Online furniture retailer Made.com’s dream of becoming the ‘new Ikea’ will come to an end tomorrow when directors are appointed, triggering around 500 job cuts and leaving thousands of customers out.
It will complete a fall from grace for the London-based company, which was valued at nearly £800m when it went public in the summer of 2021 and was being touted as the future of furniture retail.
The Made.com name is expected to be sold immediately, most likely to rival Next, in a cut-price deal. After a desperate hunt, no buyer interested in taking over the whole business came forward; one industry expert described it as a “hopeless case”.
Like other online companies, Made.com’s sales skyrocketed during the pandemic only to crash when life returned to normal. It spent several desperate months trying to raise the extra funds it needed to continue operating.
Things came to a head last week. Made.com shares have been suspended from trading and the company has confirmed that administration is now on the cards. PricewaterhouseCoopers (PwC) insolvency experts are lined up to handle the work and are expected to be formally appointed at a court hearing on Monday morning.
There were buyers behind the scenes, but they only wanted Made.com’s trademarks and other intellectual properties. Next, which has its own large furniture and homewares business, is said to have offered around £2million for the name. However, he faces competition from Mike Ashley’s Frasers Group, who have also been linked to the auction.
Frasers is a serial buyer of struggling businesses and this year alone has acquired online retailers I Saw It First, Missguided and Studio Retail. However, he also has other bigger prizes in his sights, as he bought up the shares of online fashion retailer Asos as well as high-end German brand Hugo Boss.
Made.com was created in 2010 by Ning Li and Brent Hoberman, who co-founded Lastminute.com, along with Julien Callède and Chloe Macintosh.
Li, who stepped down as chief executive in 2016 but remained on the board, told the Guardian in 2017 that Made.com wanted to be the new Ikea. “What we want to do is pioneer the next trend in how people buy their homes and really become the alternative to Ikea,” he said.
For a while, Made.com’s future looked bright, and like other internet-based businesses, lockdown restrictions meant a sales boom. Its sales jumped as people spent more time at home during lockdowns and splashed out on furniture and homeware purchases.
However, more recently the cost of living crisis has seen households cut back on major purchases such as sofas as rising food, energy and mortgage costs gobble up their spare cash.
Insiders say Made.com’s business model was flawed. Its early success was built on a just-in-time model, with parts only shipped from manufacturers after orders were placed. Rather than dealing with a handful of suppliers, it has worked with over 200 factories. But that pattern meant that when the pandemic hit, causing huge supply chain disruption, manufacturers didn’t prioritize Made.com. More recently, he had changed course, tying up his cash to ensure his warehouses were well stocked. But the timing was not right, as consumers cut spending when the cost of living crisis began to bite.
At the time of its IPO, Made.com employed nearly 700 people, but as it struggled to put together a bailout deal in September, it revealed that more than 200 workers were being laid off. It is estimated that around 500 mainly UK-based staff remain and are expected to be made redundant by the administrators.
Made.com has already stopped taking orders, but customers who have already purchased something face a nervous wait to get their money back. After PwC’s appointment, they will tell clients how to request a refund. However, there is no guarantee that buyers will get their money back, as it is likely that the company will also have other debts.
Given the situation, customers who paid for their order by credit card are advised to immediately contact their card provider and file a claim under Section 75 of the Consumer Credit Act. If they paid by debit card, the advice is to claim through their bank’s chargeback system.