The furniture maker learned from the all-digital-by-necessity model and has been supported by Oracle NetSuite on every step of its journey to a billion-dollar company.
It started as a beanbag company in the basement of Shawn Nelson's childhood home. More than 25 years later, Lovesac is now a publicly traded, high-end furniture retailer with 123 showrooms in malls across America and a valuation of more than a billion dollars.
Lovesac's trip from scrappy startup to the Nasdaq was paved with struggles and successes. While navigating the challenges of the 2008 Great Recession, Lovesac closed unprofitable stores to control costs. It then embarked on a more measured growth strategy, eventually expanding its product portfolio and pushing into new markets.
Lovesac's IPO in 2018 raised over $50 million and helped it further refine its business model and enhance its in-store and online sales operations.
After years of steady growth, Lovesac ended fiscal 2021 with net sales of $320.7 million, a strong customer retention rate, and more than 100,000 new customers of its cushy sacs and sectionals as part of the pandemic-fueled boom in the home goods category. Sales shot up 37% from the previous year.
But even as its business continued to thrive, Lovesac encountered shortcomings in its processes and technology.
In the years preceding its IPO, Lovesac was reliant on several disconnected legacy accounting and financial systems and processes that hampered growth. This was particularly true with its approach to bookkeeping and the return merchandise authorization (RMA) processes.
To modernize each of these core processes, Lovesac turned to Oracle NetSuite, a unified cloud-based business applications suite that encompasses financials, inventory management, customer management, and omnichannel commerce used by more than 27,000 organizations globally.
Early on, Lovesac's financial planning and bookkeeping efforts were tied to spreadsheets and manual data entry. This approach couldn't scale, and eventually, Lovesac's growth and IPO ambitions outpaced the capabilities of its software, including Intuit QuickBooks, which required an integrated business platform that was flexible and scalable enough to support its next chapter.
"Lovesac before NetSuite was never a bastion of executional excellence on systems, for sure," said Shawn Nelson, Lovesac's CEO. "We came up transacting on QuickBooks, and we've been through a lot of systems over the years, but nothing that's tied our data together as seamlessly as NetSuite, and nothing as robust for certain."
Lovesac also credits NetSuite with helping it win over investors during its IPO roadshow. With NetSuite, LoveSac had confidence in the quality and transparency of its financials and could prove to investment bankers that its figures were rock solid.
"We could demonstrate our sales record, and our earnings and expense records, and we could bring hard evidence that was very trustworthy," said David Jensen, Lovesac's CIO. "And I think NetSuite being in place was the core of that."
Supporting the 'Customer Love' team
Lovesac's growth over the years has been driven by its dedication to 100% customer satisfaction. Its customer service team is known as the Customer Love team, and its focus is on ensuring customers are happy not only through the entire purchase process but during the returns process as well.
For its RMA process, Lovesac wanted a system that could differentiate return types, yet also provide a framework that was cohesive and easy for its Customer Love team to follow. Since implementing NetSuite, LoveSac has improved and streamlined the entire return process without the complexities of software customization. The company also gained the ability to sync return data with accounting to track whether returns were due to carrier damage, vendor defects, engineering issues, or more typical customer dissatisfaction.
Today, Lovesac says its customer satisfaction score in the post-purchase arena has increased nearly 20%. "Our bookkeeping for return activity is also far superior to where it was a year ago, which helps us focus attention on resolving carrier issues and vendor issues," said Jensen.
Responding amid COVID-19
The COVID-19 pandemic drove a fast and significant change in Lovesac's digital strategy. As physical stores were forced to close temporarily, and furniture retailing moved online, Lovesac needed to quickly adapt its showrooms and have its front-line sales associates work in new ways to keep inventory moving.
Traditionally, Lovesac's showrooms supported a high-touch sales experience, with associates working closely with customers to personalize furniture items to their individual tastes. With all of its showrooms closed, Lovesac turned its field sales team — showroom sales associates and managers — into remote consultants who could help customers shop on the website and better understand the products. Those teams worked from home fielding calls and online text chats.
Having the cloud-based NetSuite system helped Lovesac make this change and capture, consolidate, and process sales, whether they were made in-store, online, or through its shop-in-shop partnerships with Best Buy and Costco.
Looking back on the challenges the retail industry has faced throughout the pandemic, Lovesac considers itself one of the lucky ones. It continues to grow at 30% to 40% a year and intends to leverage the lessons learned during the pandemic to provide digital customer service and sales in the years ahead.
"A year and a half ago, we were a third of the size we are today," said Nelson. "And I believe that with NetSuite as the centerpiece of our entire business operations, we have a system that is flexible enough, just like our furniture, to stick with us and grow with us and give us all the capabilities we're ever going to need."
Learn how Oracle NetSuite can help your business accelerate growth.
This post was created by Oracle NetSuite with Insider Studios.
Loading Something is loading.
Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options.