Oversized items such as furniture have become a common sight during weekly curbside trash days, and the Environmental Protection Agency found that 80% of them end up in landfills.
Companies like FloorFound have been successful in managing furniture returns, but LoveSeat is on the heels of trying to improve the performance of these landfills with its unique approach to an online return marketplace where furniture is sold at a local auction.
Husband and wife co-founders Chris and Jenny Stanczak founded LoveSeat in 2013 as a vintage furniture company based in Los Angeles and San Diego. In January 2020, the company was having trouble securing inventory and decided to try to get the furniture return truck back, and when it worked, the company flipped.
“We kept doing it over and over again,” Chris Stanczak told gaming-updates. “There was more participation, more participants and higher prices. And this is understandable, because people want more modern things, not furniture that is used a lot or too old.”
The couple have since moved to Austin and opened a market there, while continuing to operate in Los Angeles, San Diego and Orange County.
Their mission is to eliminate wastage in the return chain, which according to Chris Stanchak is a potential $30 billion market where 20% to 30% of goods are returned.
“Retailers don’t like to deal with returns,” he said. “Since people have moved their purchases online, there have been more regretful returns, and that has become a big problem because you can’t just put it back in the box. The seller must send it back to the manufacturer, so we are keen to get a new one. To find him at home.”
Stanchuk calls LoveSeat, which sells customer returns or excess inventory, a “liquidity machine.” He usually sells over 90% of the new products that hit the market each week.
Jenny Stanchuk said most items are 70% off on average, with auction items starting at $10.
“We have weekly auctions so our customers stay and come back every week because the items are new,” she said. “If you see the auction at midnight first, you can get a lot. We have hundreds of people checking auctions every week and we extend the auction time if there are last minute bids to make it more like a game. Ultimately, we have 55% repeat customer purchases.”
LoveSeat didn’t have much to do with marketing, relying mostly on word of mouth, and in its second month of operation, the Austin market turned lucrative, Chris Stanchuk said.
As such, the couple would like to expand their presence in the existing four markets and expand into other markets, so they went for a venture round and raised $7 million in Series A funding to drive that growth.
The capital injection was led by Bessemer Venture Partners, with the participation of a group of business angels, including Gokul Rajaram, Gabriel Weinberg and Kala Vepuri.
In addition to expanding the market, Chris Stanchuk expects to use the new funding to staff the leadership team and bring in operations, finance and inventory specialists. He plans to live in Texas all year and move to another state, and eventually plans to move across the country. The company also plans to use the same auction model for electronics and clothing in the future.
Meanwhile, as in any profitable market, the company itself is moving in this direction, said Chris Stanczak. The goal is to triple turnover this year, which is the same as in previous years. He is also aiming for more results than his next market in terms of auction size and dollar value.
Talia Goldberg, a partner at Bessemer Venture Partners, said she doesn’t typically invest in stock companies, but the more she dives into Loveseat, the more compelling her model becomes, and the more she leans towards a retail-focused company model. Instead of being like Craigslist, the company’s value proposition is focused on new promotions, which is what consumers want, she says.
Goldberg called Stanchx “amazing” and “a great balance in terms of his skill and ability to mess up over the years.”
“The company didn’t have to invest in marketing, customer acquisition, or stores,” Goldberg said. “Once people see a value proposition, they will share it and it’s a fun gaming experience to help move inventory. Other models have stock but are more scalable, they can do it in a way that makes the model attractive and marketable. ,