Since the outbreak of the pandemic, we've been highlighting the impact of COVID-19 on the office fitness industry, particularly lift table suppliers, and how COVID-19 reshaped the office furniture industry overnight. But two years on, with the Russian offensive in Ukraine adding more pressure to an already shaky global supply chain, now is either a good time to reassess how the office furniture & ergonomics industry is coping with it all.
Like most companies, it is dominated by companies based in Asia or sourcing products in Asia, primarily China, and as a result, the vast majority of products have seen significant price increases due to soaring shipping costs, soaring tariffs, global raw material and labor costs, and frequent out-of-stocks and backorders.
In light of this, we note two other phenomena. One is "shrinkage," where some manufacturers drive down prices by using less material in their products, or reducing the quality of the components they use in those products. We've seen everything from lower-powered motors in lift columns to thinner steel and lighter panels in office treadmill frames. In one case, Lifespan Fitness secretly changed all the specifications of their under-the-table treadmills without changing their model numbers at all.
Another contraction strategy that was obvious to us was the relative lack of sales promotions compared to the norm in the past. Fierce competition among online sellers used to manifest itself in regular, heavily discounted promotions at deep discounts. This has gradually slowed as margins have been squeezed and sellers have tried to maintain a bottom line of increased retail prices. We saw another brief period of discount promotions at the start of the Russia-Ukraine war, but this is unlikely to last long as energy and raw material costs spike again due to this worldwide event.
Of course, the pandemic has brought down many businesses, not just human lives, and in our industry sector, as in many others, there are many people leaving the playing field and the pool of death continues to grow. Most of the brands and models that have been on the market for the past decade, and indeed for the past 15 years, have exited the scene.
Of the few under-desk treadmill manufacturers, most have barely made it, although treadmill desks did "have their moment" during the pandemic. They're just, like all fitness equipment, hard to come by these days, and have become more expensive largely due to the dramatic rise in shipping costs. Lifespan Fitness, the longtime market leader in this category, has seen the collective departure of its U.S. founder and management team, the company's takeover by its Taiwanese supplier, a dramatic shrinkage in the quality of components in its products (without even changing the models or flushing out old user reviews that are no longer relevant, as noted above), a dramatic increase in retail prices, the elimination of factory warranty coverage from the base price, and the years of severe degradation in customer service and customer reviews.
InMovement went bankrupt, it was sold to a mom and pop store, then acquired the UnSit treadmill from its bankrupt founder and is now for sale at top dollar and only in rare cases in stock. In the standing desk space, we've seen dozens of large retailers (e.g. Best Buy, Home Depot) and digital-native online retailers (e.g. Amazon, Walmart) jump further into the fray, chasing their share of the emerging work-from-home (WFH) market, including the likes of big furniture companies (Steelcase, Herman Miller, etc.), racing to raise the "standing desk" and other advertising costs for key keywords and killing off hundreds of smaller competitors who could no longer afford to stay in the game.
Chinese manufacturers of standing desks have long been in a "race to the bottom" as they compete with each other over a $5 price differential to win the most customers. Most of these exist on Amazon, where the average standing desk now costs around $250. There is no doubt that the majority of standing desks sold in the U.S. are actually these products sold through Amazon. If you're reading this, it's probably because you're the kind of consumer who makes these kinds of important buying decisions outside of the Amazon ecosystem by doing some research first - so, good for you.
At least one big brand that first built its market share on Amazon and then invested in building its online presence outside its ecosystem is Flexispot, which is now one of four competitive e-commerce giants in the standing desk business, along with Autonomous, Uplift and Fully. According to sources at Google, these four companies alone now spend more than $100 million a year on search advertising, and at least three of them have very wealthy investors (e.g., billionaires or multibillion-dollar companies). The market for standing desks has definitely exploded with the WFH boom, but so has the competition.
To be a real player in today's mainstream, high-volume standing desk market, you need to bring at least 8 to 15 million visitors to your website each year. This leaves most brands in the industry to compete in smaller niches where they don't have to compete with the giants. Ironically, Fully, which may eventually exit from this group, was acquired by Herman Miller, the world's largest office furniture company, three years ago, but as often happens in these acquisitions, it seems to have lost its mojo after the founders cashed in and went live in 2021.
The one thing these four companies have in common? Their prices, or what you used to get for their prices, are definitely not what they used to be. The self-owned Flexispot started raising its prices significantly a year or two ago, moving itself out of the range of all those Amazon sellers and into the range of the "Jiecang pack" (i.e. Fully and Uplift, and Autodesk, but they seem to be sinking now, unable to continue the fight.) Uplift and Fully stopped their ongoing discount promotions campaigns. On all of their websites, we see frequent disruptions in certain desk colors and sizes as the front end continues to remain clogged (all of these products are made in China).
Suffice it to say that these four companies are now almost entirely focused on fighting each other and not much else. At least at the commodity-level end of the market, it is clear that the industry is reaching a stage of maturity where an oligopoly is forming and smaller vendors will have a hard time gaining market share (in fact, many have chosen to sell to larger companies, especially as private equity firms enter the industry; e.g., StandDesk, Fully, Anthro, etc., to name just a few).
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