Why Made.com’s ‘fall from grace’ serves as a warning to challenger brands

The business is short of the £70m it needs to survive the next 18 months and, as a result, the share price plummeted by 93% to 1/2p after the announcement came that it had shut up shop.

But it is far from an isolated case. It follows brands such as Eve Sleep, which filed for administration in June (it was saved by rival Benson for Beds). The mattress D2C business was a darling from the pandemic boom era when consumers were stuck at home investing in delivery homeware and sales were on the up for brands including Emma, Hypnia and Simba.

There are tough times ahead. It wasn’t long ago e-commerce fashion brand Missguided was salvaged by the ever-hungry Fraser Group, and just last week the UK’s biggest online vegan supermarket The Vegan Kind went bust, only to be later saved by an individual shareholder.

Nicola Strange, senior problem solver and impact lead at B+A agency, says category disruptors like Made.com will also find themselves unable to survive.

“Stalwarts can use their vast infrastructures to pivot and respond to rivals, as John Lewis has with its Anyday collection of homewares and fashion,” she says. But for challengers like Made, Strange says they need a way of “adding value, such as social impact commitments, robust sustainability or an overriding brand purpose to keep customers loyal.”

It’s a bleak picture as retailers are suffering from a combination of supply chain issues, spiraling business costs, a living cost crisis tightening consumer purses and a pandemic boom that created an inflated success.

On Monday (October 24) EY-Parthenon’s latest Profit Warnings report revealed 86 UK-listed businesses hit the red zone in the third quarter of 2022 – the highest Q3 performance since the 2008 recession.

The rise and fall of Made.com

Made set up shop in 2011 as an upmarket online-only furniture and homeware delivery brand. It was alone in a niche that was soon crowded by brands such as Wayfair, Habitat, La Redoute and Swoon. The company went public in July 2021 when it was valued at £775m, below its £1bn predicted market valuation. Herschel Ozturk-Walker, marketing manager at Brandwidth, tells The Drum: “Perhaps one can ultimately question the decision to ‘rush’ into public trading during volatile times.”

At the time its IPO was questioned as the company was struggling with achieving profitability at scale.

Ozturk-Walker adds: “Imagine being both the beneficiary and victim of the same thing ... For Made.com, the Covid-lockdown phenomenon presents not only their single largest opportunity for growth, but also their greatest risk.”

Strange suggests instead that Made suffered from a disconnect between the external brand and the internal company.

“There is a sweet spot for challengers where the brand can do the legwork while the business organizes itself, but in tough economic times growth driven by the brand can quickly turn into your downfall when the human beings doing the work behind the scenes can’t keep up.”

She questioned whether Made actually understood its customers’ purchasing realities. “It felt for a moment that everyone was a Made.com customer, but was that a fabrication?” Strange asks.

An unconventional approach to marketing

Taking an alternative approach to advertising, Made existed without an agency partner for most of its 10-year history. Its in-house creative team managed everything from the creation and production of social, copywriting and PR to visual merchandising and out-of-home (OOH) ads.

Taking cues from fashion marketing, Made’s approach has been hyper-stylish campaigns based on its iconic pastel color palette and quirky furniture.

Earlier this year, in a bid to stay competitive, Made overhauled its brand identity to get a “bit weirder” after admitting its marketing was “too safe.” It then dropped its first major ad campaign in years just one month prior to going bust.

Laura Shepherd, social strategy director at Wunderman Thompson, expressed sadness over the fate of Made, concerned its staff’s hard work will be wasted. “As someone who has long viewed the brand as a golden goose of the furniture category with a class-leading online presence, I was surprised to see its fall from grace,” she says.

According to Shepherd, Made.com put a “huge amount of work in to build mental availability through an appetite to constantly test, learn and scale through digital.” She adds that Made was often a “first mover on platform releases and signed up for all the beta schemes. Its efforts to tap into the power of the creator economy showed its products in the homes of real people to prompt people to buy.”

What could Made do to reverse its fortunes?

Ozturk-Walker says there are lessons to be learned from Made’s story. The most obvious would be to diversify inventory. “Many do this through developing aftermarket services, content, exchange programs and similar ‘soft’ services,” Ozturk-Walker says. “There is also an argument that predictive technologies can better be used to run a more effective supply chain, as well as cater to customer service.”

Meanwhile, Shepherd advises Made.com to “get comfortable with ongoing uncertainty and get creative around finding opportunities in a crisis to ensure survival.”

“It’s a tough time for retail brands right now with rising costs, supply chain issues, plus political and economic unrest, and Made.com is just another victim as physical availability has dropped off a cliff with the collapse of its global supply chain,” Shepherd concludes.