Noah Krinick at Solo Rugs' Park Avenue headquarters
NEW YORK - The rug industry is 'ripe for disruption' says Solo Rugs founder Noah Krinick, who formed the company one year ago in a partnership with wholesaler Marjan International Corp.'s president Morad Ghadamian and Ghadamian's son Daniel. The nascent Solo Rugs has been building consumer recognition via an exclusive branded program with online flash sale giant One Kings Lane and launched its own direct-to-consumer webstore store in September.
Asked if he thought it was possible to create a true consumer brand with rugs, Krinick said, "Yeah, and I do think it is one of those industries that is ripe for disruption. It's a big old industry with not really a lot of young players coming in and trying to figure out ways of doing things differently. It's been done the same way for years and years and years."
In an exclusive interview with RugNews.com, Krinick, who prior to starting Solo Rugs worked in the strategy group at PepsiCo focusing on competitive analysis and growth opportunities, explained that his friendship with the Ghadamian family goes back more than 15 years. "They have always been very successful, and pride themselves on having the best selection and best prices. That serves them very well in the brick and mortar environment," Krinick said.
A Solo Rugs Suzani rug of bold jewel tones, hand-knotted and created with vegetable dyes.
Indeed, the retail success Marjan International Corp. (MIC) has experienced over the past 40 years spawned Krinick's idea to create Solo Rugs as an online direct-to-consumer brand. "Conversations with Daniel and Morad Ghadamian led me to see there was a void and huge opportunity for MIC Rugs in the e-commerce space. As I noticed consumers were getting comfortable shopping for larger ticket items online, and as screen resolutions and technology were getting better, I saw there was an opportunity to reach a new customer that would appreciate this level of craftsmanship," he explained.
From the very beginning, Krinick had his sights set on branding, which in year-one meant building a relationship with One Kings Line and gaining exposure to its audience. "Even though MIC is very well known in the wholesale community, we were not well known yet in the retail community. We wanted to partner with One Kings Lane because they were best in class."
Over the past year One Kings Lane has been privy to Krinick's plan to establish Solo Rugs as an online storefront. He says their relationship will continue, but Solo Rugs will not be seeking any other retail web partnerships. "We were very open with One Kings Lane, and they knew what we were doing. As we've grown our selection with them, they now trust us to curate the selection for them. I really appreciate the way that they do business."
A hand-knotted blue Ziegler from Solo Rugs has all the characteristics to pop in an online sales environment.
"We set aside a certain amount of rugs each month [for One Kings Lane] - from 300 to 500 pieces - that we dedicate exclusively to them. We continually rotate our inventory with them because that's the way it works with MIC: they import thousands and thousands of pieces every month. Just as we monitor what is working to give a nice selection to One Kings Lane, we are now learning what will work with our own customers online."
FROM TRADE-ONLY ROOTS
A trade-only wholesale operation with a Manhattan showroom at 41 East 31 Street, MIC has offered dealers, department stores and designers across the U.S. a diverse inventory of imported one-of-a-kinds since its inception. Prior to launching the Solo Rugs online storefront, there was no single destination to access the thousands of new pieces entering the MIC warehouse each week. Solo Rugs gives customers immediate access online to the full breadth of the assortment, which is constantly updated as the weekly shipments come in.
As a newcomer to the industry, Krinick says other rug companies should not be worried about competition from Solo Rugs. "There is plenty of room to have a collaborative environment instead of everyone looking at themselves as competition. We are dealing with a unique product where everything is one of a kind so it's very easy to say that we are not competing with one another, although on some level we are all competing for customers looking for rugs. But there is enough room in this space [of online rug sales] since it's still so new that we're not stealing market share from one another."
With the one of a kind business model, Solo Rugs spent a good part of the past year photographing the 5,000 rugs launched in September on SoloRugs.com, as well as creating descriptions for each SKU. "A lot of work goes into the digital assets, and the site build took time as well," Krinick said.
MIC's main manufacturing partner for the past four decades has been out of Pakistan, but the company also sources from India, Turkey and China. "Eighty percent of what we sell online is from India and Pakistan, and we just sell hand-knotteds. We wanted to be very specific in what we were making available to the customer."
A one of a kind vibrant Suzani available at Solo Rugs.
"It is unfortunate that you are able to stuff so many things under the handmade label, because the true quality comes under hand-knotting. Now there are a bunch of other techniques that can kind of skate under as handmade that come in at a lot of different prices. It confuses customers; they don't understand why one rug is more expensive than another," Krinick explained.
PRICE POINTS
Asked where Solo Rugs pricing fits between wholesale and MAP, he says the website prices are somewhere in between. "If we were just wholesale straight out the door, we would be putting no work put into it. Now there is a little extra work and that's reflected in the price. So when you're dealing with an item that wholesales at $1,000 to $3,000 - and you are taking another $150 to $200 - that is not really going to move the needle as far as the consumer is concerned. Its not like they are getting a regular retail markup."
Although prices have ranged from $150 for a small Kazak rug to $60,000 for a special event vintage or mansion-sized rug, the median price on SoloRugs.com should be between $750 for a runner or 4x6, up to about $2,500. "That is where we are seeing most of the volume, and where we will build our assortment toward."
When queried about returns, Krinick said they are the nature of the business. "Free shipping and free returns are kind of a double-edge sword. We get a lot of returns, but most of the time the return isn't the final piece of the sale. It's that the rug didn't work where the buyer planned, but they were happy with the quality and the level of service, and will end up ordering something else. We’ll work with them until we find something that fits."
"The customer that's looking for a handmade rug really wants something that is going to work for them, so they are not looking to buy something and return it three months later, and buy something new. It is a definitely on the spectrum of an investment piece."
WORD OF MOUTH STRATEGY
Krinick says he is relying on organic word of mouth rather than advertising to build brand awareness. "The most authentic way for a brand to be discovered is having early adopters really championing the brand, discussing it among themselves and hopefully that cascades into talking about it with other people. We are still seeing that especially with designers. I am not even sure how they find us, but they are telling they're clients, their clients are telling their friends - and that multiplying over and over has been very helpful."
Krinick says he and his team are still figuring out who the Solo customer is. "It is a little premature for me to say I fully understand the customer. I think the customer is also still learning. Customers who see an approachable site like ours, who wouldn't think they were in the market for a handmade rug, will now give it a chance."