Next-Generation Retail: Apt2B, Los Angeles
October 30, 2013,
Apt2B is a Los Angeles-based online shopping site that offers a full range of furniture, home décor, bedding and housewares. It's a one-stop shop for the home, where items can be purchased separately or in click-and-ship room packages, offering a convenient decorating solution for newcomers and apartment dwellers challenged by space, time, delivery obstacles or unfamiliarity with their new environs.
It's also a social space filled with cool blogs, links, videos and advice from people like "The Guy in 2A" and "The Girls From 2C" who share their thoughts on everything from new products and design tips to apartment hunting, great date places and recreational sports leagues. There's a testimonial wall where happy Apt2B customers post photos of their newly Apt2B-furnished digs, along with first name, neighborhood, favorite color and favorite superhero. The final selling spot for discounted and discontinued items is called the "Trash Chute."
Co-owners Mat Herman and Alex Back, together with their team, hand-select Apt2B's pieces based on their comfort, functionality and workability with other items in the company's inventory.
Herman, a second-generation furniture industry veteran, explained the concept. "Apt2B is not just an e-commerce site; we're building a brand. We're trying to build a bridge between Ikea and Crate and Barrel by providing our customers with fun, functional, stylish and affordable furniture, home décor and housewares. Everything on Apt2B is on our website for a reason. We're not throwing products up online just to have them. We've curated these items based on what we think our customers will want - things that show off our modern style but remain price-conscious. We want people to know that style is attainable and affordable."
He estimates Apt2B's success rate at delivering packages to customers, complete and on time, at over 90%. "We are not drop-shippers," Herman said. "If we don't have an ordered item currently in our inventory, we order it to be delivered to our distribution center. From there, one complete delivery is sent out from us - no waiting around multiple days for movers or packages to arrive."
Equally important to the company's success is its engaging website, which draws consumers in and holds their attention for at least five minutes on average with up to 12 page views per visit, according to analytics reports. "Because we live almost solely online, we knew that we had to have an engaging, complex, yet easy-to-use website," Herman said. "It's the lifeblood of Apt2B and we all contribute to keeping it as fresh and fun as possible."
Since launching in June 2011, a growing stream of customers has become fans of Apt2B's affordable style, quality and customer service. The company is shipping nationwide and gaining exposure through partnerships with local businesses and websites, pop-up shops and Costco roadshow set-ups. Last fall, Apt2B became the first recipient of lifestyle web-
How's business? We were up over 45% in our second year and our business has continued to grow rapidly. Finally we feel like we are at a tipping point as our last three months have been fantastic.
Tell me a little more about the room and home packages. Our packages were the inspiration for creating Apt2B. When someone moves into a new place they run off to Bed, Bath and Beyond, Target, Ikea and other traditional furniture stores to find the things they need to furnish their pad. You can find "bedroom sets" or "living room packages" but no one was taking that concept to the kitchen and the bathroom and the entire apartment. By combining all of these, we've streamlined the process to become a one-stop-shop. Our most popular room packages are our kitchen packages and our complete home packages. The business we do from them stems primarily from people who are relocating - we work with recruiters and relocation companies to provide this service to them. These are big-ticket items for us so we are constantly looking for ways to grow this even more. And we are currently doing an overhaul on our room package builders to make the process more user-friendly.
Who's the creative mind behind your website and blogs? I (Herman) do all the buying and merchandising of the products and our website is managed under Alex's wife, Becca McHugh, a graphic designer, who maintains the look and feel of Apt2B.com. The social media component of Apt2B is run by me, everything from Twitter, Instagram, Pinterest, Facebook and our blog. Alex is our inside operational manager and runs the nuts and bolts of the operation from handling all of the fulfillment to customer service and everything in between.
How long do you keep items before they go to the Trash Chute? There's no set criteria for items heading to the Trash Chute. Sometimes it's because the manufacturer discontinued a product, some things are in there because I no longer like the look of them, and some are just dogs that don't retail.
Who wrote "The Keys to Apt2B" in the Mantra section of the site? I did. The idea was inspired by my home accent guru, Jonathan Adler.
What was the Happy Hour Friday event? Basically, it was a flash sale we ran for four hours every Friday from 4-8 p.m. Every week we featured a promotion, like "All lamps
20% off during Happy Hour" or "$2 shipping for orders placed during Happy Hour."
Where is your main office? We build the brand from my work/live space in Hollywood, the warehouse is in Van Nuys.
How accurate is this statement: "Apt2B was started by Millennials, is staffed by Millennials, and targets Millennial consumers." I'm 40 and Alex is 29, so it's more like "started by Gen Xers who think they are Millennials," which is actually the perfect storm: Older people still want to think they are hip and fashionable, so they try to cater to the looks of the younger generation, while the Millennial buyers want to buy up and be their big sister, big brother. Everyone wants to be 33. The 23-year-old wants to be the cool 33-year-old. And the 43-year-old wants to feel like they are still 33. So we are really finding ourselves selling to 23-43 year olds.
In your opinion, what are the top three things vendors, designers and retailers should keep in mind when designing for/selling to this demographic? Customizable, functional, affordable.
How many people work at Apt2B? Aside from me, Alex and Becca, we have two full-time employees and a number of contractors and seasonal employees that we hire throughout the year.
How much business originates from outside of the L.A. metro area? After Los Angeles our biggest penetration is in San Francisco, New York, Chicago and Dallas. Up until this year, we really haven't made a big push to be a presence outside of Los Angeles. As our company has grown and we've come to better understand our products and customers, we've started pushing the Apt2B brand throughout California and across the United States. Learning how to be a local online business that now meets the needs of our customers nationwide has been challenging, but the orders continue to come in, and we're happy to see people across the country looking to us to meet their home furnishing needs. Ideally we want to be local in every major metropolitan marketplace and still meet the needs of the fly-over states as well.
About what percentage of your sales are home accents? 25%
What categories of home accents do you carry? Accent furniture, lamps, rugs, wall décor, clocks, decorative pillows, throws, mirrors, tabletop, decorative accessories and lots of fun tchotchkes.
What's hot? We do really well with rugs and lamps. We are also known as a place to find unique "wow" pieces. Kitchen and tabletop are strong, as are handcrafted and locally made.
Who are some of your key vendors? Not Neutral, French Bull, Menu, Maxwell Dickson ... I don't like to give our secrets away but those are a few that deserve mentioning. We have some really cool new home accent lines launching in the fourth quarter.
Tradeshows/markets you shop: Atlanta, L.A. Mart, Las Vegas - I'm really excited that they are getting more into gift and home décor during the furniture show. I also go to a lot of local shows like State of Unique.
How did you and Alex get into this business? Home furnishings is a family affair for me. My father was a furniture rep for over 40 years. After college, I worked as a sub rep for him in Ohio. When the opportunity arose to have my own territory in Southern California repping Stratford/Simmons Upholstery, I jumped. After two years on the road, I decided to learn more about the retail side of home furnishings and took a job as general manager of Michael's Furniture, a large independent furniture store in Southern California. It was there that I first got involved with the Costco roadshows - we ran more than 80 a year for three years. I met Alex when I hired him to work at the roadshows, which he soon took over and managed.
We discovered we shared the same drive and passion for home furnishings and lofty aspirations for the future, so we began discussing plans to blaze our own trail. Combining our wholesale and retail experience with the rising trend in online retail space, we felt that there was a unique opportunity. It was over four years in the making, but in June 2011 we officially launched Apt2B.
And now Apt2B is doing roadshows for Costco? Our Costco Roadshows are a really important component of our business, not just monetarily, but also for the partnership, exposure and branding of Apt2B. It represents about 15% of our volume. We ran 12 roadshows this year and each one runs 10 days.
Tell me about your pop-up shops. Our first pop-up was to celebrate our one-year anniversary, and it was a real "Aha!" moment for us because it allowed us to finally talk and interact with our customers. We always hoped that people were diggin' our products, but we got the chance to see them in person and hear all of their positive reactions! Now we are in our third pop-up and hope to launch one in a new city (maybe San Francisco) in the first quarter of next year.
Is the collaboration with Homepolish design services a permanent one? We're on a trial run. It's a service that we'd like to offer to our customers, but we didn't want to manage it ourselves. I read about Homepolish and reached out to them from one start-up business to another to see if we could collaborate and help each other. We just launched this in September and so far we're both quite happy.
I saw something about a collaboration with Immovingtola.com? Wow, you really do your homework. It's just another non-traditional way of partnering up with other companies that correlate, but don't compete with us.
What are some of the other things you've done to bring in customers? So far, we've been casting a big net with our advertising and brand promotion. We do a lot of funky stuff and some of it sticks. We do a plethora of traditional and non-traditional advertising and branding - SEO, affiliate marketing, TV commercials, direct mail and some out-of-the-box stuff as well. We've partnered with the TV game show Let's Make A Deal, which has been a blast for us, worked with set designs of HGTV shows, and helped furnish the new Real World house on MTV that will premier in January 2014. We also work with bloggers and YouTube stars to run contests and giveaways. All of these efforts have created an energy that continues to shape the brand Apt2B has become.
I'm really impressed with your presence in the social media sphere and interaction with commenters on consumer review sites like Yelp. Do you monitor social media and marketing sites 24/7? We pride ourselves on customer service. Living online you must have a fantastic customer service team, and right now, there is no one that Alex and I trust more than Alex and I. This is one area of the company where we are still completely hands-on. We are passionate and protective of our brand. If we mess up, we are going to make it right. We monitor countless social media outlets because we live in a world where one bad review carries a lot more weight than it used to. We want to make sure that we get the chance to address any customer's concerns.
Biggest challenge you face as a retailer: Keeping up with the fast-paced, ever changing online marketplace. There are new apps, widgets and social media platforms emerging almost daily. Deciding where to put our resources, and learning to say no and pass on some things, is hard but we have to stay grounded.
What are your plans for the next 12 months? We are super-excited about the upcoming launch of our first designer collection. We've partnered with an extremely talented, emerging designer named Kyle Schuneman who will be launching a sofa collection through Apt2B. His collection features apartment-sized furniture with a splash of color, all under $1,000. We're also looking forward to working with Costco again and expanding not only the number of stores we're in but reaching outside of Southern California. And, based on the success of our pop-ups, don't be surprised if you eventually see a permanent Apt2B flagship store in Los Angeles.
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