Baldai1.lt Grew By 80%, Plans A Repeat Performance This Year
The Furniture1.eu Group, operating in Lithuania under the Baldai1.lt banner, is applying the business model it tested in Lithuania, recording 80% growth in income throughout 2019, from 25 to 45 million EUR. 80% growth in revenue is expected this year as well, reports Verslo zinios.
These results are determined by several factors. There are over 100,000 items in the catalog, the website accepts payment upon delivery, and the company expanded into countries boasting over 10 million citizens.
Pijus Makarevičius, the majority shareholder and CEO of Furniture1.eu, said that customers are increasingly choosing the option of buying furniture online, especially when there are no major furniture salons in their area. Last year alone, the company received 168,000 orders, compared to 93,000 in 2018.
“In the Baltics, our business has reached the stage of mature development, but we are expecting to see the quickest growth soon in countries with more citizens, like Hungary and Romania,” said P. Makarevičius. “The ability to pay for their order upon delivery and return what they bought for free within a year encourages clients to buy furniture online.”
The company operates in nine European countries but the biggest contributors to its fast growth were Slovenia, Hungary, and Croatia, where revenue grew by 63%, 78%, and 107% respectively, compared to the results from 2018.
Significant growth was achieved in countries, where Furniture1.eu only started operating in 2018. For example, income in Greece and Romania together grew from 0.28 to 4.6 million EUR.
“This year, we’re planning to match our yearly growth numbers from 2019, which amounted to 80%,” predicted P. Makarevičius. “Business in new markets grows faster and will soon start to overtake our older markets in terms of the income share. Growth in the Baltics will be somewhat slower but the much faster development in the Middle and Southern European markets will make up for it.”
Furniture1 has plans to not only expand their catalog but shorten delivery times and reduce prices. In an effort to reach these goals, the company will try to improve partnership agreements with more than 200 furniture manufacturers, automate data sharing with suppliers, and perfect logistics processes.
According to P. Makarevičius, one of the contributing factors to the company’s 2018 growth in Lithuania was the acquisition of the Berry brand.
“We managed to successfully adopt the proven traditions from this network while injecting the Furniture1 experience where appropriate,” shared the CEO of Furniture1. “Now, we are planning to expand the assortment of goods on offer in Berry shops by providing more options when it comes to the interior, lighting and home textiles categories.”
Joining the Bygghemma Group in the autumn of 2018 allowed Furniture1 to gain valuable experience from market leaders in Scandinavia and expand its catalog, according to P. Makarevičius.
“Together with that, we gained the confidence we needed to apply our business model in other markets,” said P. Makarevičius. “This union was the push we needed to expand our business in Greece and Romania. On the other hand, there were countries like Finland, where we decided to stop our business.”
The CEO does not keep it secret that several factors contributed to ceasing operations in Finland. One of them was the lowest customer satisfaction out of all countries Furniture1 operated in. Additionally, the Finland project was the only one servicing the market from another country, Estonia.
“Logically, we were not able to service a geographically bigger area without changing our business model,” explained P. Makarevičius. “The fact that we did not have a local team could have been one of the reasons that determined the low customer satisfaction numbers. Changing the business model would have meant establishing a local company, assembling a team, and having to deal with high fixed costs. When planning investments in 2020, we have chosen countries where we see more opportunity for our current business model to flourish, so we decided to abort the project in Finland.”
Revenue from Finland only contributed several percent of the company’s total revenue.
According to the majority shareholder, the company plans to concentrate on the Southern European markets, with the next target being Italy with its population of almost 60 million people.
Furniture1 is currently successfully cooperating with local brands in the Baltics, Hungary, Croatia, Slovenia, Bulgaria, Romania, and Greece. Furniture1.eu currently employs more than 300 people in close to 30 offices and cross-dock warehouses. These warehouses are special because when the furniture is delivered there, it is immediately loaded to the company’s couriers and delivered to the customer without being stored for extended periods of time.
Joined the Klaipeda FEZ
Last August, Baldai.lt joined the Klaipeda FEZ community. The company successfully set up its new distribution center in the FlexStart building and is servicing not only Klaipeda but also Telsiai and Taurage municipalities.
According to P. Makarevičius, setting up operations in Klaipeda FEZ exceeded all expectations.
“The infrastructure here is very comfortable, the terms are very flexible, the FEZ management team really listens to what we need,” commented P. Makarevičius. “After moving to the Klaipeda FEZ, we increased the area serviced from our Klaipeda warehouse by 15%. We believe that our Klaipeda FEZ division will continue to contribute to our fast sales growth in Lithuania.”
According to the CEO, the scope of the company’s activities in Western Lithuania grew by 60% after moving its Klaipeda warehouse to the FEZ territory.
Source: Klaipėda Free Economic Zone