The showroom is quiet.
Fanie Fikri, Head of Marketing at Fabelio, one of Indonesia’s up and coming startups, isn’t worried, the usual mall traffic is out to lunch.
“Our experience centers contribute a healthy 15% of our total revenue.”
He’s referring to the number of customers who have “signed in” to any of the company’s two offline experience centers to view Fabelio’s line of Ikea-esque furniture before buying it online.
To promote a product such as furniture, it’s almost mandatory to have an offline presence and it must be working as the company has raised $3.5M in total funding (2017).
I invited out Fanie for coffee to discuss how the company markets affordable coffee tables and artisanal items to the masses and the habit of purchasing furniture online.
What was buying furniture like?
“A complete mess.”
Fanie explains that his father used to find a carpenter on the streets of Jakarta, attempt to describe his coffee table vision and haggle for an agreeable price. He would also need to return a few times in a week to check on its progress because very rarely would it be without blemishes or completed on time.
One could understand the frustrations with buying artisanal furniture in Indonesia and why it was such a big deal when Swedish furniture giant IKEA opened its first store in the archipelago three years back.
It also showed the shift in taste of Indonesians from traditional teak furniture to a more minimalistic and functional design.
Furniture is not dominated by one brand and Ikea only captures 18% market share in Indonesia so why not offer another option online?”
Startups, do your research.
If a company expects potential visitors to spend at least $250 per order on its website, it would be wise to conduct extensive market research first. Furniture is one of those items that people prefer to have home delivered, but who is the audience?
Unlike IKEA, that focuses on younger people with higher education, medium income, and are not very status conscientious, Fabelio targets new Indonesian families who have the growing luxury of decorating as the average top income earners are 30-34 year olds (Euromonitor: Income and Expenditure Indonesia).
Consumer expenditure in Indonesia on household goods and services is also forecasted to rise in the next 13 years.
The company has held many focus groups comprised of young couples, with and without children, to understand what its consumers are looking for. Fanie, a local Indonesian himself, knows that many young professionals are living in “Koskosan” – temporary rooms that are already fully furnished – so they wouldn’t be Fabelio’s main customers.
The company deduced the following from marketing efforts:
- Focus groups revealed that Indonesians prefer wooden furniture but the look cannot be too raw, it needs to be extremely well polished. Women typically decide on the household’s smaller purchases but males have the final say on larger purchases.
- Paid search keywords in Bahasa – “furniture”, “buy furniture online”, “dining room table”, “chairs” – hold the highest marketing return
- Showrooms “experience centers” are the company’s build trust and inspire, are able to capture names and emails in a visitor log book to track efficacy
- Event sponsorships are important to reach the right audience, in Fabelio’s case, Indonesia housewives, who still have 78% influence over their spouse’s income. The company partnered with Femina Group, a popular magazine for women, to provide the furniture for its offline pop shop
What about the Swedish competition?
Although both companies offer minimalistic designs, Fabelio ensures competitive pricing and more room for customization.
Like IKEA, the company also offers “Fabelio Design & Build” that is a B2B interior decorating service. The offices of Go-Jek, Qraved and Singapore Airlines all contain a splash of Fabelio.
“Home by Fabelio” is the company’s newest venture that caters to customers with basket sizes of 20M IDR and up. If clients are purchasing multiple pieces of furniture, why not send in a professional interior designer for free to transform the entire space?
Although it’s been only 4 months since its launch, over 100 customers have currently signed up for the service.
Furniture may seem as a one-off type of buy but Fabelio sees 20-25% repeat purchases within six months. Fanie also shares other factors that attribute to the company’s success:
- Extremely vigorous QC process that includes testing weights on the tables, balance of chair legs, polishing uneven colors and surfaces to reduce number of returns (only 10% of returns are due to quality issues)
- More logistics control with its own dedicated fleet and free delivery and installments in West Java whereas IKEA charges for both. Fun fact: the Fabelio trucks have travelled 120,000km, equivalent to 3X around the globe’s circumference.
- Having “Ready Stock” items delivered within 4-7 business days and “Made to Order” items delivered within 3 weeks
“We don’t see IKEA as an enemy, they are more of a mentor we can learn from. What we want to know is why our customers who’ve been at IKEA come to Fabelio,” comments Fanie.
Fabelio’s design for its own future
The company hopes to offer delivery to other parts of Indonesia beyond West Java, the country’s largest consumer market, and open more experience centers. The challenge is finding a sweet spot between high foot traffic and rental price.
Fanie shares that although Fabelio plans to expand to new markets, namely Singapore and Malaysia being the most mature and ready for furniture ecommerce, the company wants to cater to Indonesians properly first.
There is already one piece of Fabelio furniture in all 267 neighbourhoods of Jakarta, minus Thousand Islands Regency. Maybe the next coffee table for your new home won’t have to be from Ikea but Fabelio.