Despite the widening of operating losses for Made.com, its CEO, Ning Li, believes the e-tailer is near a tipping point in its evolution.

Its year-end results for December 2014 reported operating losses widen to £5.3 million from £4.9 million the previous year. But in contrast, sales surged from £26.2 million to £42.8 million, which Li believes is only going to improve.

He said: “Made is fast approaching a tipping point in its evolution, with continued rapid sales growth and improving financial metrics. Overseas sales now contribute 30% to total sales, demonstrating the brand and product have international appeal and reflecting the continued investment we are making in European expansion and improving the customer experience.

“This momentum has continued into 2015 with sales growth of 46% for the first six months of the year and the successful entry into Europe’s largest furniture market, Germany. With funding secured and infrastructure proven, Made is well positioned to capture the opportunity, presented as the furniture industry transitions online.”

Speaking to Sophie McCarthy, consultant at Conlumino, she said the industry has to remember Made.com is only five years old and some of the most established retailers like Sainsbury's and Tesco are still finding it difficult to make their websites operationally profitable – while even eCommerce giant Amazon took years to turn a profit.

"Made.com sales have grown massively on the year and they are ploughing investment into international expansion and now 30% of sales are from overseas – which is something a lot of high street retailers would like to have," McCarthy told Essential eCommerce. "When you put it in context and look at the level of investment Made.com are putting in, then I think they are doing the right thing.

"No one wants to present a negative loss this early on, but Made.com are prepared to make that investment up front, because they're confident they will get it back," she adds.

Fulfilment nightmare

McCarthy explained that it is fulfilling online orders which causes the profit-related headaches for retailers, pointing to John Lewis which recently started charging customers £2 for its click & collect service.

"Anecdotally, retailers say it costs between £10 and £12 to fulfil and order, but customers don't pay that much," she said. "And fulfilment is how they compete with eachother – Amazon launches one-hour delivery and that puts more pressure on retailers to launch quicker and cheaper delivery."

Showrooming

Made.com has also turned heads with its London showrooms, and it is to open a third in Liverpool later this autumn.

"A lot of our research states people want to touch, feel and see before they buy, especially when it comes to furniture,"  said McCarthy. "And this is one of the things Made.com prides itself on."

She said while Made.com is an online retailer with no costly overheads, launching showrooms helps to inspire customers and allows them to interact more with the products.

"But it's not going to be a significant form of revenue and they haven't pushed it as a big part of their strategy because to keep their prices so low they can't have the overheads of a store," she noted. "It's more of a marketing tool to drive awareness and convert sales."

She also said the Made.com brand is well suited to the retail pop-up culture the UK is experiencing at the moment. "It's a current, fashionable way of marketing," she added, pointing to a pop-up department store recently launched in London called Multiplex.

Social showroom

Meanwhile, over its last financial year, Made.com launched a social showroom, called Unboxed. Unboxed is a social platform which allows customers to post photos of their Made.com furniture online. It provides a Pinterest-style inspiration board of real homes featuring furniture you can buy from its website.  

McCarthy said the social commerce launch was a clever and cheap play on people's curiosity, which she said is surprisingly not damaging to the brand, even though some photos show Made.com furniture placed next to competitor pieces.  

"It's a clever way of creating more of a community, particularly if you don't have the staff interaction that you would have with a store," she said. "And it's playing on the Pinterest trend which not many retailers have tapped into, using looks and wish-lists."

McCarthy said Made.com is quite responsive to social media, and it understands that is what its customers are doing to gain inspiration for their homes.

"Although some photos feature images from competitors, many are aspirational, and in some instances are more persuasive than the website, as they give you a much better idea of size and positioning."

Brand awareness

While McCarthy wouldn't say if Made.com is close to that tipping point Li is hoping for, she said it is becoming a much more popular retailer.

The e-tailer is investing more into TV and billboard advertising to raise awareness and has also hired former merchandiser from Marks & Spencer's home department, James Smith, as its head of stock merchandising.

"They're really raising the awareness [of the brand]," she said. "And Made.com now has the right people in place to be quite a big business."