Amazon Signals Furniture Ambitions with Private Labels

Category may not be 'Un-Amazonable'

Author: Andria Cheng

November 13, 2017

Already the leading online furniture retailer, Amazon has amped up the pressure on the sector with the launch of two private-label furniture lines. 

Amazon’s Rivet and Stone & Beam lines are still too new to have made a big sales impact, but the launches are a signal that consumers are growing more comfortable with the idea of online purchases of furniture.  And that in turn is a clear warning sign for competitors in a sector that has been considered somewhat less at risk of being "Amazoned." 

An image from Amazon's Stone & Beam shop.

Even before it launched its private labels, Amazon already dominated online furniture sales. Amazon holds 42.4% of the US online home and kitchen goods market, according to Slice Intelligence data. No other online sellers—including Wayfair at 4.2%; Target at 3.8%; and at 3.2%—held more than 5% of the market.

Walmart had a 3.4% share. Macy’s, Pottery Barn, Restoration Hardware and West Elm each had a less than 3% share of the online market in that category, according to Slice.

Slice, whose data is based on online receipts from a panel of 5 million online shoppers with the latest study covering purchases in the past two years through September, said Amazon’s online home goods category growth of 37% in the past year also has outpaced the industry category growth of 25%. 

That powerful growth can be seen in data from One Click Retail, which estimated that Amazon's US furniture sales for the year through August 5 rose 50%, with particularly strong growth in bedroom furniture.

Between 2011 and 2016, total brick-and-mortar store sales of furniture and other home furnishings rose an average of 1.9% each year, compared to 16% online, according to Euromonitor.

“The rollout of private label furniture and home decor brands is a big bet in a category where consumers often feel the need to physically evaluate products before purchasing,” said Ken Cassar, principal analyst at Slice, in a note. “The big question is whether Amazon’s quick shipping and 30-day evaluation policies will get consumers over that hurdle. The one thing that is clear is that this move is uniquely possible for Amazon because of the resources it has invested in distribution capabilities over the past 10 years.”

For the two brands, Amazon promised 30-day free returns and one or three-year warranties respectively. All the new products basically qualify for free shipping since they exceed Amazon’s minimum free-shipping threshold of $25.

In comparison, for instance, West Elm said on its website that customers may be responsible for return shipping costs of $13.25 for large items depending on their reasons for returns.

Amazon already sells some private-label home furnishings products such as Pinzon sheets, which have become among its best selling in that category. For instance, a $69.99 flannel sheet set on sale for $52.08 and exclusive for its Prime members alone generated nearly 3,800 reviews, with 84% ranking the product five stars.

Many of the reviews of the new furniture lines are mixed and come from Amazon Vine reviewers, who receive the products for free in exchange for honest feedback. 

One review in particular—not from a Vine reviewer—encapsulates promise of the category for Amazon, but also the challenges of meeting customer expectations:

“It's exactly what I hoped for! it’s risky buying furniture sight unseen but I’m glad I did. Love the fabric and the color is pretty true to the picture. The legs screwed right in to the bottom. I wanted PB furniture - but this is less expensive and just as cute!! ... I got this in 6 days but I also ordered two chairs and a sectional sofa on the same day (Nov 3) and my estimated delivery date for those is Nov 28. Not cool.”