Made.com, Westwing, & European Online Furniture

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Christoph can you share some context to the strategy behind launching made.com in Germany?

When I joined made.com, in order to launch in Germany, the company had earned its right to go into the biggest market in continental Europe. They started in the UK and were already selling in France, Benelux and Italy. Germany was always considered a scary, competitive hairy monster, but there was a clear hypothesis on the ground to be successful in the market. I was not only the guinea pig for the German market but also the first presence in continental Europe with an office and things went well. We were able to replicate the trajectory that Made had seen in other markets and executed on the three-year business plan to the dot.

How would you compare Germany's furniture market to that of the UK?

The UK has one third of the purchasing power in and around London whereas in Germany, Berlin is the biggest city with three million people, with most other cities closer to 500,000. The top five cities together are roughly equal to the volumes in London. In the early stages of the launch, we saw that our customers were coming from urban centers, which makes it easier when you're scaling up down the line with an offline presence and also with logistics.

How do German customers purchasing patterns differ from those in the UK?

All the markets follow a similar growth trajectory due to similar demographics across regions, which leads to similar basket sizes and purchase patterns, and our collection is global. Sales seasons were particularly successful in Germany where they are sensitive to discounts. That was part of our early growth, but I have not seen any of the current numbers.

Did you focus mainly on urban millennial or older women, similar to the UK?

I wouldn't necessarily restrict it to women, but affluent urban customers between 30 and 50 years old were initially the most responsive target group.

According to the financials, Westwing has a higher portion of orders from women; is the customer base or the focus slightly different between Westwing and Made?

I cannot speak for Westwing but, at that time, they had a very different model which was exclusively based on an online magazine subscription and regular deals. They addressed female customers with their daily or weekly deals, but I would question whether the purchaser is always female. In the showroom setting, we always had couples, especially those who had possibly bought their first house. Women had a more keen interest in the details and had done some research up front, but the purchasing decisions were not solely taken by females.

How would you describe the made target customer?

Our particular target group was the graduate from IKEA, anyone who was willing and able or tired of buying packs and probably in their third rental apartment, even if they didn't own it yet. Prices were sufficiently affordable, especially on the accessories side, to give people the opportunity to find a different assortment than that of IKEA or other big box offline retailers, which characterized the German market.

How did you plan to position Made versus competitors in Germany?

The key difference was always on the design spectrum. You have to deliver quality within a price level, although average price points even among more premium offline competitors seem to be quite similar, which has to do with global sourcing. Everyone has access to the same producers so it comes down to brand differentiation. Made were focused on being a design-led organization, which remains a key indicator in all marketing materials.

Sourcing and design are intimately tied together, with deep relationships between external designers. That was the biggest advantage compared to big box offline retailers who tend to have a huge inventory risk. A typical IKEA store makes 100 million revenue per year, so there is not much flexibility in terms of taking risks on the assortment. The agility of Made and the strength of their design team allowed them to take more risks in the assortment and, therefore, stand out on the design spectrum.

How does the design approach differ between Made and Westwing?

Are you talking about the permanent collection of Westwing?

Specifically, their permanent collection but also their design approach, because Westwing claim to hire 200 design and inspiration-focused creatives. How would you compare the way Made claim to be design-led versus Westwing?

The DNA or heritage of Westwing stems from a deal-first environment, where they offer their customers special deals 365 days of the year – newness in their assortment – and their heritage is not in producing. Conversely, made.com comes from a production standpoint with a permanent collection which gets iterated behind the scenes. When I was there, a quarter of their 3,000 to 5,000 SKU collection was exchanged every quarter, giving them a gradual transition in newness, which they never advertised because the bulk of their revenue comes from established proven bestsellers.