For years, Jaslyn Chan wondered why quality furniture and furnishings come with big price tags, when other consumer products had improved in both quality and affordability. This question drove her to co-found homegrown homeware and furniture retailer IUIGA that aims to disrupt this industry here.
Pronounced as “eye-you-gah”, the brand’s name means “I love quality”, and the company aims to offer products that are not just of high quality, but also affordable. “The quality and value of our products are determined for the masses. We want to serve the masses,” says Chan, who holds the chief growth officer title at IUIGA.
IUIGA, which started in 2017 as just an online platform, has maintained an attractive price point for its products while retaining their quality through its unique original design manufacturer (ODM) business model. Essentially, all of IUIGA’s products are manufactured by the factories that produce the same items for other large brands, such as luggage brand Samsonite.
“I wanted to do something that disrupts the traditional way of doing business. So, we went to the suppliers, intermediaries and finally the manufacturers. We realised that the cost prices of the products are low and these designs are not owned by the brands,” explains Chan, adding that buying the products straight from the manufacturers helps to cut out any middleman costs.
However, getting to work with these factories or manufacturers was not an easy feat. Chan recollects that it took the team one and a half years just to convince their first 57 manufacturers to work with them. Luckily, the brand took off and grew tremendously. Now, IUIGA partners more than 400 factories worldwide.
Home sweet home
When Chan and her other co-founders first decided to start a business, they knew they wanted to go into retail and adopt the ODM model, but were not entirely sure about what they wanted to sell. They bounced off ideas from selling tech devices to products for babies and mothers, but eventually settled with homeware products, as they realised that there was a lack of competition for such products.
“In Singapore, there is a lack of competition for these [homeware] products; that’s why all you can find are the expensive international brands,” says Chan, adding that homeware was a good platform for them to start with, to build the brand up to be a one-stop lifestyle retail destination.
With work-from-home arrangements becoming the new norm, people are growing more conscious about the way their homes “feel” as they spend more time at home. For Chan, it is an opportunity to introduce affordable furniture pieces into IUIGA’s range of products. Its home and living catalogue includes up to 100 new designs that focus on contemporary designs with minimalist aesthetics.
Although the Covid-19 pandemic has been harsh on retailers, this has not been the case for IUIGA. While its physical outlets islandwide suffered from a 35% to 40% drop in footfall, its online platform continued to flourish, growing up to five times in revenue during the “circuit breaker” period, especially with the sale of its affordable face masks amid retailers jacking up prices due to high demand. “Because of our omni-channel approach, our online sales managed to offset the drop in physical sales,” says Chan.
The drop in physical sales has not stopped IUIGA from expanding its business. It opened its first physical furniture showroom at 111 Somerset in August.
It was part of their natural progression to go into the furniture segment; Chan notes that IUIGA’s regular customers “strongly requested” for furniture products to be sold.
“Our intent is clear. We are entering the market of furniture and furnishing to meet today’s dynamic consumer preferences and a range of customer desires. With furniture in our catalogue, we are not just a lifestyle brand; we now meet today’s home and living challenges head on with our mandate for uncompromising quality and affordability,” says Chan.
The majority of IUIGA’s furniture and furnishings is priced at about $1,000 or lower. Additionally, IUIGA has complementary layout design services — inclusive of 3D rendering — for showroom visitors upon request.
IUIGA’s furniture segment, however, is not its money-making business. “The profit margin for the furniture segment is close to 0%, and the selling price is just enough to cover the product and operational costs,” says Chan, who views the furniture business as the brand’s marketing cost. Instead, it will concentrate on making profits from its homeware business.
Honest pricing
With so many e-commerce sites, it is easy for potential customers to make comparisons. Chan is taking a different tack when it comes to pricing. “We want to provide affordable products that are of quality,” says Chan, who believes that consumers should not have to burn a hole in their wallets just to afford quality products, or have to settle for less at lower prices.
“Overall, I am not operating at a loss. All of IUIGA’s products have a transparent pricing chart. All my customers will know how much I’m making. I usually price my products on average twice that of cost prices to remain profitable,” says Chan. A product’s transparent pricing chart displays its retail price and a breakdown of its raw costs – cost of materials, labour, tax and transport. Also in the chart is a comparison of the product with similar ones by other retailers.
To better empower consumers to make purchases, IUIGA has recently partnered “Buy Now, Pay Later” platform Atome to offer a flexible payment option, allowing consumers to spread the total cost of their bill into three equal payments over time with zero interest, hidden charges or service fees.
“We believe in making quality, premium products at fair, transparent prices and this partnership helps increase the affordability of our products, particularly for our Gen Z and millennial customers,” says Chan.
Apart from giving consumers a peace of mind, being transparent in its pricing allows IUIGA to stay on top of its game.
“When your cost price is laid out in the open, any other player that wants to come in and disrupt your business model will have to compete with your cost price. And that is not something that a lot of traditional businesses can compete with, because they have real overheads that are not viewed as marketing expenses,” says Chan, who considers physical store rentals as “marketing costs”, as the stores serve as a platform for consumers to physically examine the products and their quality.
IUIGA also has to spend on warehousing and rental as it expands its physical stores, so Chan tries to keep other costs low by keeping a “very lean team” and not hiring excessively. Instead, she relies on automation and its omni-channel approach.
As prices are the same online and offline, consumers are encouraged to purchase products online. They can then decide if they would like to collect their purchases at a physical store, or have them delivered to their homes.
At some of the physical stores, IUIGA has QR codes displayed together with the price tags of the products. Customers can scan the codes and check out their products through their mobile phones. After shopping, they can collect their purchases at the cashier counter. This allows store attendants to be able to focus on other more meaningful duties, such as attending to walk-in customers and refund queries, instead of having to constantly man the cashier.
Apart from keeping a lean team, Chan points out that to maximise cost savings, production runs are coordinated with the manufacturers’ production lulls. Stocks are also kept in different warehouses around the region instead of a single centralised one.
That way, “we can better review and predict which products will sell better and which ones will not, as feedback can be relayed to manufacturers faster compared to traditional retailers who stock products via a higher minimum order quantity”, says Chan.
Funding for expansion
Earlier in May, IUIGA closed its Series A funding round led by Indonesian conglomerate Konimex Group. The $10 million funding quantum injected by Konimex serves two broad purposes.
First, the new funding will be used to boost IUIGA’s go-to-market business strategy by partnering like-minded investors with common aligned visions of bringing product transparency to consumers.
Second, it enables IUIGA to broaden the reach of its successful omni-channel business model across Southeast Asian markets. This $10 million funding will be channelled to IUIGA’s Singaporean and Indonesian operations. IUIGA intends to double down its business operations in strategically burgeoning markets, with Indonesia the key focus for 2020.
The funding will also go to product development and technology investment to augment IUIGA’s go-to-market business strategy. The brand will invest in big data and AI to deepen its e-commerce personalisation, to better integrate with customers within its omni-channel business model experience. More stores means the need for more manpower. The funding will also be used on hiring to accommodate the expansion of IUIGA’s physical footprint.
“Most immediately, we’re intending to grow our Indonesian operations, with the target of doubling the office’s headcount [by end-2020. Indonesia’s potential is immense, with its burgeoning tech-savvy demographics. We want to be right in the action and unlock the economic potential in growth by 2025,” says Chan.
“In particular, we’re observing a noticeable sensibility within the Indonesian consumer market; consumer preferences are evolving where brand affinity is now pegged to how one’s personal values align with a brand’s broader values and mission,” she adds.
