Steve McMasters and his FTS Direct vignette inside the McMasters Home Gallery showroom.
Dealers delighted with their direct-sourcing experience
By Alan Wolf, YSN
It was a bold idea.
Looking to give independent dealers the same direct-sourcing advantage as national chains, Furniture Technology Source (FTS), the home furnishings arm of AVB BrandSource, launched FTS Direct.
The concept, explained Michael Posa, AVB’s GM, home furnishings, was to allow multiple members to share in mixed container loads of merchandise that came direct to dealers from manufacturers’ factories. Led by Luke Larsen, senior manager of merchandising, home furnishings, the team would select vendor partners, curate the lineup, and import and ship the split container loads of private-label goods, as well as negotiate drayage and domestic freight from all U.S. ports.
And members, by pooling their buying power, would enjoy close to factory-direct pricing without committing to a full container of furniture.
See: FTS Begins Direct-Sourcing Furniture
What’s more, by leveraging the digital prowess of AVB Marketing, FTS would provide each imported item with a complete package of merchandising and marketing material, including images and descriptive content, that can be plugged into LINQ for website display.
FTS has also expanded the program to include national brands. “The FTS team looks forward to eventually rolling this out to most, if not all, existing BrandSource vendor partners by working with their factories directly,” Posa said. “By supporting the vendor through logistical support and program engagement, we will save both our vendors and retailers money and open up the market for all.”
Related: FTS Goes Direct with Ashley, Coaster
Little more than a year after the initiative was announced at the 2023 Convention, the fruits of FTS’s labors can be found on showroom floors across the country, Larsen said, with more shipments arriving to members patiently awaiting their orders. So far, the feedback from recent recipients of FTS Direct’s debut line of premium, leather motion upholstery has been positively positive.
All Aboard
“This solution leverages the buying power of the group to allow members to access goods and obtain pricing that might only be available at container quantities — all while purchasing only a portion of that container,” said AVB COO Dave Meekings at last spring’s Summit. “This has opened up brand new product and margin opportunities for our members, and they are jumping on board.”
Among the latter are Tennessee members Phillip Lovin of Lovin’s Wholesale Furniture and Appliance, based in the northeastern town of Talbott, and Steve McMasters of McMasters Home Gallery, located about 5 ½ hours away in Loretto, near the Alabama border. After an initial delay, which the dealers dismissed as an understandable snarl, the two received their first deliveries this past spring. Their combined order landed at McMasters, with FTS trucking Lovin’s portion — 10 six-piece power-reclining leather sectionals — to his 15,000-square-foot store.
For Lovin, the initial attraction to FTS Direct was the ability to order small quantities of mixed items at close to container-load cost. “We don’t generally order truckloads, much less containers, although obviously that’s the best way to get the best price,” he said. “So just the idea of being able to get something similar to container pricing without having to buy the whole container is what looked good to us.”
Equally attractive was the product itself, which features top-grain leather, high-density foam, USB charging ports and power headrests and footrests. “A leather sectional built the way it is with the options that it has just made sense,” he said.
The Lap of Luxury
McMasters concurred, noting that the collections are comparable to better-quality products that typically retail for 25% higher or more. “It looks and feels like it’s better quality,” he said. “The leather feels good, it’s got a good hand to it, so I think I’ll be giving my customer a better value.”
Lovin described the process, from ordering to delivery, as “easy and simple; everything went as we were told it would.” In the end the cost came very close to initial estimates, the merchandise was pristine, and the quality matched and perhaps even surpassed that of the floor models at the BrandSource EXPOs. “I didn’t even have a box with a scuff on it,” Lovin said.
Several of Lovin’s sectionals sold within the first few weeks and, priced $500 below their $3,500 suggested retail, still provided a very healthy margin. “We can’t get down to this price on a similar product” when buying from a domestic warehouse, he said.
Online at LovinsFurniture.com, the FTS Direct pieces are highlighted as “Hot Buys” and are filtered to come up first under searches for “leather” or “sectionals.”
Display’s the Thing
In the showroom, the charcoal sectional is “plugged in and running,” Lovin said, and the reclining ends of the navy sectional are placed together to resemble a love seat while he awaits delivery of the companion product. “That way, people can see both colors and styles within one footprint,” he said.
McMasters has his FTS merchandise set up in a similar fashion on the sales floor, placing the grouping “as close to my front door as I can get it,” while online at MCMHG.com, the collection’s digital assets were pre-loaded by FTS and AVB Marketing. “They activated FTS for me as a brand and the pictures and descriptions were in my backroom, just waiting for me to turn it on to add to my website,” he said.
Happy with the experience, Lovin has already placed an order for FTS Direct’s follow-up series, a low-cost, margin-rich grouping of high-quality lift chairs available with a remote control lift-and-recline system and two hidden cupholders.
“FTS has been great to work with and extremely responsive; they’re doing a great job,” he said.
McMasters is equally pleased with the program. “The profit margin is nice, the price point for the customer is really nice and the look and the feel is really nice,” he said. “I think Luke and his team have done a good job of putting it together.”
What’s Next?
As FTS Direct enters its second year, the furniture merchandising team is going full bore in further enhancing the program with additional products, in-house financing, shortened lead times and vendor opportunities.
Expanded Selection: FTS Direct will continue to expand its offerings, with plans for new pieces that can mix with the lift chair category. “We are looking to provide more flexibility to our members through merchandise that we know will turn on retail floors,” explained FTS’s Larsen.
Improved Cash Flow: FTS is also coordinating with BrandSource Financial (BSF), AVB’s in-house financing arm, to make payment terms available to all FTS Direct participants to enhance cash flow.
“Offering in-house, interest-free financing to furniture retailers across the U.S. is a first in the industry, and we are thrilled to be a part of it,” said FTS’s Posa. “Members always tell us they want financing options for new product categories, so 18 months ago we started financing electronics purchases for Expert Warehouse and it has been a huge success. Now, we are excited to be a part of launching container and central buy programs for FTS Direct.”
Automated payments, a user-friendly portal and the added bonus of extended terms make financing with BSF a very attractive cost- and time-saver for participating members, Posa noted. “We strive to help members stay profitably in business, and helping with their cash flow by offering term options is one of the many ways we do that,” he said. “Cash flow is king!”
Indeed, efficient cash flow management helps ensure there is enough liquidity to cover expenses, and the payment terms give members comfort when ordering — allowing for better forecasting and planning — and peace of mind should an unexpected expense occur.
Lead Time and Replenishment: Besides category expansion and in-house financing, FTS Direct is zeroed-in on shortening the program’s lead times. “Our focus has been on factory production times, filling orders and optimizing freight programs,” Larsen said. The goal, he explained, is to provide an ongoing strategy to support members and flow product on a three- to four- month schedule. The assortment will remain consistent, he said, but will be optimized for best-selling products, special buys and regional assortments.
Vendor Partnerships: FTS Direct is all about harnessing the buying power of members, and to that end, the furniture merchandising team has launched centralized billing programs. This allows members, through FTS Direct, to negotiate better pricing and product selection with BrandSource-approved vendors.
Moreover, FTS Direct plans to extend its logistical prowess to most, if not all, BrandSource vendor partners by working directly with their factories, saving vendors and members money and opening up the home furnishings market for all, Posa said. Kicking off the breakthrough strategy are direct-buy programs with leading furniture brands Ashley Furniture Industries and Coaster Fine Furniture.
Unlike the mixed container loads for recliners and lift chairs, the partnership with Coaster will allow FTS to aggregate orders from members and order collectively as AVB, affording BrandSource dealers access to national account-level pricing. Conversely, the new program with Ashley melds the original mixed container concept with a direct-buy feature like the Coaster partnership. Under the plan, members can purchase a full or partial mixed container of between 25 and 35 core products that are stored at Ashley’s central warehousing facility in Asia for shipment to their stores.
“This is a unique program, available only through the group, and it brings some real benefits to the member,” COO Meekings said. By acting like a group and combining orders, BrandSource can “begin building a product flow into the U.S., so members can take advantage of the margins and terms, making them both profitable and competitive.”
YSN publisher AVB BrandSource is the nation’s largest merchandising and marketing co-op for independent appliance, mattress, furniture and CE dealers.
