Success Story is a Sourcing Journal feature highlighting innovative solutions across all areas of the supply chain.
Returns are often a major headache for retailers that deliver oversized products. With shipping rates continuing their ascent, reverse logistics costs only further add up. But the costs incurred in the logistics process aren’t the only concern. To make matters worse, many products will end up in landfills because the shopper doesn’t always have an easy out to return the item.
According to the most recent data collected by the U.S. Department of Commerce, as many as 9.7 million tons of furniture and furnishings were sent to landfills in 2018.
“We just knew that we needed to do more to own the lifecycle of our product,” said Racheal Brown, senior vice president of marketing, Floyd. “We didn’t want to just send something to a warehouse to either sit there forever, which is what was happening with a lot of our return products, or go the way of fashion where things just literally end up in the landfill.”
Based in Detroit, where its products are manufactured, Floyd partnered with resale solution provider FloorFound in 2020 to launch Full Cycle, a fully branded recommerce storefront designed to extend the lifecycle of its products.
Thus far, the platform has reaped various benefits, with Floyd already reducing carbon emissions 80 percent in transportation, recovering 72 percent of returns revenue on average, and selling each newly merchandised item within just eight days.
If a shopper buys an oversized good, they typically will only return it to the retailer 10 to 15 percent of the time, with the rest ending up in a landfill or elsewhere, according to Chris Richter, founder and CEO, FloorFound. But Richter said they have reduced items going to landfill by as much as 90 percent for retailers that use the platform.
Pilot program attracts new consumer base
With FloorFound, Full Cycle first launched as a pilot resale program in Floyd’s three core markets: New York, San Francisco and Los Angeles. As part of the pilot, the company was able to open new warehouses and leverage FloorFound’s partnership with its last-mile delivery provider XPO Logistics to deliver or pick up any furniture necessary.
“We rolled this out quietly, with small messaging to customers, and we saw that there was definitely demand there. People were buying up the inventory,” said Brown. “Once we felt comfortable with the processes and what the customer experience was going to be like, we were able to then look at what it would look like if we expanded.”
According to Richter, FloorFound now offers brands access to 25 last-mile delivery hubs throughout the U.S. thanks to its partnership with XPO.
“We cover the vast majority of major metros with local pickup of a return going to a local warehouse, where that item is going to be locally stored, and then sold from there,” Richter told Sourcing Journal. “By making all of that a local transaction, we’ve cut out carbon emissions, and we’ve cut out cost of the transportation. We’ve solved the problem of ‘Where are you going to put this stuff?’”
Although there was initial concern about the pilot’s success, and also whether it would cannibalize the company’s general sales model, those apprehensions dissipated. Seventy-five percent of all consumers that had purchased from Full Cycle during the pilot were new shoppers that had never purchased from Floyd before, according to Brown.
“That was an indication that offering product at a discount might be a way to help people that might not be able to afford Floyd at a baseline be able to purchase,” Brown told Sourcing Journal. “But then we saw that 25 percent of those people are coming back to buy more from Floyd. It’s still giving them a solid introduction to the brand, and they’re enjoying the product, despite it being used [or returned].”
Floyd takes back furniture even if there are imperfections, chips, scratches or discoloration, at as much as 50 percent off the original sticker price. They can return their item within 30 days for a full refund. The reseller preaches full transparency, so all used and returned products are inspected and graded by the FloorFound team and will be marked for damage if necessary. When posted online, the products will have accompanying imagery taken at the XPO fulfillment centers.
The home furnishings brand does not charge a return rate, but the cost is baked into the original shipping fee, which ranges between $5 and $149.
“We’ve always designed our products for keeping, so we’re very purposeful in our choice of materials. We design it first with an idea of serviceability in mind, meaning that if one piece of a product gets damaged, it’s very easy to replace,” Brown said. “We don’t have to toss the entire thing, or our customer doesn’t have to. I think our product design itself really lent itself to a program like this working really well, where it’s very easy for us to swap out a piece and keep it in circularity.”
In-person “shed sales” started it all
Prior to working with FloorFound, Floyd had launched its own in-person resale program, with the brand taking inspiration for the idea from Patagonia and its Worn Wear used clothing returns program.
“We were founded on this mission of creating furniture that’s for keeping, but when you really look at it at face value, people are going to move and there’s going to be times when products aren’t going to work for their life, or they’re going to return something for whatever reason,” said Brown. “We had inventory that either didn’t meet quality standards or got returned, piling up in a warehouse in Detroit.”
To offload this inventory, the brand hosted three consecutive, annual “shed sales” at the warehouse where local shoppers could buy the furniture. After the success of the events, Floyd took customer feedback to help expand the in-person shed sales to the online pilot and began its partnership with FloorFound. This gave the brand confidence that it could build out a used furniture market, as long as it maintained its transparency through descriptive imagery.
“We used our customer feedback to learn what it might mean to sell and market used and damaged furniture. It was important to us that it’s very clear what they’re getting,” Brown said. “That was important to our customers. They needed to know.”