MegaStory

D’FURNI’S FLEXIBLE BUSINESS MODEL

Congratulations on all of your good fortune. It is not easy to achieve that goal. How could you do that in such volatile economic conditions?

Doing business, in my opinion, cannot avoid market fluctuations. With the continuous fluctuations over the last three years, resulting from the impact of the pandemic, the global economy has yet to recover, wars, inflation... it is clear that most of businesses including D'FURNI have been greatly influenced.

Our company's revenue decreased not only during the pandemic, but also in September and October of this year. The business situation improved in the previous two months of 2023 as a result of a strong export market for foreign projects.

Luck alone will not suffice. For years, D'FURNI's flexible and proper business model has been the deciding factor.

The business model you said is …

Full loose furniture solution. This business model distinguishes D'FURNI from other rivals. Typically, a Vietnamese furniture factory specializes in a specific material group, such as natural wood, industrial wood, iron and steel, aluminum and glass, cowhide... D'FURNI chooses to provide comprehensive solutions for loose furniture, from production to exclusive distribution of products to domestic factories and global brands.

Our goal is to meet the diverse needs of our customers by adding value to every single project because each project is unique. There are two major types of furniture. The first category includes wall-mounted furniture such as ceiling, floor, and curtain... Professional contractors complete the construction in 1 to 6 months.

The second category is removable furniture, which is the market segment we are aiming for. From office furniture to cinema seats, stadium seats, schools, and hospital beds... D'FURNI can almost always provide well-suited solutions, and installation takes between 1 and 7 days.

Some separate furniture enterprises have appeared on the market, but they are only focusing on a small portion of the project. So I can confidently state that D'FURNI swims in the "blue ocean." In fact, with large-scale projects, one investor cannot waste time while also managing and operating resources to collaborate with 5, 7 different suppliers to create a complete project. They require a supplier who can manage and solve problems for the entire project. As a result, even though customers are aware that we can only produce about 60% of the project's quantity, they continue to place their trust in D’FURNI because our company have the capacity to provide comprehensive solutions of quality and standard.

D'FURNI respects architects' and designers' design concepts and can collaborate with them to make their visions a reality. We are prepared to provide individual sofas in the reception hall, which is something that factories that specialize in exporting to retailers cannot do. And we've implemented this solution for a number of domestic hotels in Phu Quoc, Nha Trang, Cam Ranh, and elsewhere, as well as for international corporations.

Could you please elaborate on the model's adaptability?

First and foremost, we have numerous brands and product lines. D'FURNI currently has four brands in four different segments: MANAGER, O'FURNI, HOME'FURNI, and BESTUHL. Each of these units owns a number of product lines. When a product line suffers from a pandemic or financial difficulties, we concentrate on the lines that are least affected, even creating new demands for the market.

We can fully implement the online sales program with the background from the factory supplying to the end user, who is the investor or individual customer, to make up for shortfalls in other product lines. Of course, at the time, the profit goal had to be temporarily set aside in order to create jobs and ensure employees' lives. We are proud to have retained 90% of our key human resources after the peak of COVID-19, thanks to this strategy.

Secondly, D'FURNI has eight distinct sales channels. When any sales channel shows signs of risk, difficulty in growth, or decline, we will promote channels with opportunities and create opportunities ourselves, similar to how priority positions are rotated between product lines. These eight sales channels are as follows: nationwide agents; contractors, architects, designers; direct supply channels from large investors to micro companies with only 5-10 employees; consumer retail channels, export channels... We can all find a happy medium.

This model has a clear advantage. However, is the profit truly generated or just compensated, with one feeding the other when operating costs are too high? Not to mention, how do you ensure synchronized quality from operation to personnel management to product quality?

We had many endless debates when developing this model. I even faced some harsh criticism. In fact, D'FURNI has spent enormous resources to operate four distinct brands at the same time, each with its own marketing team and platform. That is a significant challenge for a mid-sized business like us. However, as time passed, the market validated our expenditures. Because it provides customers with specific and practical benefits.

Consumers in various segments must always receive their own value. For example, the "only-for-the-boss" product line is positioned specifically for customers who are business owners or senior managers, making them happy and proud.

SATISFIED VALUES

Is your business philosophy "bringing concrete and practical value to customers"?

I have followed the theory of core values since the day I started this business. Every activity at work or in my social life revolves around this doctrine and must answer the question: Will this value benefit the group I am serving? Do they really value this?

The second point is, do the people who work with me, who are following me, share my vision and values? For example, if you become an expert in a particular field and stick to your beliefs and values to the end, and you have a group of people who share your perspectives, your chances of success increase. D'FURNI has solely specialized in loose furniture for the past 18 years.

How about your employees?

D'FURNI has reached the 18-year milestone, and many of its employees have been with the company for 13-14 years. Most managers and employees who have worked for the company for more than ten years become shareholders, are rewarded with shares, and purchase preferred stock. I believe the most successful aspect is that they regard D'FURNI as a family. It should also be noted that I am a strategic business planner, so I am not a good human resource manager. Fortunately, I have good associates who interact well with the teams, do a great job of keeping a balance mong generations of employees and assist me in establishing a solid internal foundation.

D'FURNI currently has an ISO 9001-certified manufacturing process. How did you put this together?

First and foremost, we position D'FURNI as a furniture manufacturing and distribution company. Each brand will have its own segment, and we will strictly adhere to the quantity-to-quality ratio. We only provide the exact quantity of products for one project and work within that scope, resulting in very little raw material inventory. Finally, we move on to the next project.

For example, D'FURNI pine frames for sofas only use pine with forest certifications from New Zealand, Chile, and the United States... Similarly, D'FURNI only uses natural rubber for foam cushions in chairs and beds. However, it nearly caught fire but did not burn. We choose and use only the standards set out for several groups of ingredients. Of course, this makes it difficult for us to compete and leads to a rise in production costs. However, over time, both domestic and foreign customers with similar aesthetic and quality standards have chosen D'FURNI and remained with us.

In production management, we create an ISO 9001 standard process that is accompanied by an ERP software system to manage production resources. The system also supports big projects to easily cooperate from small contracts to larger ones.

What strategy does D'FURNI apply to expand to other markets like Europe?

To answer this question, let me discuss the global loose furniture business model. Contractors in other countries are all selected through bidding and project management. And 70% of contractors purchase goods from all over the world. Previously, China was their first choice. However, following COVID-19 and former US President Donald Trump's anti-dumping policy against China, Vietnam is emerging as a new center, particularly for the furniture industry.

According to an industry report that I surveyed and conducted, Vietnam's furniture industry is expected to reach $25 billion between 2016 and 2025, with 20 billion coming from exports. This figure is not a mirage, as the export value has only reached $16.9 billion in 2022. Vietnam advanced from fifth to second place in the furniture export market to the United States in 2021, surpassing China.

As a result, I believe that D'FURNI's provision of furniture to contractors in the United States, Dubai, and Qatar... is part of this shifting trend. The retail export market in the United States is declining, and inventory levels are shockingly high, but I believe the project situation will improve over time. New construction is still underway, albeit at a slower pace, and requires furniture. Projects also need to be renewed after two to three years of silence due to the epidemic.

On the other hand, the World Cup will be co-hosted in the United States, Canada, and Mexico in four years; consider what these countries are doing right now. I believe this is a great opportunity for not only our company, but also other projects and Vietnamese furniture manufacturers in general.

In terms of the 2023 export plan, we will continue to supply furniture to Holiday Inn hotel chains in the United States (approximately 5,000 hotels) and Canada (2,000 hotels). They constantly change and refresh the rolling furniture. We have contracts with the Hilton hotel chain as well as Marriott hotels in the United States. We intend to approach European contractors with stringent product quality standards.

As you mentioned, the outlook for Vietnam's furniture exports is quite positive. What, in your opinion, should Vietnamese businesses do right now to capitalize on opportunities and overcome challenges?

Vietnam currently exports timber and forest products to 110 countries and territories. The United States, Japan, China, the European Union, and South Korea are the country's top five export markets, accounting for 90% of total export value. However, from the second to third quarters of 2022, interior furniture segment faced a number of challenges, including increased global inflation, transportation costs, and supply chain disruption. Consumers reduce their spending on household goods, including furniture. However, business prospect is forecasted to improve since June 2023. Following a temporary suspension of goods imports, businesses' inventories will deplete and they will resume purchasing.

There is still a high demand for wooden furniture. However, in order to adapt, businesses must clearly assess market needs, respond to changing customer demands, and strictly adhere to each market's export standards. When orders from major markets such as the United States and Europe are in decline, Vietnamese businesses can expand to markets with more stable growth, such as the United Kingdom, Germany, and Norway... It is also necessary to save. Consumer tastes and preferences are shifting across countries. Because of its functions and diversity, they prefer products made of wood and other materials such as metal, knitting wire, and so on over pure wood products.

1/ Quality goods factories have fewer export orders than mass goods factories.
2/ Promoting added value via new model design and new technology.
3/ Vietnamese factories are best suited to niche markets.
4/ Directly exporting to North America via Amazon, Alibaba, etc., without having to establish a business there.

Business administration, technological innovation, e-commerce development; improving the quality of raw material areas, and connecting regions to create stability... are all things that businesses can do to restructure production activities and create a ready platform when the market recovers.

Thank you!