Linking crowdsourcing and furniture production may not be the obvious combination for business success, but one fledgling online company has spotted the potential in the tie-up. www.Made.com is streamlining the process of getting items from factory to living room, and vastly reducing the cost to consumers, by inviting potential customers to vote on the furniture designs they like; the most popular are then listed for sale, and the factory starts production only after the orders are placed.

The business model is the brainchild of CEO Ning Li, a former investment banker turned web entrepreneur, who is French-educated, British-based, and was born in the southern Chinese city of Foshan – the heart of the world’s furniture and lighting manufacturing. www.Made.com launched in March with €6m backing from investors including Brent Hoberman, founder of www.MyDeco.com and www.Lastminute.com, Marc Simoncini, founder of online-dating company Meetic, John Hunt, founder of the Seattle Coffee Company (which was sold to Starbucks), and venture capital fund PROfounders Capital.

Li says Made’s business model is the opposite of that used by online fashion clearance houses, which offer heavily discounted excess inventory: “We don’t have any inventory waste – we’re producing exactly the quantity and model that consumers want, and we have no stock, so no warehousing.”

This eliminates the risk that furniture retailers usually take when they order stock – that they end up with a stack of items that nobody wants, which then have to be stored and heavily discounted with the cost absorbed into the price of more popular items. By ordering only what’s needed, the cost to consumers can be reduced by more than half. “We’re still a middleman, because you need someone to consolidate orders and deal with the factory, but it’s a lot more efficient.”

Buyers have to wait about 10–14 weeks for items to be made in China and then delivered; online updates show how production is progressing. Made has had 50,000 visitors to its site and has sold 10 containers’ worth of furniture, driven primarily by word of mouth; there has been no marketing campaign to date.

Li says consumers are either former IKEA shoppers who want a good-looking armchair for less than the usual retail price, or wealthy, discerning buyers who want designer items without paying excessive retail mark-ups. Items for sale include a pair of aluminium chairs for £86 (€100), and a desk for £319 (€375) that the company says would normally retail for almost five times the cost. Made’s profit margin varies by item; for designs that are widely available, competitive pricing takes priority, while for exclusive designs, the margin is higher. Made is not yet profitable; when it will be, Li says, depends not just on sales growth but also on how much the company decides to reinvest in marketing and expansion.

The appeal of online shopping is steadily increasing worldwide. Forrester Research forecasts e-sales to grow to 8% of all retail sales in the US by 2014, up from 6% in 2009. In western Europe, e-sales are expected to grow in value from €68bn last year to €114.5bn in 2014. The UK-based Centre for Retail Research is predicting faster growth in e-tail sales, at 20% this year alone in Europe, compared to total retail sales growth in the region of just 1.4%. Hoberman’s MyDeco is among the e-tailers expanding this year; the interior design and home furnishings shopping site has launched in the US, working with 1,200 retailers across the country.

Aged 28, Li is a relative newcomer to the world of interiors, and he quickly concedes that he’s no designer. He’s also fairly new to online sales, having started his working life as an intern with Boston Consulting Group while studying for a Master of Science at HEC School of Management in Paris. He worked as an analyst for Rothschild & Company, covering equity capital markets in Paris and then M&As and capital market deals from the Hong Kong office.

His move into online enterprise came in 2006, when he was hired to advise the CEO of Meetic on potential M&A targets; he went on to head the Asia-Pacific division of the company, which now has market capitalisation of close to €500m, before launching the first online company of his own. www.Myfab.com was an early incarnation of the current Made business model, but without the online voting element. He sold the company – at the time, profitable and employing 200 people in France and Germany – for an undisclosed sum in July last year.

Li says the Made principle could apply to products beyond tables and chairs. “The reason we started with furniture is because I come from Foshan. You have to start somewhere and this was something I was familiar with,” he says. “I could totally imagine selling home appliances and textiles this way, as long as you have an interesting offer for consumers.” Furniture further appealed because the industry – worth €30bn a year in the UK alone – is highly fragmented, with no single retailer holding more than about a 5% market share. Li says this means there are clear efficiency savings to be made.

Made’s pared-down business model even extends to its stock photography, which features naked models using many of the products. “We thought selling chairs alone would be quite boring,” Li says. “Because we’re selling furniture without any branding, it’s like selling naked products. Also it’s a rather fun and a bit of a controversial way of doing it… though it’s done in a classy way.”