couple of years ago” – are now clear, thanks to the inexorable growth of online shopping. “The consensus is that online value will see double-digit growth in the next five years,” he says, “and it may well be that as much as a third of all market transactions are made online by 2022.”
More and more people are trusting digital brands to deliver simple, reliable purchasing experiences – furniture included. Even final-mile delivery – the area in which the industry has “the greatest opportunities to improve”, says Philippe wryly – is steadily getting better, thanks to new scheduling technology and brand transparency.
Then there’s Made’s showrooms. As so many pureplay ecommerce brands have conceded, clicks can benefit a great deal by having a few bricks beneath them. As well as being one of the first furniture brands to utilise pop-up shops, Made opened a showroom in 2012, in London’s Notting Hill, before going on to secure locations in Batley, Soho, Leeds, Paris, and, most recently, Birmingham.
Philippe says these spaces are “not about transacting – they are a marketing proposition, offering the touch-and-feel factor”, but their importance is such that Made is likely to expand its UK footprint in the near future (physical expansion in Europe is already going ahead with gusto).
There are opportunities to more rapidly expand the number of physical touchpoints, but the CEO again says that brand dilution is too high a price to pay. “We want to own the relationship with our customers,” he says. “If we traded through concessions, for example, we’d be putting someone between us and the customer – and we’d rather be building a long-term relationship with our customer base.”
To this end, Made is entering wider lifestyle categories such as garden accessories and bicycles, and has launched the second phase of TalentLab, a platform from which new designers can pitch for consumer backing. It’s essentially Kickstarter for furniture designers – but unlike the established crowdfunder, it comes with Made’s manufacturing and distribution capabilities.
“TalentLab offers every young designer access to the market,” says Philippe. “The designs which receive the most pledges get access to our large European consumer base. This enhanced engagement also means each customer becomes the co-curator of a range, and has a say in its future. It’s a real step change in the way we’re interacting with our audience.”
Made hopes that the platform will launch around 200 new designs each year, taking the brand’s already-extensive relationship with the design community to a new level.
“We want the design community to be part of the ecosystem we’re building,” says Philippe. “The number of collaborations we have in place today makes us so different to anyone else – with so much external input coming on line, we’re guaranteed to be on trend.”
Despite its democratic, multivocal design process, a handwriting of sorts has emerged at Made. Phillip defines it as “colourful, fine design with a modern outlook”, informed by the brand’s transparent and “very European” DNA.
“Most importantly, we’re offering a curated range that’s exclusive to us,” he says, when quizzed about Made’s place amongst Europe’s hard-hitting ecommerce leaders. “Our battle is around a proposition and an arrangement that you’ll never find elsewhere.”
It sounds like the perfect match for a growing demographic of young furniture buyers.
“Fifteen years ago,” says Philippe, “I had the good fortune to start a small website in France that would become the largest dating platform in the world. Back then, the most difficult aspect was hiring people – there was definitely a stigma attached to this line of work, and to online dating in general.
“But I knew in my heart that the internet was the most powerful tool for connecting people, and that I just needed to build trust in it – by developing the system, the experience, and the brand – before expanding Match.com on a global level.
“There’s a lot of similarities with Made. Eight years ago, it wasn’t extremely obvious that people would buy designer sofas online – look at how that’s changed. Now we’re on a journey to build that credibility on a huge scale.
“It’s all about disruption, innovation, and, most importantly, trust.”
This article was originally published in the July 2018 edition of Furniture News magazine.
