Basil Karam and his brother Geoff started Life Interiors on eBay in 2006. The co-founders were experts in marketing and technology, but not necessarily design, so it’s little wonder they established their fledgling furniture business in line with a major industry trend at that time: designer knock-offs, otherwise known as replica furniture.
But the Life Interiors CEO says that business model never sat right with him, and after a few years, he realised that customers didn’t really like it either. Karam started transitioning the business away from replicas and towards original designs about six years ago, and today the company works with a range of local and international designers to provide modern, unique furniture for the Australian market.
Here, Karam talks about the challenges of selling across multiple marketplaces and his goals for 2019.
Inside Retail Weekly: What were some of the highlights of 2018 for Life Interiors?
Basil Karam: We had another year of record sales. And we launched an exclusive collection by Sarah Ellison.
IRW: What drove your record sales in 2018? Or do you set a new record each year?
BK: Each year has been a record on the year before. The success is always multi-faceted. It’s got to do with the introduction of new products and collections; it’s got to do with working with strong partners like Zanui and Temple & Webster; and it’s also got to do with being online and having a [bricks-and-mortar] retail presence. We’re targeting the whole market, whereas someone who’s online-only may only target the customers who are comfortable purchasing online and a traditional retailer may not have the reach of an online retailer. We’ve got the best of all channels, and it’s all contributed to our success over the year.
IRW: In terms of the exclusive Sarah Ellison collection, is this the first collection you’ve introduced with a more well-known Australian designer?
BK: Sarah Ellison is not the first, but it’s been the most comprehensive product launch. At Life Interiors, we believe in great design and making it accessible to everyone, Sarah shares the same vision.
Under the stewardship of Nicole Arvela [Life Interiors’ senior buyer and creative manager] over the last several years, the business has made it a focus to support local Australian designers and artisans and the furniture and homewares manufacturing community. We’ve worked and supported many amazing, up-and-coming brands including Armadillo & Co, Kip & Co, MJG, Sage x Clare, Industria X, Capra Designs and Bonnie and Neil to just name a few.
IRW: How was the Sarah Ellison collaboration different?
BK: In the case of Sarah Ellison, we decided to pilot a slightly different format and level of involvement, including leveraging our extensive OEM [original equipment manufacturer] capabilities to assist with the manufacture of key signature products. We’ve also allocated dedicated areas in our showrooms where customers can immerse themselves in a Sarah Ellison-designed spaced. It’s been a real privilege to be selected by Sarah as an exclusive partner and it’s a testament to where we’ve positioned ourselves in the marketplace.
IRW: What has the customer response been like?
BK: It’s been great. At Life Interiors we strive to make great design accessible to everyone. It’s that vision that drives us to uncover new local designers, introduce new overseas designers and design our own designer furniture for the Australian market.
IRW: How do you select the local and international designers that you work with?
BK: We have a buying team, and they’re across the latest trends in the market. We obviously review our own internal metrics as far as lost opportunities and what customers are telling us they’re looking for. We use as much data as we can get our hands on, but we also look at the broader market overseas in terms of trends and take a view of what we think is modern, designer furniture in Australia and back those brands [that offer it].
IRW: What are some of the main goals you’re working towards in 2019?
BK: A main goal of ours is expanding into a new showroom in Brisbane. We’ve got a store in Sydney and we’ve got a store in Melbourne, and for us, it plays into the whole omnichannel strategy, where we have in essence one physical store per state and we really support it through our digital initiatives. And that’s the strategy we want to continue rolling out across Australia. We find it extremely successful. It drives online sales in that state as well; it gives people the trust that there is a point of presence there, so it works in unison.
IRW: I understand Life Interiors has done some really innovative work with Google’s local inventory ads. Can you tell us a bit more about that?
BK: Yes. We were Australia’s first furniture store to introduce what they call ‘local inventory’ ads. It was extremely challenging to introduce that across our business. I was just reviewing [the ads] online, and it’s still just Officeworks and a couple major players doing it, so it’s still in its infancy.
For us, the benefit of local inventory ads is that they really tie in our digital marketing strategy with our retail stores and, at the same time, really manage the customer experience. If you’re within five kilometres of a Life Interiors store and search for a bar stool [on Google], the results page should say that our bar stool is less than five kilometres away and available in-store. So the customer could come into the store and know the product is available to see.
It’s been an important initiative for us because it drives people into store, and it’s helped us get a better return on our marketing spend.
IRW: Any plans to ramp up the initiative any further in 2019?
BK: I think the essence of Google local inventory ads is what we have at the moment; I don’t expect it to change tremendously over the course of the next 12 months. But in terms of technology more broadly, we want to be one the first to introduce augmented reality into the Australian furniture and homewares industry.
IRW: Do you sell through any other channels besides your own bricks-and-mortar stores and e-commerce site?
BK: In addition to our e-commerce and retail channels, we also sell through Temple & Webster, Zanui, Catch, eBay and House of Home. Although not technically online marketplaces, we also reach our audience via Google Shopping, Houzz, Instagram Shopping and Pinterest. Amazon Australia will be considered in 2019.
IRW: You have a pretty big marketplace presence. When did you start expanding onto marketplaces, and why?
BK: Like so many other businesses, we started Life Interiors on eBay well over 10 years ago. It was during these years that we learned that marketplaces and their large audiences are the fastest and most cost-effective way to test a product’s overall appeal. We went on to launch our own e-commerce and retail stores, but it wasn’t until 2014 that we really decided to execute on a multi-channel e-commerce strategy to accelerate the overall growth of the business.
Unlike larger furniture retailers like Nick Scali and Freedom Furniture, we couldn’t rely on expansive store networks and large marketing budgets to reach a broader audience, so we embraced furniture marketplaces like Temple & Webster, Zanui and House of Home. Integrating into digital marketplaces and marketing channels meant we could reach a new audience and better manage our inventory cost effectively.
IRW: It seems that more and more retailers are embracing marketplaces, whereas perhaps in the past, some brands (like Nike) would have steered clear. Why do you think this is?
BK: The opportunity is simply greater than the risk of not participating. Globally over the last several years, the growth of marketplaces has been exponential, and it does not seem to be slowing down. Engaging with reputable marketplaces doesn’t need to come at the expense of the brand. Trust mechanisms like product reviews and high service levels are baked into the core of the best marketplaces, and in many ways, they force brands to improve their service levels or be penalised.
IRW: Still, I imagine you must need to have robust backend systems to manage inventory and sales across so many different channels…
BK: That’s definitely a major challenge. There are some marketplaces that don’t necessarily have click-and-install integrations like eBay and Amazon, so orchestrating the inventory across those channels has been technically quite complicated. With marketplaces, you also have a reduced margin. You’re sacrificing anywhere from 10 – 30 per cent, so you really have to have an efficient supply chain and fulfilment process to extract the value out of those marketplaces as well.
IRW: Do you see the number of marketplaces continuing to grow, or do you think there will be some consolidation going forward?
BK: We knock back marketplaces all the time, and we’ll definitely go through some sort of consolidation phase even with the marketplaces we have at the moment. You test and you try different marketplaces; each one has its own unique audience and demographic. I think retailers that have a strong brand will need to get used to having marketplaces in the mix, they’re an important part of the mix. But I think for retailers, there’s a point at which the law of diminishing returns starts to play a role. The complication and sophistication required to sell comfortably and profitably… you can only really be on a handful of relevant marketplaces, otherwise the energy involved in maintaining the marketplace far outweighs the revenue you’re going to generate out of it.
IRW: Given your long history selling through marketplaces, I’m curious to hear your thoughts on Amazon.
BK: I can only say what I’ve heard from others who have listed on Amazon, but overall I’m bullish; they’re here for a long time. For us, our involvement with Amazon is not about if, it’s about when. We’re a relatively small business, so we need to make sure we’re launching on the platform at the right time.
In terms of their launch, I think it’s been commendable and they’re a force to be reckoned with. I think retailers need to grapple with the additional transparency that Amazon will introduce into their categories. They’re a platform that will enable smaller players to disrupt existing retailers. As some of these larger marketplaces start to gain momentum, they will drive up the cost of acquisition on platforms like Google. It’s about knowing you’re going to be impacted one way or the other and being on the right side of that disruption.