February 19, 2016 – To create customer confidence and greater visibility, selling a piece of furniture is only the beginning. That furniture still needs to be delivered and set up in your customer’s home. Just the thought of that makes some home furnishings retailers cringe, given deliveries are often handled by someone other than themselves.
A furniture store’s delivery process depends largely on its sales and delivery volume, its geographic area and service radius, as well as customer needs. Owners should consider a number of issues as they determine the best course of action.
When a retailer decides to employ an outside vendor for delivery, they’re trusting that company with a huge part of their business, says Patrick Cory, CEO of Cory 1st Choice Home Delivery, an 81-year-old delivery firm. “Make sure there is a cultural alignment and internal expertise,” he says. “For example, what is their Department of Transportation compliance record? What does their regulatory department look like when it comes to making sure the fleet is safe? What is their maintenance record?”
Delivery companies range from independent, small local moving companies, to large, global logistics companies, to those that specialize in “last mile logistics”—those that deliver only in one area or have just a few trucks. Outsourcing to a delivery firm can cut costs and provide efficiencies of scale.
However, David Grass, a consultant with DLG Furniture Services, cautions there might be other problems. In these days of e-commerce, the delivery staff may be the only human contact a customer has with a company. “Because those delivering furniture may not be the best paid or most highly educated, some who make the deliveries may not project the best image,” says Grass. “White-glove service is a false word that involves a driver doing what he is supposed to do. It’s all about image.”
Logistics executive Rob Davis of Diakon says, for “small or new retailers, it comes down to volume.” When it comes to doing their own deliveries, retailers with more than four to six trucks will see the economic benefit of outsourcing, as well as the risk tolerance and increased service level. “It’s our specialty. We take away the risk and liability. Smaller retailers should track and consider the number of truck stops, the miles covered, the average pieces per delivery, the length of the day, the time between stops, fuel costs, HR, recruiting, etc., to understand how much the equipment costs to run. If it’s too high, you should consider a company like mine or change service providers. For those who will never have more than four trucks, find ways to motivate your teams to be quick, talk to customers and provide quality customer service.”
Davis adds that services may hire people who may not be well-trained or familiar with the business. “All it takes is just one delivery accident or incorrect installation to impact your business.”
When HFA member store El Dorado Furniture in Miami opened 50 years ago, “We had our own trucks,” says CEO Pedro Capo. “After a few years, we [sold] the trucks to employees and made them independent contractors, paid the same way we would a salesperson—by volume instead of by stop or by piece. We gave them an incentive to make more deliveries within a certain period of time instead of paying them by the hour. As the business grew, we realized the need to concentrate more on warehousing and not the delivery part of the business.” This led first to hiring a third-party delivery company, then to using outside companies starting with Cory Delivery. Two years later, Capo added Diakon Logistics as a second company to accommodate its growth. Both companies specialize in the furniture retail industry.
Capo says there are advantages to hiring an outside service. “We needed more trucks to be available when necessary,” he says. “After investigating our options, we chose (to add) Diakon.” Both companies have asked for all of El Dorado’s business, but, Capo likes the idea of the companies competing with one another. “This makes them both better,” he says. “This gives them a vested interest in making things better. One has more trucks working for us, but both use similar systems, are great companies with a lot to offer.” Drivers with higher completion rates receive greater incentive pay, so “each driver has a great reason to make sure each delivery goes well the first time.”
“There are times during the year when you have highs and lows and need either more or fewer trucks; [These services] provide the flexibility to get more trucks when you need them, like on a weekend,” Capo adds, while, “If you had your own, you’d have to pay their salaries.”
HFA member Lee Goodman also uses a second party, Diakon, to handle all of the deliveries for Jerome’s Furniture in Orange County, California. “It is a better use of resources to focus on our business and allow them to continue the home deliveries,” says Goodman, Jerome’s CEO. Having inherited Diakon when he joined the company 10 years ago, Goodman notes, “If you try to make a change, it is incredibly disruptive.”
Jerome’s has its drivers and customers phone into a call center after each delivery “to make sure the customer is completely satisfied, that they’ve looked over their product and are happy, that the trash is out and that we’ve done all we can to make the experience what they wanted and expected,” Goodman says. Problems are immediately resolved. “Calling them allows us to ensure that kind of satisfaction.”
Goodman says, “The use of outside companies provides an economy of scale, by taking care of what needs to be done efficiently and by bringing best practices to the table, and allows for the flexibility of being able to expand or shrink more easily than by using your own people. As long as you can connect your strategy with the customer experience and with the drivers, and give the drivers the tools, training and resources they need, there are few negatives.”
On the other hand, fellow HFA member Jim McIngvale, owner of Galley Furniture in Houston asks, “Why outsource a core competency?” Gallery offers a delivery training class every Monday and McIngvale is proud of his staff. “They do extraordinary things every day,” he says, which helps build his company’s brand equity. McIngvale says some customers even request a specific person to make a delivery. “That’s pretty good,” he says. “It’s about standing out in a crowd.”
Walnut Creek Furniture, an HFA member in Walnut Creek, Ohio, delivers to customers within a 50-mile radius. Manager Galen Swartzentruber uses a local delivery service he hired based on recommendations and an interview process. He outsources other deliveries. “The company is local and we know and trust them and their work ethic,” says Swartzentruber. “It’s much like delivering the furniture ourselves. If any delivery issues arise, they call us right away. We also check with the customers to make sure things go the way we want them to. If a company represents you, the customer does not know [their] name, they only know yours.”
In Wausau, Wisconsin, HFA member Nigbur’s Fine Furniture owner Linda Nigbur says it has never crossed her mind to outsource delivery. “There is a benefit to keeping our name out there,” she says. “If it is our truck, the neighborhood knows; it’s additional advertising you don’t need to put in your advertising budget.” She uses store staff to “allow them to see more from beginning to end, to follow-through the whole customer experience. [They are] involved in moving things, prepping the merchandise for delivery and inspecting it,” says Nigbur. “We go through a pretty stringent process prior to delivery [which makes them] more knowledgeable with a better level of understanding about the capabilities of, say, a reclining piece of furniture or what characteristics are acceptable or not in case there are problems.”
For example, Nigbur’s staff learns to navigate crown molding to ensure there are no sharp or rough edges, as well as look for fabric flaws and know the mechanics and functions of things. She often sends her crew to the manufacturers to rehearse how they will work and act with customers in homes. Nigbur’s staff “is the final contact with our store; that is huge, as they are the ones to leave a lasting impression—good or bad,” she says. “They reflect our name.”
Unique in the business, HFA member Allentown Interiors in Bethany, Oklahoma, furnishes mostly model and spec homes, and offers home building and decorating services. Covering only about a 30-mile radius, they don’t have the volume to justify a full-time delivery person. As a result, owner Scott Edwards has three employees with appropriate drivers’ licenses to drive his truck. “Delivery is not a profit center for us,” he says, “but we are big on service and getting a good name. We work around customers’ schedules and plan it out pretty well.” In business for about five years, Allentown Interiors assigns charges based on the number of items, with a $50 minimum delivery charge, and adjusts prices according to the number of pieces and distance to cover costs.
HFA member Walker Furniture in Las Vegas serves Nevada, California, and Utah customers. General manager Dennis Dieter says they use one out-of-state shipping service for transporting long-distance items, but lease trucks for local deliveries.
“We’ve had bad experiences when using outside sources locally,” says Dieter. “They lack proper insurance and you become liable if something goes wrong. It is hard to find people fully insured who have a good reputation, something that really counts.” He says the shipper they use “is very efficient, white glove, and gives us extra business we might not otherwise be able to get. He’s been with us for years and his role has evolved over time.”
Another HFA member, family-owned Morris Furniture in Albert Lea, Minnesota, has been handling its own deliveries for more than 40 years. “Our geographical location determined it,” says owner Michael Kenis. “We have a small demographic, but deliver in about a 50-mile radius.” Morris employees make deliveries. He says he won’t consider using an outside service because his store sells “a lot of power-lift merchandise, like chairs and beds so we do a lot of emergency deliveries. We have more dexterity by using an in-house delivery service.”
One of the downsides to Morris handling its own deliveries involves government regulations. “We run three, 20-foot box trucks and cover two states,” says Kenis. “With all the ICC [Interstate Commerce Commission] and DOT [Department of Transportation] regulations, there is a lot we’ve had to get into to follow government regulations.” However, he has not found a good delivery service in his area, making the positives outweigh the negatives.
“Retailers are really good at retailing, buying furniture, sourcing it, displaying it, and selling it,” adds Cory, “that is why they are successful. They may not, however, be good at transportation and delivery, as that is a completely different business and mindset. If you are happy with what you are getting and have your eyes open, you can keep doing what you are doing. If you don’t know what you are doing and are struggling to find qualified drivers—a big issue now—you need to outsource to a third-party company.”
Grass advises those considering different delivery options do their homework. “Look at your (current and projected) needs and expenses before making a decision to determine if a company fits the bill, especially for the smaller scale retailer,” he says. Consider “what the players offer, their specialty and where can they provide service.”
For those who do their own deliveries, Davis added, “You have to have the stomach for this.”
Thinking of Outsourcing?
Here are five questions to ask:
Are drivers experienced with delivering and setting up furniture?
How will you measure customer satisfaction on deliveries?
Will your savings equal or surpass the cost of a second party?
Are you willing to give up that face time with your customers?
Can a second party work around your customer’s schedule?