The word ‘innovation’ conjures unfortunate images of visionaries sitting under Apple trees, leaping from baths or donning a black turtleneck to show off their latest gizmo in a Californian convention centre.
The reality is, thankfully for those of us who aren’t timeless geniuses, rather more prosaic. It’s also far less likely to be driven by the producers of glitzy technology than by a better understanding of the end user’s needs.
Take Swoon Editions, an online furniture retailer founded in 2012 by media professionals Debbie Williamson and Brian Harrison.
As industry outsiders, they were able to see weaknesses in the conventional business model, which goes something like this: retailer bulk buys products from its suppliers in summer and winter ranges; fast-selling tables and sofas sell out; laggards fill expensive warehouses for months, before a costly mark down for clearance sales; repeat.
Swoon turned that on its head. Mirroring what’s been seen in the clothing industry over the last two decades (if you can have fast fashion, why not fast furniture?), the company releases as many as 100 new designs every month, centred on a creative theme and guided by predictive analytics on previous sales. The batches are tiny – as few as 10. Those that prove popular in these daily tests then go into larger-scale production.
Adopting this rapid response business model has allowed Swoon to pass on significant savings to its customers – the company says it sells products for typically half the price of equivalent retailers.
"Furniture’s big and expensive, so if you’re stockpiling, that costs a lot of money. We have a distribution centre where it comes in and goes straight out to the customer. That is a huge cost saving," explains co-founder Williamson.
"But the biggest saving is not having these big end-of-season clearance events, and not having the same cost of failure, because if there’s a problem and you’ve delivered it, then you have to collect and replace it."
What enabled this demand-led innovation is another innovation on the supply side. Swoon is unusual in that it owns the intellectual property on its furniture designs, and puts the contract to build them onto a bespoke supplier platform.
A set of 37 vetted and approved artisanal suppliers around the world, many of them in India, engage in a reverse bidding process every time a new order comes in. The system automatically adjusts the bid based on their track record of delivering without quality issues.
"It was a bit of a sell at the beginning, with these small runs, but over time they’ve seen the benefits of it," says Williamson. "We share data on what’s working – they get feedback on new materials and techniques really fast and they can then fan those out within their own offering."
Swoon has now raised over £20m in funding, led by Index Ventures and Octopus Investments. As it scales, Williamson hopes to expand the supplier base and branch out into accessories, to match the growing trend towards incremental, as opposed to one-off, home redesign.
Look out for part II of this interview, where Williamson shares how she found her suppliers in an industry she didn’t know, visiting over 500 around the world to find the right ones.
Image credit: Swoon Editions