A simple shopping expedition to find furniture to replace the milk crates he used as chairs in his backyard has turned into a $20 million business for Sydney man Winston Tu – including one item which unexpectedly took off during the pandemic.
Back then, when he was sitting on milk crates instead of chairs, he went looking for an outdoor set that he really liked. But it was selling for $3500 and he simply couldn’t afford it.
Scrolling the web before e-commerce had taken off in Australia, after a few weeks of digging Mr Tu found he could buy the set for half the price.
Even better, he said, was he could sell the furniture for half the price of traditional retailers by cutting out the middle men and going straight to the manufacturer.
The 44-year-old borrowed money from a friend and took a $20,000 cash advance from his credit card to get his first container of stock to launch his business Luxo Living.
“The funny thing is that first set we imported actually had ottomans that looked like the milk crates. It was like an ottoman that went under the seat,” he told news.com.au.
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Launching the business in 2003, he was selling wicker outdoor furniture and everything from dining sets to outdoor sofas and sun beds.
The business was cruising along nicely but things were a struggle in winter when sales would drop dramatically and Mr Tu would have to turn to things like saunas and appliances.
He realised he was missing out on a massively obvious market – indoor furniture – and introduced bed frames to the business about five years ago.
Currently, Luxo Living’s bestseller is actually a triple bunk made with New Zealand pine with the option of several different colours, which retails for $699.
But when the COVID-19 pandemic hit, there was a big problem, admitted Mr Tu.
“COVID was very interesting looking back now. At the beginning we were struggling. March and April last year was terrible for us, as our whole business was based on a just in time order and then replenishing a model, so we would try and time incoming stock to arrive when we needed it and with shipping delays we ran out of stock,” he said.
“What happened at the beginning is we couldn’t get any stock, so had an almost empty warehouse and we reduced the staff down to four people during that time. After things started normalising, we had 14 people and it’s funny as we went from a just in time model to a just in case, so we were ordering too much stock as we kinda got burnt.
“We went crazy ordering a lot of stock during the first few months where we got to point that more than 80 per cent of the range is in stock and available for same day delivery.”
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But with people stuck at home, the pandemic caused a boom in sales from May onwards, although not in the obvious areas.
“Interestingly the saunas – they are not furniture but one of two aspirational categories – became really popular with people staying at home, having extra cash, not going to the gym and not wanting to share a steam room, so they went crazy and are still popular,” he revealed.
“Bed sheets also went really well. There was a massive increase in bed sheet sales, so rather than furniture it was furnishing. So it led us to start sourcing quilt covers and different types of bed sheets as we only had one in different sizes and colours at the start.”
In fact, it prompted Mr Tu to boost the Luxo Living range from 350 products to 1200, which will tip them into annual turnover of $20 million this financial year.
“There is a gap in the smaller items such as home decor products that we are starting to focus on,” he said.
“Traditionally furniture is large and bulky and heavy and we don’t have a lot of decor items like artificial plants, bed linens, cushions and that kind of product.”
There are also plans to launch their own premium delivery service where they go into a customer’s room of choice, set up the furniture and remove the rubbish at the same time.
After a successful brand collaboration with reality television show, The Voice where Boy George was filmed sitting on their Esben sofa in a couple of episodes, there are also plans to team up more.
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