Shipping Adjustable Beds? This FOB Alternative Can Solve Your Inventory Problems

April 4th, 2024

As a furniture retailer, finding the perfect adjustable bed to sell to your customers is a huge step toward creating a profitable product range. However, finding the perfect way to get the beds to your customers will define the success of your business. With this in mind, we asked ourselves the following question: why are so many retailers taking huge risks with logistics and inventory?

In this blog post, we’ll examine why Free on Board (FOB) shipping is a risk that you can avoid, and how the LOGICDATA Domestic Inventory Program could be the FOB alternative you’re looking for: a simple, low-risk solution for shipping adjustable beds.

Inventory Problems and the US Furniture Market

The market for home consumer products in the US, is in a state of flux. There are two reasons for this: demand and inventory. Post-pandemic, fewer households are spending on home items, in favor of experiences like holidays and restaurants. This has led many of America’s largest retailers to reduce orders, lower stock numbers, and renegotiate supplier terms. Target, Ashley and Walmart were among the most notable to do so.

Naturally, the furniture market is especially vulnerable to excess inventory. Bulky items cost more money to store, are generally harder to ship, and will be more significantly impacted by changing demand and the increase in the cost of living. Although many retailers are already adapting to new logistics models, as you can read about logistics in this Furniture Today article, the market as a whole still has a long way to go, and one significant monster to slay.

The Source of the Issue: What is Free on Board (FOB) Shipping?

Inventory problems for US suppliers would be less severe if purchasing models were more flexible. However, the issue is tied to the way that many retailers in the US acquire their stock: in-bulk, Free on Board purchases from suppliers outside the US. So…what is Free on Board?

All trade has two basic ingredients: the product that is being sold, and the price that the product is exchanged for. For physical products like adjustable bed bases though, there is an important consideration to add to the recipe: when do your beds “change hands”?

As you can see from this overview of shipping methods, there are an incredible number of ways to define this. However, for international shipping, most are reasonably impractical – the chances that you’ll hop over to China and pick up your adjustable beds from a supplier warehouse are reasonably small.

That’s why FOB Shipping – or Free on Board – is the most common way of managing ownership and liability. The rules for FOB are the same everywhere, defined according to Incoterms (the standard of the International Chamber of Commerce), but they are not exactly a paradise for buyers.

When you buy adjustable beds with FOB Origin Shipping, the following applies:

1. You become the “owner” of the beds as soon as they are loaded onto the freight ship. This is also the point at which payment is due. As such, you could be paying for your beds long before you receive them.
2. Anything that happens between loading and the bed reaching your warehouse is your problem. The seller isn’t liable for delays, damages, or losses beyond that point.
3. You’re also responsible for dealing with customs and imports when the bed reaches the US.

Why Do You Need a FOB Shipping Alternative?

As you can probably see from the above, FOB shipping has a major issue from which all others stem: risk. There are plenty of factors that can turn FOB shipping into a serious issue for your business, but these are the most severe:

• Time. The time it takes for the goods to arrive at your warehouse is essentially beyond your control. No matter how good your portfolio is, if you don’t have any beds in stock, you can’t sell any beds to your customers – which make gaps in supply a potentially disastrous scenario. Remember the Suez Canal blockage? It doesn’t take much to bring down our interconnected waterways.
• Liability. In the logistics world… accidents happen. When you’re shipping potentially delicate products halfway around the world… even more accidents happen. You’ll need a solid insurance to protect yourself against damages, and that’s going to eat into your margins.
• Customs and Tariffs. The world around us is changing – and with sanctions, protectionism and environmental regulations becoming increasingly common, the likelihood that goods will get stuck in customs is higher than in living memory.

Perhaps the even worse news for furniture retailers… the bigger and more expensive your product, the greater the risk to your business is. Adjustable bed bases, which can retail well into four figures, fall into that category. You’ll find that your hard-earned gains in locating price-effective suppliers, negotiating price, and ensuring stock numbers evaporate quickly in the distance between you and the port of origin.

For this reason, furniture retailers everywhere are looking for suitable alternatives to FOB. If you’re one of them, here’s what you could consider.

FOB Shipping Alternatives for Adjustable Beds

If you still want to take advantage of the strong dollar and import your adjustable inventory from abroad, there are some slightly more secure options than FOB Origin.

• FOB Destination, which means that the seller is liable until products reach the port in your country.
• Other structures, such as Delivered Duty Paid or Cost, Insurance & Freight, which assume the costs for the different processes within your shipping model.

As well as being considerably more expensive than FOB Origin, none of these variants address the overriding issue: that the sea is a cruel mistress when it comes to consumer products. Wouldn’t it be better if you just avoid shipping altogether? With LOGICDATA’s Domestic Inventory Program… you can.

What is a Domestic Inventory Program?

As the name suggests, a Domestic Inventory Program is the alternative to FOB shipping and the risks of international logistics, and it’s perfect for retailers of adjustable furniture. By choosing products that are already in the US, you remove all the risks and expenses that importing beds normally incurs.
In comparison to Free on Board, a Domestic Inventory Program means the following for adjustable bed retailers:

• Your beds arrive faster. As they only need to travel a shorter distance, your beds will arrive at your warehouse in days, not months. As such, your money is tied up for less time, and you can be more responsive to customer needs.
• There are no customs charges to worry about. Your beds have already been cleared for entry into the US – saving you time, money, and stress.
• You can order fewer items and still get a good deal. International shipping is only cost-effective in bulk. By choosing a supplier with a domestic inventory program, you can order smaller quantities and still achieve the same effect.

Best of all? You can pass these savings onto your customers to achieve a competitive advantage in price and service – a particular concern in the face of rising inflation, fuel costs and dwindling customer demand. According to Victor Baez, Key Account Manager at LOGICDATA North America, the Domestic Inventory program is a necessary step to help retailers stay competitive in a cost of living crisis:

When times are tight, customers seek value everywhere they can – as a retailer, it pays to keep costs as low as possible. FOB container models, with your money being tied for months, can cause you sleepless nights with even the best bedroom furnishings. With our Domestic Inventory Program, we ensure that these kinds of nightmares stay out of your beds.

LOGICDATA’s Domestic Inventory Program is the perfect way to reduce acquisition costs for adjustable bases. Unlike others, we keep product stock in Michigan and can ship just in time to wherever needed – single pieces via UPS or FedEx, pallets, truckloads, or even full containers to your stores or warehouses. This brings plenty of benefits to retailers who choose our COSMO Line of adjustable beds: flexibility, shorter lead times, and lower risk than FOB models.

Interested? Come Visit LOGICDATA at trade shows like the Las Vegas Market. Prefer a personal appointment? E-mail sales.na@logicdata.net to book your time slot with our experts.