Traders often turn to China to outsource manufacturing. However, competitive suppliers exist all over the world. For Palermo House, a direct-to-consumer luxury furniture supplier, Argentina is a natural source.
Marco Ferro is the company’s California-based founder of Argentinian descent. He was born there, as were his parents, co-owners of the company.
During our recent conversation, I asked Ferro about importing goods from South America, shipping to customers, bootstrapping challenges, and much more. The full audio of our conversation is embedded below. The transcript is edited for clarity and length.
Eric Bandholz: Give our listeners a quick overview of what you do.
Marco Ferro: I am the founder and CEO of Palermo House. We are a direct-to-consumer homewares furniture brand, launched in 2020. We are known for our Dune Lounge Chair, a mix of a vintage ottoman and chair. It’s available in vegan leather, velor, and select outdoor options. It’s stylish and comfortable, and people love it. Architectural Digest introduced us. This has been our flagship product, although we have a vision to expand to other products.
My father, my co-founder, designed the chair a few years ago. He comes from a family of architects. He created the lounge chair with a mid-century modern look. It fits well into this ambiance and is minimalist, functional and comfortable. It’s not super stiff and yet it stays in the same shape. It adapts to your body and changes when you sit on it.
Bandholz: Your suppliers are in Argentina against China, like everyone else. What are the logistical obstacles linked to relations with South America?
Ferro: I was born in Buenos Aires, Argentina, just like my parents. My father has many ties to Argentina and feels comfortable working there. It is not the easiest country to transact with, with challenges related to payments and political instability. But the situation is generally favorable. The exchange rates are reasonable, so we stayed for over two years.
As we expanded, we didn’t want to go to China or other countries that might require huge purchasing orders. We wanted to evolve comfortably. The good news is that we have a simple and agile supply chain. We can acquire the lounge chair covers almost just in time, avoiding excess inventory. The filling that takes up more space is made here in California. The covers are made in Argentina and we recently used a supplier in Colombia. But that doesn’t mean we haven’t ruled out going to China, India or somewhere else where we could potentially find more profitability.
We ship customer orders unassembled in two boxes because large dimensions incur ridiculous oversize fees.
Bandholz: How to acquire customers?
Ferro: We invest in paid marketing. Our main channel is Meta – Facebook and Instagram. We also use paid search on Google. Our average order value is over $1,000. This gives us more margin to cover acquisition costs.
We do organic Instagram, Email, and SMS. We believe our products generate strong word-of-mouth referrals. We don’t have a lot of data to validate this, but furniture, especially a product like ours, stands out in a home. When you invite friends, it’s clearly visible, a mini showroom for future customers.
Bandholz: You went beyond the chair by offering home accessories, rugs and throws.
Ferro: It was difficult to sell anything other than deck chairs. We have not found the right supplier for these products in terms of quality and price. The rugs, for example, are 100% wool and hand-woven, made by artisans in northern Argentina. I have a rug at home. It’s thick and beautiful. But they take a long time to complete, which is not good for business. They also require some initial investment.
Bandholz: Your product photography is fantastic.
Ferro: We take most of the photos ourselves. My father plays an important role as an architect. He has an eye for houses and we will do some scouting ourselves. This is a collaborative effort and we will choose the house. This mostly happened here in Southern California. We are using Peer space — Airbnb is mainly used to spend the night. We only need a few hours a day. Peerspace is suited to this use case at a premium price.
You have to do a lot of things on set in a limited time. We have big products. So it’s a matter of renting a U-Haul, going out there and moving large products. At least they’re super light. We use male and female models as well as children and pets. We try to show that our products are for the whole family.
Bandholz: Are you bootstrapped?
Ferro: Yes. My father, my mother and I are the owners. We did not raise any external financing, therefore entirely bootstrapped. We have tripled our annual revenue every year since we launched in 2020. This has created funding challenges. We are starting to talk to potential investors. We like the idea of a partner in the space that can add value, capital and talent.
In the meantime, we will continue to run the business as if it had started. We work on our gross margin and in particular on the cost of our products. But we never compromise on quality and feel.
Bandholz: Where can people buy your products or contact you?
Ferro: Visit our website – Palermo.house. I’m on it LinkedIn.