Here at Design Manager, we have been closely following the growing sub-sector of the interior design industry known as e-design. E-design is a broad term that is essentially defined as an interior design service that is dominantly conducted digitally — where client and designer often never even meet. One type of e-design that grew in popularity in recent years is app-based matchmaking, where a company matches a potential client to an interior designer based on information it collects digitally, by way of a style quiz, for example. Some e-design companies focus heavily on the matchmaking element, while others take a broader approach and de-personalize the interior designer behind the work. While e-design is showing some signs of success when conducted under specific conditions, many of the initial leaders in the matchmaking e-design space have failed, leaving only a few clear winners.
The concept of e-design was born out of the idea of taking a traditionally in-person, individualized service onto a digital, homogenized platform. We saw this revolutionary approach successfully disrupt several industries throughout the 2010’s, with the rise of transportation apps like Uber and Lyft and dating apps like Tinder and Bumble. Many tech entrepreneurs and investors, few with interior design backgrounds, assumed the same approach could work for the interior design industry. But in the last couple of years, many interior designer matchmaking companies folded. So, why has interior design been largely immune to the digital matchmaking trend? And will we see new entrants in the space, a second wave that can succeed while learning from the failures of their predecessors?
Virtual Interior Design Came In Like a Wrecking Ball
As e-design began, the target market for these tech startups were clients with small and medium-sized budgets who could not afford a traditional interior designer, only wanted a light touch of assistance, or who plainly did not want to deal with the interpersonal nature of working with a designer in person. A stream of apps sprung up, many of which got buzz in the press, and a handful of which even had celebrity interior designer affiliations. And many failed. Some of the most prominent that have failed or struggled include these:
- Laurel & Wolf: This splashy startup is interesting because former CEO, Leura Fine, was one of the earliest people to publicly muse about the business opportunity of e-design. It attracted investments from some of the biggest venture capitalists in the world. Their plan to profitability was to offer design services, the standard package costing $299, but to take a cut of the furniture purchases made by clients, which could have worked had the company not reportedly been run so poorly. Interestingly, the company started with the name Decor / Aid until finding out the name was already taken – an example of the type of undisciplined leadership and lack of care for proper process that brought upon its downfall. In early 2020, the company was re-launched under new management. Its new business model closely resembles that of more successful companies (see below). Business of Home published an extensively researched article about the rise and demise of Laurel & Wolf under its original management and also was one of the first to cover its relaunch.
- Homepolish: The 2019 demise of Homepolish came as a surprise to many, as this e-design start up had gained national brand recognition, 2 million Instagram followers, and a $100 million valuation. As covered by Courtney Rubin in an article published by Marker, an inexperienced CEO with a tendency to stretch the truth played a big part in the fall of Homepolish. The business plan of Homepolish was to charge for design services by the hour, with the minimum package costing $400. They would not take a cut of product purchases. One of their differentiating factors was that they would send a designer to the space to take measurements and not just rely on pictures, bringing in some human element, but the rest would be done digitally. To summarize the downfall of Homepolish, the company excelled at marketing but never built the infrastructure to support its business plan. It used freelance designers and did not provide them with the tools to provide quality service to its clients.
- Decor-Aid: The actual status of Decor-Aid is not crystal clear, but appears to be defunct. Decor-Aid was more of a traditional matchmaking service for clients and interior designers. Interior designers would conduct their business in person and Decor-Aid would take care of the project management. Their target audience were a tier below the “1 percenters” – those that had considerable means to put into a project, but with budgets less than the $500-$600k that a top-tier interior designer would charge for a project. It’s not clear what went wrong with the company, but it appears to have shut down in early 2020.
- Design Advisory Group: Similar to Decor-Aid, the status of this company is unclear, but it’s last social media posts are from July 2019 and its website is only a landing page with a logo and email address. The company was strictly a matchmaking service for clients and designers, offering no other support. However, it was very high-end, working with top-tier designers, and it gained the attention of Architectural Digest. Similarly to Decor-Aid, while it's easy to speculate what happened here, all we know is that after a sensational start, the company is no longer in operation.
While Many Failed, Some Skyrocketed
While many of the original stars of e-design ended up failing, there are a handful of very successful companies that managed to identify and harness their target audiences while providing a clear, consistent virtual interior design service. The winners include:
- Decorist: Decorist offers e-design services for a flat fee, ranging from $299 to $1,299 depending on the level of experience of the designer, where the client and designer never meet. Clients can choose their designer from Decorist’s roster, or they can be matched to a designer based on their preferences, learned via questionnaire. From there, clients send in pictures of their space, and designers go to work, eventually offering furniture and layout suggestions by way of mood boards and other 2-D presentation tools. The client can choose to purchase the suggested furniture through the Decorist website, which makes a fee for the service of purchasing and managing the order, making it akin to a successful version of what Laurel & Wolf tried to achieve.
- Modsy: Modsy is less of a matchmaking service, and more of a quick-turnaround, one-size-fits-all design solution. Clients upload pictures of their space, which Modsy turns into a 3-D rendering. From there, clients describe who lives in the space and submit a style quiz. Modsy turns around a design proposal with high-quality 3-D renderings. They minimize the actual interior designer behind the work in the process and make the experience more about working with the company and less about working with the designer. Like Decorist, clients can shop for the recommended products through the website, which manages the orders and makes a fee for the service. The difference between Decorist and Modsy is minimal, coming down mostly to the lack of individuality given to the design process.
- Havenly: Havenly is among the most affordable of the matchmaking services, charging $79-$199 for its design fees, depending on the size of the room and whether or not you want a floorplan to accompany your suggested furniture list. Like Decorist and Modsy, you can purchase items directly through Havenly, which comes with the same profit advantages to the company.
There are many more interior design matchmaking and e-design companies, but these three stand out as clear success stories. They have identified their target markets, marketed to them appropriately, and successfully built the infrastructure to support their business models. The success of these companies suggests that digital interior design matchmaking is not dead, per se, but can only succeed under specific conditions. High-end interior design needs highly tailored support built into its operations, so it is difficult for these types of interior designers to thrive on matchmaking platforms that are built on the concept of providing a generic service to the masses.
At this point, e-design still has ample opportunity to grow, as interior designers look to grow their businesses into multiple revenue streams. The successful players have a large market share and new entrants could well have a hard time differentiating themselves when the success of these particular digital companies is based on homogeny.
We will continue to monitor the progress of e-design and the interior design in the digital landscape, so stay tuned! And we would love to hear from you about the impact these services will have moving forward.