Elie Fouerti joined his brother, Albert, in a venture to sell high-end cameras in 2011. After the advent of smart phones relegated dedicated cameras into a niche market, his brother had the idea to sell people something they actually need. It hit him that there will always be a market for home appliances like refrigerators or washers and dryers.
After intensive research, Albert predicted that the prices for home appliances will continue to trend up the increased revenue streams would be surely follow. Albert, after becoming the chief executive of the company, saw his foresight pay off beyond expectation. Sales for the Brooklyn based Appliances Connection have surpassed $155 million. This rapid growth catapulted the company back to Crain’s “Largest Privately Held Businesses” list.
Factors that Contribute to the Fouerti Brothers’ Success
There are two factors that contribute to Elie Fouerti and his brother’s success:
It took some time for the general public to trust making purchases large in value and size, like appliances, on the internet. However, in 2016, a tipping point was reached when consumers in the US spent $4 billion dollars purchasing white goods online – a 38% increase from 2015.
As Millennials buy their first homes and, at the same time, aging Baby Boomers downsize and move, demand for appliances of at all price points has surged.
These are two great waves that Appliances Connection have been able to ride to success.
Strategies Appliances Connection Depend on to Blow Past of Competitors
The rise in internet sales of appliances did not come without casualties in the general market. Remember the in-person shopping experience of decades past. Brick and mortar stores must bend to the fickle winds of real estate pricing. They must employ salespeople to curry favor with customers. They must sometimes be burdened with illiquid overstock that won’t sell.
Many companies that have been household names just could not and cannot compete with these hurdles. In March 2017, HHGregg filed for Chapter 11 bankruptcy and announced the closure of 220 stores, laying off 5000 people. At the time of this writing, Sears/Kmart has announced the planned closure of 150 stores in 40 states. Home Depot, Lowe’s, and Best Buy have all lost a combined $12.5 billion in market capitalization as a direct result of aggressive moves in the major home appliance sector by Amazon. Some would look at the landscape and think traditional brick and mortar retailers of appliances are breathing their last.
There is still quite a bit of life in the brick and mortar aspect of the business. Overall consumer appliance auctions in the United States grew 5.6% in 2016, to $69 billion. Appliances Connection depends on several factors to surpass its competitors, including P.C. Richard & Son, The Home Depot and fellow Brooklyn independent e-tailer AJ Madison. The factors are:
- Aggressive pricing.
- Detailed product descriptions.
- Digital marketing chops developed over years in e-commerce.
- Expert and experienced in-house salespeople and customer service professionals who can be reached via an 800 number. In fact, about half of the company’s sales are made through phone calls with consumers.
Issues While Expanding Appliances Connection into Moving Furniture
Out of more than 68,000 customer-satisfaction ratings, Appliances Connection scores 4.7 stars out of 5 on shopperapproved.com. However, not all of the business’s reviews are stellar. There have been concerns raised by a vocal minority of their customers Elie Fouerti’s brother, Albert, admits that the firm has experienced logistical anomalies during busy periods. He said, though, the complaints represent a small segment of the thousands of orders fulfilled every day.
Moreover, some issues have arisen recently as Appliances Connection has expanded into selling furniture. The Fouerti brothers consider this another selling category ripe for e-commerce. Furniture is a lot more delicate than appliances. Both brothers also mention that they are not backing off from it and want to revolutionize it.
In another move, the business set up a division to supervise sales to manufacturers of multifamily properties. About 85% of its business now comes from residential customers, and the rest consists of government agreements and developers.
Elie Fouerti and his brother ponder that this new division could double the sales to builders. Eventually, the company’s B2B segment could expand to 40% of overall revenue.