Maximising Your Profit Margins: A 2024 Guide for Furniture Retailers & Dropshippers

Discover how to build a sustainable, profitable furniture retail business

According to IBIS World’s Furniture Retailing in Australia 2024-2029 report, more time spent at home and rising discretionary income are driving furniture sales in the wake of the COVID-19 pandemic.

Additionally, despite the size of major furniture retailers like Harvey Norman and Ikea, there are opportunities for new, smaller entrants to enter the market, with lounge and dining room furniture attracting the highest demand. 

While the industry is predicted to continue moving positively, proactively identifying gaps and striving for continuous improvement are key factors for staying ahead of the competition and maximising revenue. 

As your dedicated wholesale furniture partner, we’ll outline five strategies to help you boost your profit margins and build a sustainable furniture retail business in 2024.

5 Profit-Boosting Strategies for Furniture Retailers & Resellers

1. Identify areas for cost reduction

As with managing your personal finances or running any successful business, it’s essential to develop a clear understanding of your overall cost structure. You have to stay on top of what’s going in and out to identify potential gaps or improvement opportunities. 

Aside from considering the cost of purchasing wholesale furniture, you must also factor in other ongoing costs such as storage and warehousing, shipping and logistics, and operational expenses. You can partner with an experienced accountant to help you assess your finances and audit areas for maximised cost efficiency.

If partnering with an overseas furniture wholesaler, you’ll also need to calculate import tariffs and exchange rates. International goods entering Australia may incur duty, GST, and/or additional charges, which often depend on the type of goods and country of origin. Click here to learn more about the cost of importing goods into Australia.

2. Escape pricing wars with a value-based pricing strategy

While consumers will always seek value for money, and price is often the most significant competing factor among furniture retailers, small furniture retailers can test and adopt a value-based pricing strategy.

With a clear understanding of your target market, you can emphasise the value of your furniture over price alone by focusing messaging on the quality of craftsmanship, innovation, or sustainable materials. 

By building a strong brand, promoting clear values, and effectively marketing unique selling points that resonate with your target market, you’ll be able to attract discerning customers who are happy to justify the premium pricing while protecting your profit margins.

3. Implement efficient inventory management

Implementing an efficient inventory management system is essential for maintaining healthy profit margins. 

Invest in robust inventory management software to help your team maximise turnover by actively tracking current stock levels, identifying slow-moving products, and forecasting demand. This will go a long way in freeing up capital, streamlining operations, and reducing unnecessary inventory holding costs.

To minimise inventory holding costs and waste in an increasingly complex, dynamic marketplace, you can look into Just-in-Time (JIT) inventory management. This is a popular strategic approach where goods are received on a flexible, as-needed basis, enabling businesses to improve cash flow while keeping as little inventory on hand as possible. 

Furnlink offers full support for our furniture retailers and distributors – when partnering with us, there’s no need to hold stock as we do it all for you, from keeping large on-demand stock holdings to organising deliveries direct to your customers.

4. Diversify your product range and increase average spending by upselling

Diversifying your product range is a great way to expand your customer base by meeting a wider array of customer needs and wants. 

Diversifying your range can include expanding into new furniture categories, catering to different styles and aesthetics, and adding home decor and accessories to complement your main furniture range. You can also cater to niche markets by tailoring your product range to specific demographics, such as children’s, environmentally-friendly, or pet-friendly furniture. 

Additionally, you can increase your customers’ average spending by upselling related products, suggesting add-on accessories, or promoting upgrade options.

For example, if a customer is purchasing a dining table, you may recommend a matching set of chairs, a furniture protection plan, or other decor for the dining room. When strategically promoted at the right time and place, upselling will help you increase each transaction’s profitability.

5. Grow your customer base with cost-effective marketing strategies

Employing cost-effective marketing strategies is essential for building brand awareness and trust in the increasingly competitive retail space. 

As discussed earlier, competing on price alone won’t always pay off and may impact your potential to scale. With a deep understanding of your target market, from demographics to where and how they spend their time online, analyse the performance of different online and offline marketing channels.

Whether it’s social media advertising, content marketing, print campaigns, or referral programs, it’s important to identify the marketing strategies that yield the highest returns.

For example, even though investing in Google Ads might get you on the first page of search results, it can be incredibly competitive and costly.

If you’re targeting a younger audience who spends most of their time on Instagram or Pinterest, your money might be best spent on social media advertising or partnering with home decor and lifestyle influencers. On the other hand, if you’re physically based in a tight-knit, regional community, you could consider investing in a referral program that encourages customers to promote your business via word of mouth. 

Most importantly, take the time to work out which marketing channels work best for your furniture business, and double down on those areas rather than spreading yourself (and your budget) thin across all channels.

Partner with Furnlink, Australia’s trusted furniture wholesaler, for a profitable, win-win relationship

As Australia’s preferred importer, stockist, and wholesaler of hospitality and commercial furniture, Furnlink’s complete partner program is designed to help furniture resellers and distributors of all sizes sell and profit more. 

With our in-house professional marketing support, done-for-you stock holding, and door-to-door shipping services Australia-wide, you can rely on our industry expertise and exclusive product range as an extension of your team. 

Comprehensively supporting your goals all year round, get in touch with us to learn more about becoming a Furnlink partner.