In its second-largest acquisition, Amazon buys the company for $970 million.
In the next several years there could be as many as 400,000 merchants selling consumer goods over the Internet, but the largest maker of home furniture won’t be among them. St. Louis-based Furniture Brands International, which manufactures Broyhill, Lane and Thomasville furniture, announced in June that it has no immediate interest in selling online. Instead, the company will continue to sell furniture through its existing network of more than 5,000 chains and independent stores.
“We have concerns that the Internet still isn’t an appropriate means of distribution for our products,” says Lynn Chipperfield, a Furniture Brands vice president. “Lower-end stuff like computer desks you assemble yourself and arrive by UPS is conducive to selling on the Internet, but in our product range we still have questions about delivery and service.”
While the online furniture market may be a billion-dollar market as soon as 2005, Furniture Brand is taking a pass on becoming a Web merchant because of possible problems in losing control of its brands. “The integrity of our brand names can only be maintained by the traditional retailer who has a demonstrated commitment to customer service,” says Furniture Brands CEO Mickey Holliman.
Adds Holliman: “We will not be doing business with virtual retailers whose sole channel of distribution is the Internet.” In the next several years as many as 75% of all manufacturers are expected to have a merchandising presence on the Web, but analysts point out that big manufacturers with substantial market share such as Furniture Brands don’t have to be among them. “They can afford to take their time,” says Maxwell H. Sroge, CEO of an Evanston, Ill.-based retailing and cataloging consulting firm. “They have strong brand recognition with established retailers, so they don’t have to rush into this.”