Furniture is one of the most competitive fields in the German eCommerce market. Though brick-and-mortar retail is still very healthy, online sales have grown rapidly in recent years. 37% of German consumers have purchased furniture online, up from only 22% in 2015. Ikea still dominates the European Furniture market, but brick and mortar retailers are gradually losing market share to online-only competition such as Home24, Otto.de, and Amazon. Furniture, once depending on showroom displays and lagging behind other markets in eCommerce growth, is now moving swiftly into the online domain.

Ikea has made no secret of its need to invest more heavily in eCommerce in order to remain competitive in today’s market. Similarly, last month Home24 announced its intention to “challenge Ikea’s dominance of the European furniture market.” But Amazon has a crucial advantage over both of these competitors: consumers already spend a lot of time on Amazon when they’re not in the market for new furniture. While Ikea, Home24 and other specialized retailers compete for the greater share of search results on Google, Amazon doesn’t have to because so many consumers are skipping search engines entirely.

Furniture in Germany: The Amazon Effect

 

Amazon’s largest competitor in Germany is Otto.de. The German online-only retailer, which is also the parent company of North American furniture chain Crate & Barrel, is a generalized e-commerce site operating primarily in Europe. Amazon, however, is rapidly closing the gap, with 44% YoY growth in 2017 and already holding more than double the eCommerce share of both Ikea and Home24. Amazon’s recent investments in this space – the launch of Amazon Home, the building of new warehouses in Europe for large furniture and appliances, and the release of two new private brands, Rivet and Stone & Beam – reveal the company’s aspirations as a major player in the furniture space. Brands looking to compete online in Germany would be wise to invest in an Amazon-first strategy.

Furniture in Germany: The Amazon Effect

 

What’s Big

Amazon’s Furniture sales in Germany are dominated by two categories which together make up approximately half of all sales in the product group: Home Office Furniture and Mattresses. Both categories have seen their growth stabilize in recent years to a steady 12 and 19 percent respectively.

Home Office Furniture is led by the DX Racer brand of gaming chairs. While in the U.S. this category is led by the private brand AmazonBasics which produces basic consumer-grade office chairs, German shoppers are spending more money for higher-end products. One third of all first-party sales in this category are controlled by the DX Racer brand.

Mattresses, on the other hand, are led by cheaper products. While still a major category by size, the leading item is a foldable, portable mattress by Gigapur and many of the other top-selling mattresses are inflatable and/or low-cost products. These two top categories illustrate how consumer habits vary depending on the product type – on the one hand, brands need to understand the habits of Amazon shoppers in order to market effectively on the platform, but on the other hand consumers are becoming more comfortable buying higher-end products on Amazon and brands may find success by filling a niche that has so far been overlooked.

Furniture in Germany: The Amazon Effect

 

What’s Growing

The fastest growing category in Germany is Living Room Furniture – in fact, at the time of writing this category has already surpassed Mattresses, 2017’s #2 category, and now ranks as the second-largest category of 2018 YTD. Bedroom Furniture is growing nearly as fast and is likely to outrank Mattresses by the end of the year as well. These categories are led by the B-Famous and Wimex brands respectively, with the top items being a B-Famous small-space sleeper sectional and a Wimex cabinet wardrobe.

The growth in both of these categories is driven by young couples and families, almost half of which buy most of their furniture online. Mattresses and office furniture became popular online sooner because many of these same consumers were going to school and renting apartments and only investing in the bare necessities. Now, this demographic is buying homes and furnishing them from scratch. This is driving high sales volume and rapid category growth in categories which lack major dominant brands, meaning that both of these categories are great targets for furniture brands looking to enter Germany’s eCommerce market.

Private Brands

Last November, Amazon launched their first two furniture brands, Rivet and Stone & Beam. Both specialize in living room furniture, with Rivet selling affordable mid-century modern pieces and Stone & Beam selling higher-end furniture. Currently both brands, which together feature hundreds of pieces, are Prime exclusive and only Stone & Beam is so far available in Europe, but Amazon is already having success in Germany with private-label Furniture with the AmazonBasics brand. The private brand’s 5-shelf storage rack was the second-bestselling Furniture item of 2017 and the top item in the Bathroom Furniture category. As Amazon’s largest market in Europe, there is every reason to believe that Amazon’s full range of private-label furniture items will be coming to Germany.

It’s clear that the furniture market is a valuable investment for Amazon, and it’s equally true that Amazon is a valuable investment for furniture brands, within Germany and in all of the retailer’s markets. The large and loyal base of Prime members is less likely to shop at any other online retailer, and Amazon’s investments in logistics, private brands and new technologies are growing this base. The company already holds the second-largest market share of online furniture sales in Germany and is likely to capture the bulk of future growth in the long term. Furniture brands looking to compete in eCommerce, the industry’s fastest-growing space, need to begin at Amazon.

 

 

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