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1Mby1M Deal Radar 2012: Furniture Lenny, New York City, NY

Posted on Monday, Jun 25th 2012

Furniture remains a product that people still tend to prefer to buy in person. But some e-commerce furniture businesses manage to succeed. SSTL, Inc., founded in 2009, is an e-commerce company that comprises four distinct furniture websites, BedroomFurnitureDiscounts.com, DiningRoomsOutlet.com, DiscountLivingRooms.com, and TVStandsOutlet.com, all under the Furniture Lenny umbrella. SSTL incorporated in January 2010 to establish a consumer-friendly e-commerce platform that uses the latest technology and management science to sell furniture products. 

The idea for the venture came about after co-founders Lenny Kharitonov and Thomas Corrales established a furniture store in Brooklyn, New York, called Unlimited Furniture Group. The company imports and retails a variety of products, including mattresses, bedroom sets, living room and dining room sets, and other home furnishings. Over time, the two recognized e-commerce’s potential in the United States and decided to launch an e-commerce platform.

Initially, the founders had planned to sell products online through multiple targeted niche e-commerce websites while managing the back-end processing.  SSTL wanted to use metrics and analytics to measure and tweak every aspect of the business such as vendor performance, product performance, website performance, and so on, and optimize each aspect to create an efficient and effective business. The company’s home furnishing offerings range from traditional to contemporary, from budget to extravagant. The products are sold via SSTL’s websites and a retail showroom.

SSTL’s living room, dining room and bedroom furniture and TV stands are supplied by vendors with U.S.-based warehouses. This allows the company to save money and then pass those savings on to customers.  SSTL coordinates with various vendors and third-party logistics and delivery services to provide customers with quality furniture at competitive prices.

SSTL was founded by Lenny Kharitonov, Thomas Corrales, Sara Shikhman and Stan Spiegelman. Kharitonov and Corrales each have more than 20 years’ experience in the furniture industry. Shikhman and Spiegelman each have more than 10 years’ experience in finance, law and business development. Each has held leadership roles in large organizations such as Deutsche Bank.

The home furnishings e-commerce industry has both established competitors and start-ups. SSTL sets itself apart from competitors such as Wayfair, Hayneedle, ATG Stores, Cymax, HomeGalleryStores, CarolinaRustica.com, Furniturexo.com, and Blacklion in various ways, not the least of which are providing excellent customer service and having an exceptionally well-trained staff. The company also provides free white-glove delivery for most customers. The delivery service increases SSTL’s overall costs, but this valued service minimizes damage claims.  After delivering the furniture to the customer, the deliverers will set it up in the customers’ homes, also free of charge. Most of SSTL’s competitors don’t offer this kind of service.

Although many consumers still prefer to physically touch and feel the pieces of furniture they want to purchase, this attitude is slowly changing as e-commerce vendors like SSTL capture an increasing share of the home furniture market.

SSTL dedicates a lot of time, energy and resources to training its staff. While most retail furniture stores have a high employee turnover among salespeople, SSTL has proven to be successful at training its sales personnel, which it believes has led to higher customer satisfaction, lower employee turnover, and a healthy and satisfying work atmosphere.

The total addressable market for home furniture sales is $50 billion. E-commerce furniture sales companies command 18% of that market, and the percentage continues to grow.

SSTL does not buy furniture from vendors until the customer places the purchase order. While some competitors hold significant inventory risk, SSTL has a much lower risk profile because furniture is ordered on an as-needed basis rather than holding on to inventory that can become outdated.

SSTL does not ship directly from the manufacturer to the customer but rather ships to a partner warehouse for pre-inspection. Once the furniture passes inspection for quality, it is shipped to the customer.

SSTL exclusively targets retail customers within the continental U.S. who own credit cards. The company’s target segments comprise 50% women and 50% men. Twenty-five percent of them are in the 35 to 40 age range and 25% are in the 55 and over age range.  Approximately one-third of SSTL’s customers have an annual household income of $60,000 to $100,000 and another third has income exceeding $100,000 a year.

In 2011, SSTL generated approximately $3 million in revenues and is growing rapidly. For 2012, the company is expected to exceed $7 million in revenues. SSTL has 100,000 unique visitors per month to its four websites.

The founders invested $20,000 of their own money and have not received outside debt financing or equity financing, but they are exploring various alternatives.

SSTL will continue to grow by expanding its product line and through effective advertising. The founders also intend to grow by tapping into international markets and partnering with stores like Target, Home Depot, and Lowe’s.

Though not actively seeking an exit, the founders would consider selling to a larger organization.

Recommended Reading
Deal Radar 2009: Shipwire
The 1M/1M Deal Radar 2010: Plimus, Fremont, California

This segment is a part in the series : 1Mby1M Deal Radar 2012

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