Founded in 2015, Fabelio offers well-crafted and high-quality furniture for the Indonesian market from local designers at attractive prices. SMEhorizon speaks to Fabelio’s Marshall Tegar Utoyo, CEO and Co-Founder, and Christian Sutardi, Co-Founder, about their inspiration for entering this sector, the company’s plans for omnichannel marketing, their IT infrastructure, and their ambitions to compete with other furniture giants such as IKEA.
The inspiration for entering the market
According to Christian, the idea of a design & consumer centric furniture brand was inspired by his own hunt for furniture for his new place. “Whatever excellent products I found on the Internet wasn’t really available in stores. If it was, then it was costly. So finally I bought a bookshelf and a shoe rack, both were neither cheap nor beautiful. After only a mere 2 weeks, the door of the shoe rack fell off!” he recalls.
At the time, he was also struck by the poor customer service he experienced: upon making a complaint, he was told that he should’ve bought the warranty. “That remark resonates deeply with me until to this very day,” he said. “We all made a pledge to build a company that would offer beautiful, sturdy furniture at affordable prices and offer excellent customer service.”
Leveraging omnichannel marketing
Omnichannel marketing is where the customer is provided with a unified experience through all outreach channels, including both traditional and digital channels, point-of-sale, in-store, and online experiences. Fabelio recognises the importance of leading the omnichannel customer experience as Indonesia becomes digitally empowered.
To this end, says Marshall, they are planning to open up 10 new showrooms and experience centres this year in Indonesia and cover the whole island of Java by the end of 2020. “This largely refers to a great assortment of products, a smooth website and an easily reachable network of experience centres,” he continues.
While their main focus is to improve their assortment in terms of breadth, depth and stock availability, they also plan to expand their coverage area by opening new warehouses and experience centres.
Simultaneously, adds Marshall, “A significant portion of the proceeds will be invested in technology, which includes scaling up the current team of 40 engineers.”
“Our technology developments are always focused on assuring smooth customer experience: it’s the invisible magic that connects all teams and tech products that are involved in a customer order. A heavy emphasis is placed on last-mile logistics to reduce our delivery times even more.
“As an example: while last year less than 4% of the orders were delivered within 24 hours, today one out of five orders (20%) arrive at the customer the next day or even earlier. Mattresses can be shipped in less than four hours,“ he continued.
Online sales as a way through COVID-19
“The contribution of online sales to overall sales in every vertical has been increasing in Indonesia,” says Marshall, ” be it electronics, fashion, groceries or furniture.” When the pandemic has forced local showrooms to close, the company focused extensively on leveraging online marketing, digital accessibility and education for the new normal. “Our goal is always to provide better customer experiences, no matter what the situation unfolds.” He adds.
For all retail products – but especially for furniture – customers appreciate being able to touch and feel it for themselves. Said Marshall “We overcame this challenge through a virtual assistant, where we would educate customers by offering more personalised services via live chats with service staff and also mobile platforms such as WhatsApp.”
“Our virtual assistants are bridging the gap between pure online and pure offline purchases by giving social support for website customers. This channel’s contribution increased by almost 23 times at the peak of the pandemic and stabilised at around 11x more in the “New Normal” era. To strengthen services for customers, we continued to implement a 30-day return period, with a warranty period that was extended up to two years. Also, we provide a variety of delivery process options, from the same day to the next day delivery,” he continued.
These efforts have paid off, with Fabelio recording their highest online sales in April this year, even higher than during Indonesia’s #1 online shopping day Harbolnas on 12/12. “The future of eCommerce is brighter than ever, and the simultaneous ramp-up in payments and infrastructure will support this growth trajectory. Online sales increased by almost two times, compared with pre-pandemic sales,” says Marshall.
Fabelio’s IT infrastructure
Powering their digital strategy is a “mature IT infrastructure built over the last five years starting from a monolithic, off-the-shelf Magento community edition deployment which was heavily customised over the initial years to fit the business requirements,” says Marshall.
“As the business evolved, we adapted to a micro-services strategy and today we run more than a few dozen services on our cloud infrastructure as well as leveraging 3rd party SaaS services.
“Today we run most of our services as containerised applications running on Kubernetes setup with automated testing, deployment and monitoring systems running multi-cloud on AWS VMs, along with a few legacy apps running on GCP. Most of the software is built with nodejs/typescript and reactjs,” he explains.
To align with their growing business needs, they have scaled up their team size from a lean ten-member tech team to 38, “running multiple Pods [verticals with specified objectives] with dedicated PMs, Engineering Leads, Dev-Ops and Data Engineers and Analysts.”
Competing with the giants
According to Christian, the variety of competition in the online furniture retail space is reflective of the growing customer confidence in purchasing furniture online. “We feel that Fabelio has the advantage of knowing the user experience needed,” he adds.
“With the exception of product manufacturing, we own the complete value chain from product design to our own last-mile logistics. This means we have full control over every customer touchpoint. We always look at the holistic customer journey and don’t see us as either online or offline and embrace the preferences of our customers. We are continually incorporating customer feedback into our decision-making process, and that’s reflected in all departments,” he continues.
Achieving economies of scale
At the same time, the company keeps the cost structure lean, as, explains Christian, they stay “asset-light with a bias towards ‘bits/digital’”. Considering themselves first and foremost an e-commerce company with half of their sales from digital channels, they keep showrooms compact and outside of expensive, high-traffic areas, since their data has proven that this is sufficient given digital technology.
They also follow “a complex inventory model with a mix of “ready-stock” and “made-to-order””, explains Christian. ”The majority of customers buy items that don’t even exist yet. For a large set of our SKUs the inventory risk remains with the suppliers and manufacturers. This allows us to be very capital and cost-efficient.”
Lastly, through their robust collaborations with local Indonesian manufacturers, Fabelio avoids expensive import costs (freight, tax & duty) and can order smaller quantities for the same sales volume because delivery times are shorter compared to overseas imports. It is the focus on customer experience, together with a lean cost structure enabled by technology that has made Fabelio a major player in the Indonesian furniture market.