US furniture retailers face new supply chain challenges! Start sourcing outside China and Vietnam

Most products and raw materials in the U.S. furniture market are sourced from China and Vietnam. However, the COVID-19 pandemic has hampered logistics and transportation in these two countries, causing a series of shocks to the U.S. furniture industry and bringing many new challenges. Retailers and brands are seeking new solutions.

Last year, many retailers and brands turned to air transport due to port congestion, container shortages and other supply chain issues. According to one estimate, air cargo demand in 2021 is up nearly 7% compared to 2019.

However, there are many limitations to air transport for furniture products, as furniture products are large, difficult to move, heavy, and expensive to transport by air. Analysts said that this year's supply chain situation is expected to be the same as last year.

New supply chain challenges

Analysts point out that the biggest challenges facing the U.S. furniture supply chain are the unpredictability of ocean shipping and port congestion. Last year, as consumers renovated their homes, demand for home furnishings surged, while container shortages and congestion at ports in Asia and the United States led to massive delays.

But the biggest pain point right now is that delivery times are unpredictable, with expected delays ranging from a few weeks to maybe three months, to three to six months. Retailers are trying to figure out where the product is in the actual supply chain, but it’s hard to pinpoint a delivery date.

In addition, tight supply chains have led to a surge in prices for furniture raw materials, including oil and lumber. Rising freight rates have further exacerbated cost pressures. However, despite the challenges facing the industry, many larger furniture retailers are in relatively healthy financial shape.

The data shows that among companies such as Williams-Sonoma Inc., Ethan Allen, RH, La-Z-Boy, Overstock, Basset Furniture and Wayfair, all but Wayfair have seen their financial health ratings improve in the past 12 months.

Increase local warehouse inventory

Due to the characteristics of furniture products, most retailers do not have the advantage of air transportation. Due to the longer and more unpredictable shipping time, in addition to increasing delivery time to the expected value, retailers also respond to shortages and delays by increasing inventory reserves. Currently, the warehousing of the furniture industry in the United States is at a historical high.

For example, Overstock has maintained a policy during the pandemic not to sell any items that need to be shipped by sea. 99% of the goods on its website are in domestic warehouses and can be picked, packed and shipped to customers' homes within a few days.

Additionally, some retailers are adjusting by changing ports of entry to bypass congestion at the ports of Los Angeles and Long Beach. Some of Overstock’s suppliers are doing the same to avoid delays.

Sourcing outside of China and Vietnam

Furniture manufacturing and procurement are usually located in areas close to raw materials. Based on the advantages of raw materials, Vietnam and China have become important furniture exporters in the world. But last year, the outbreak of the COVID-19 pandemic in Vietnam and China caused a huge bottleneck in the furniture supply chain.

In addition, due to Trump's tariff measures, many retailers have begun to turn to sourcing in countries other than China and Vietnam, such as India and Türkiye. These new partners can help to deal with future market obstacles and twists and turns.

Some retailers and brands have moved more manufacturing closer to the United States. For example, U.S. furniture retailer Whittington said it has added three factories in Mexico over the past year to expand production capacity.

Mexico and other Latin American countries, as well as Israel, are trying to win more furniture manufacturing business, and some are also looking at the United States, which once had a strong furniture manufacturing industry.

The cost of doing so is higher labor costs and other manufacturing costs. But for brands and retailers, these costs may be worth it compared to losing market share due to shortages in the current unstable supply chain.

Editor ✎ Xiao Zhu/

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