BETTER BUSINESS: Advice almost cost couple $22m
IN THE year 2000, furniture company Matt Blatt was seriously struggling.
Today, the brand is an Aussie icon - but at the turn of the century, it was a very different story.
At the time, owners Adam and Deborah Drexler were manufacturing pieces, but failing to compete with similar Chinese products on the market.
The debts were piling up, and so they switched from manufacturing to importing - but still, the sales weren't happening, and the business was steadily going broke.
The situation was so dire Mr Drexler was even preparing to get his taxi driver's licence as a Plan B if the business collapsed.
He had been toying with the idea of taking the business online, but during a meeting with his accountant, he was given some advice that could have cost him everything.
"I was visiting our accountant in his office and saw he had credentials for being both an accountant and a financial adviser, so I said 'I need advice, I'm thinking of totally changing our business model and selling direct to the customer through an online channel'. He didn't think that was a very good idea and he said it wouldn't work," Mr Drexler said.
"At that time in 2000 no one was making a profit selling products on the internet - even one of the biggest businesses at the time and today, Amazon, was notorious for losing money selling online.
"My accountant said I was wasting my time and that I'd go broke."
Despite his accountant's ominous warnings that shoppers would never want to buy furniture online as they wouldn't be able to touch and feel it, the Drexlers took "a leap of faith" and went ahead with what was a radical decision at the time.
But even though consumers were terrified of credit card fraud and buying goods online in the early noughties, Matt Blatt 2.0 "took off like a rocket" almost immediately.
And over the next five years, the company raked in $22 million from online sales alone.
"It was a really good decision for us at that time and it saved our business," Mr Drexler said.
"We did the opposite of what many businesses do by starting online. Even though the nature of the business is more touchy-feely than things like books and clothing it started taking off once we opened a showroom so people could sit on the sofas and feel the fabric, but the online component of the business was very strong, about 60 to 70 per cent of the total turnover.
"There was some hesitation [before launching online] but the situation was such that we didn't have a lot of choices. We had a product and we had to sell it so we took a leap of faith and we hoped and prayed and had faith in our abilities to pull it off."
Mr Drexler said it had been a terrifying experience.
"We had many sleepless nights - it was a stressful time and it was pretty scary," he said.
"But it really picked up and the overdrafts started coming down. One day we had a pretty good weekend and I thought the overdraft would be down to zero.
"But on Monday I saw it was $18,000. When I realised it was $18,000 in the black and not in the red, it was a very emotional moment - that was a big milestone."
Today, Matt Blatt is an undisputed leader in the furniture industry, with online revenue up 80 per cent so far this year, and revenue from social media up 270 per cent year on year, while sofa sales remain the company's biggest sellers.
But Mr Drexler said Australia's wider retail industry was going through a tough time and that the real estate downturn had also affected furniture sales.
He said the business had changed rapidly since 2000 with the emergence of global players like Ikea and the growing popularity of Kmart's homewares range as well as the roll out of new technology such as AfterPay.
But he said Matt Blatt stood out from the crowd and had a different, niche demographic with a focus on unique and quirky pieces.