10 tips on how to go digital in the home decoration and home textiles sector

Doing business has become increasingly digital in recent years. The COVID-19 pandemic further accelerated digitalisation among both consumers and businesses. This study gives you 10 key tips on how to work digitally and how to benefit the most from digitalisation in the home decoration and home textiles (HDHT) sector.

1. Be aware of the most common types of digitalisation

Digitalisation is stimulated by several powerful drivers, including:

• The new millennial and Gen Z consumers (and buyers);
• Wellness, including the positive and negative effects that digitalisation can have on mental health;
• Sustainability and transparency; and
• The ongoing push from the tech industry and its strong creative and marketing power.

These trends are related, and also strongly influence the HDHT sector in general. Millennials and Gen Z are quickly becoming the main consumers and professional buyers in Europe. Their key buying motive is improving their mental and physical wellness. Sustainability is an important aspect of this.

As customers, millennials and Gen Z demand complete convenience – including 24/7 online access to products and services, plus accurate and quick delivery. They are less sensitive to traditional marketing messages but are still looking for authentic, ethical brands. Because of this, marketing must be relevant, targeted and present on their favourite social media channels. Online reviews and the opinions of online peers inspire trust.

Lockdowns and travel restrictions during the COVID-19 pandemic forced both businesses and consumers to further accelerate their digitalisation. After the initial outbreak, digital adoption made 5 years’ worth of progress in just 8 weeks. In the HDHT sector, perhaps the most notable change was the shift from physical to digital sales. Although this mainly affects the relationship between consumer and retailer, digitalisation will also become increasingly important for you as a manufacturer/exporter from a developing country.

A 2022 ITC survey among micro, small and medium-sized enterprises (MSMEs) in 11 French-speaking African countries reflects how digitalisation can boost your business. 85% of enterprises using digital technologies said they increased sales as a result, and 81% said the digital technologies helped them cut costs. In addition, digital technologies helped enterprises access international markets – ranging from 34% for micro enterprises to 72% for the largest enterprises in the survey.

2. Invest in relevant business software solutions

Business software can transform the efficiency of your business processes and reduce costs. These systems can handle everything from inventory and order management to billing and customer relationship management (CRM). An added benefit is that digital documentation is generally more reliable than paper archives. Now that digitalisation is becoming increasingly common, you have to determine what software solutions your company requires to keep up with your buyers’ digital needs.

The easiest way is usually to start with individual software applications for specific business processes such as accounting, CRM, invoicing, inventory and order management, HR, and compliance management. For example, accounting software like QuickBooks, Xero or even Excel can streamline your financial management. There are also local suppliers that specialise in solutions for small and medium-sized enterprises (SMEs): SME Vai from Bangladesh offers digital solutions for accounting, marketing and legal services for SMEs and Africa Digital Genius from Côte d'Ivoire specialises in digital transformation, providing solutions for processes like accounting, CRM, marketing, HR and inventory.

For many business processes you can even use free applications. Although these may have relatively limited functionality, they can be a good way to try out a specific type of software and determine whether you need to invest in a more elaborate tool.

For more experienced users, Enterprise Resource Planning (ERP) systems are the most comprehensive option. These systems offer an integrated set of applications for all your main business processes, including inventory management, order processing, logistics and risk analysis. Although ERP systems like SAP and ORACLE are traditionally associated with large companies, less expensive options are becoming available for SMEs. Many of these are cloud-based.

Procedures in export logistics are also increasingly cloud-based, such as in the Registered Exporter (REX) system of the European Union (EU). Registration in this system allows you to certify your products’ origin based on self-certification, via a ‘statement on origin’. You can then include this statement in your invoices, so you don’t need to apply for a certificate of origin upon each export.

This kind of streamlining can also be helpful in the context of sustainability due diligence. For example, supplier members can use the Sedex platform to easily share their sustainability performance data with multiple customers at once. Such standardised ways of sharing sustainability compliance data may become increasingly available as the EU rolls out its Corporate Sustainability Due Diligence Directive.

3. Use digital communication tools

Face-to-face meetings and company visits used to be the standard, until the COVID-19 pandemic forced companies to move their business online in 2020. Interestingly, many European buyers prefer digital interactions and self-service, mainly due to ease of scheduling, savings on travel expenses and safety. They also believe this new model to be equally or more effective than the pre-pandemic way of doing business. Unsurprisingly, then, the shift towards digital channels has persisted.

Source: McKinsey

B2B sales have become omnichannel, with traditional (for example, in-person meetings), remote (for example, phone and video calls) and self-service (for example, e-commerce) channels all playing a role in sales. According to McKinsey, a ‘rule of thirds’ has emerged across all major industries, at all company sizes, in every country. At each stage of the sales process, buyers use a fairly even mix of sales channels.

Online ordering and reordering are especially popular in Western Europe with 40% of total orders. This kind of B2B e-commerce is rated as the most effective sales channel by 35% of respondents to McKinsey’s December 2022 Global B2B Pulse, ahead of in-person sales (26%), video conferencing (12%), email (10%) and telephone (8%).

Your website and social media channels are key digital tools to showcase your products and processes online. European buyers look for stories they can use in their marketing towards resellers. The more relevant, lively and interactive your maker and making stories, the more added value they offer down the distribution chain. Environmental and social sustainability are becoming increasingly important topics. Impact data about aspects like meaningful employment, recycling or a reduction of your CO2 emissions can give you a competitive edge.

4. Sell your products via digital B2B marketplaces

You can also attract new buyers online on B2B HDHT marketplaces. Such platforms allow convenient B2B sourcing and one-stop-shopping.

Important European HDHT trade fairs now have a B2B marketplace as a permanent online presence. A good example is MOM, which offers you a dedicated ‘mini site’ at an annual fee. You can use digital showrooms to showcase products, upload a company video, and highlight collections, projects and news. Interested buyers can contact you directly, so you can do business outside of the platform. The platform has just added the option to shop directly on the marketplace, but this feature is currently only available for European brands.

Figure 2: MOM, the new marketplace to be

Source: Maison & Objet @ YouTube

Another option is nmedia.hub (formerly Nextrade), an international B2B store solution for the home and living industry. This platform is linked to Messe Frankfurt, the organisation behind HDHT fairs like Ambiente and Heimtextil; it facilitates direct B2B transactions, allowing buyers to order your products directly via your shop on the platform. In addition to the annual fee, it charges a commission per order for this service. The platform also offers dropshipping, which allows suppliers to ship products directly to retailers’ end customers.

Other relevant marketplaces are the Dutch online wholesale marketplace Faire, connecting small independent retailers and brands around the world, and Fairling – particularly for sustainable and eco-friendly retailers and independent brands. Marketplaces like Orderchamp and Ankorstore are currently only available to suppliers from Europe, but you should be aware of their existence.

Figure 3: The Faire Guide for Shop Success

Source: Faire @ YouTube

The AliBaba B2B marketplace is especially suitable for sellers of larger volumes. It can be challenging to stand out from the competition on this platform. Successful sellers often have a dedicated AliBaba team to attract buyers.

There may also be national/regional initiatives you can join: Qalara is a global sourcing and wholesale platform from India for responsibly produced goods across all consumer categories from South and Southeast Asia; wholesale platform ANKA offers services to sellers of African products on a global scale; Buyamia is a one-stop marketplace that connects international buyers with local Indonesian artisan suppliers.

5. Tap into the digital B2C sales market

E-commerce can help you reach a broader range of customers. In 2023, 15% of EU consumers ordered furniture, home accessories and garden products online (in the 3 months preceding the survey). This ranged from up to 10% mainly in Eastern European countries to about 30% in countries like Denmark and the Netherlands. Nearly half of all EU online shoppers ordered goods and services from national sellers, and about 12% from sellers outside the EU – including the UK. E-commerce is most popular among millennials and Gen Z.

Consumers generally prefer to buy from brands with both an online and a physical presence. Such hybrid or multi-channel retailers allow them to gather information and inspiration online as well as in the physical store. Online is considered ‘better’ than offline across many criteria, including variety, reviews, price, comparison of brands and products, and fun. However, physical shopping wins on the ability to try a product before purchasing it and advice from staff.

In HDHT particularly, experiencing items in person before buying still plays an important role. This allows consumers to try out and feel the items, and also helps them avoid having to arrange returns for large home-delivered furniture pieces if they do not meet expectations. Because of this, even ‘digital-first’ retailers may have physical showrooms in their target markets.

Supplying to online or hybrid retailers

A good way to tap into the e-commerce market is to supply to a European wholesaler or retailer with an online presence. This has fairly little effect on the way you do business as an exporter. Because European HDHT retailers often sell their products both in stores and online, the way you supply to them stays the same. Even digital-first retailers like Wehkamp (Netherlands) and MADE (UK) need to take stock before they can sell to consumers. This means that supplying to online retail is not a separate market channel in itself.

Selling your own products online

Another option is to open your own webshop. However, selling directly to European consumers like this can be complicated and costly.

In addition, the new General Product Safety Regulation requires you to have an ‘economic operator’ in the EU who is responsible for product safety. In B2B sales, this is often the importer. For B2C sales you need to make specific arrangements, such as mandating an authorised representative or fulfilment service provider in the EU.

The EU also introduced new value added tax (VAT) rules for e-commerce in 2021. VAT must now be paid for all imports, in the EU member state where the goods are to be delivered – either via the EU’s Import One-Stop Shop (IOSS) or via a full import declaration. According to the Dutch Consumers’ Association Consumentenbond, Dutch consumers buy less from non-EU webstores because of the new VAT rules. They are deterred by the increased VAT on orders up to €22 and the uncertainty about additional costs.

All this can make direct online sales to European consumers especially challenging for exporters from developing countries.

6. Collect data for your product management

Big business and public services increasingly work with ‘big data’ – extremely large sets of highly unstructured raw data, usually from abstract internet or corporate and governmental sources. For small and medium-sized enterprises (SMEs), a more focused and systematic approach to collecting and processing production and marketing data is a better fit. An important area of their data management is product management.

Exporters must comply with EU legal requirements, which sets off a data mining and processing process that involves at least the following steps: 

1. map out the product ingredients and components – this is often registered in your bill of materials, and includes data on your suppliers and any certifications they may have
2. establish the HS code for your product
3. establish the relevant EU legal requirements
4. test your product to ensure compliance with the relevant legislation
5. design or adapt product specifications that ensure a safe product 
6. create an admin system – this should include information such as the bill of materials, specification sheets, internal and external test reports, certifications, cost sheets and price dates
7. keep the system accurate and up-to-date
8. share relevant data with your buyer – this helps them with quality assurance and sustainability communication

Such standard operating procedures may also apply to areas like social and environmental compliance, sales analysis and production efficiency, such as reject percentages and production input/output data. This kind of data management will help you become a more effective business and a more relevant partner in the distribution chain.

Data security

The potentially negative side effects of the global digitalisation trend are also becoming clear. Consumers feel overloaded and are cautious about issues like spam, hacking and phishing. What’s more, privacy issues are the order of the day, both in business and in private communication. Processing data comes with the responsibility to keep those data safe, so you should not collect more information than you need and must safeguard it with secure password systems and restricted access.

7. Study international trade data

For a good understanding of the European HDHT market, you have to invest time and effort into market research. The European market is sophisticated and segmented, so to be successful you must match your offer to a corresponding segment. Our market information for the HDHT sector is a great start, giving you information on topics such as trade flows, trends, requirements and market segments.

When looking at big trade data and statistics, you will find that the larger Western European countries are generally the main importers of HDHT products. However, importers in these countries are generally re-exporters who sell their products across Europe. As such, individual countries are not markets. Instead, your best strategy is to focus on market segments, from low- to high-end.

For a deeper dive into the specific trade flows for Europe and your country or product, you can use international trade data from free tools such as ITC’s Trade Map and the EU’s Access2Markets’ trade statistics portal. These can provide you with insights into country or product performance, demand, alternative markets and the role of competitors.