When Nick Arambula and his friends decided to start a business that focused on expanding people’s indoor living to the outdoors, it was because they thought it was a fun and potentially lucrative idea.
Then the pandemic hit. And while its impact caused uncertainty for many small businesses and startups, Arambula’s company was a solution consumers sought.
“Everyone was basically thrust into their home. Every place became school, the office, a gym, a restaurant. A place where they went for relaxation all of a sudden became a place of stress,” Arambula said. “They looked outdoors as a place to get some release.”
When Arambula and friends Mike Fretto and Chris Lee launched Neighbor, their Phoenix outdoor furniture company in 2020, they quickly discovered an eager client base.
At the time, many traditional retailers experienced delays in getting inventory and challenges with their supply chains to meet demand, Arambula said. That Neighbor was a new, unknown brand that sought to create a seamless transition from indoor to outdoor living was key.
“We were putting ourselves out there as best we could. What was thrust upon the world has had a very positive impact on the launch of the business,” Arambula said. “Some reached out because family was coming to town and they wanted to be safe with them outside.”
As a result, Neighbor’s customer base spans more than 80% of the U.S., Arambula said. The company has generated more than $1 million in revenue since it started. Success has enabled it to expand its online presence to a 800-square foot showroom, and the company is projected to do 15 times the revenue by this year’s end.
Neighbor is part of a global outdoor furniture market that is forecast to reach a value of $22.9 billion by 2027, according to Statista
Mike Fretto, Nick Arambula, Chris Lee and Mike Fretto (L-R) pose for pictures at Neighbor, a Phoenix-based outdoor furniture store, in downtown Phoenix. (Photo: Patrick Breen/The Republic)
Crate & Barrel recently started selling Neighbor’s furniture on its website. About 20% of business comes from interior designers and landscape architects. Individual customers comprise the rest and run the gamut from those on a budget to those like a recent Pacific Northwest homeowner who spent $14,000 with Neighbor.
“Some are looking for something unique, or they have an odd space that needs something to fit in it,” Arambula said. “But they’re looking for something of quality that is going to last. They’re tired of having something that falls apart.”
The pieces are also crafted to withstand the unforgiving Arizona summers and dry climate, which also made them sturdy enough to hold up to the harshest winters in other parts of the nation.
All products are designed in the U.S. All soft materials, like cushions, are made in the U.S. with hard components made in Vietnam.
The products are made of solid teak wood, the interior cushions made from weather-resistant and fast-drying foam, and the exterior cushion covers from Sunbrella upholstery that will not fade.
“When they say, ‘I love that you’re using Sunbrella, I love you’re using teak,’ that’s music to my ears,” Arambula said.
The collection is also designed to fit any space with a modular system that enables any configuration. The options range from a single chair to a 30-piece sectional.
“We’re able to offer the consumer the most amount of flexibility. It takes on more of a design aesthetic,” Lee said.
Scottsdale interior designer Heather Kelly was looking for an outdoor sectional that would be comfortable but durable to the Arizona climate. Having spent her 11-year career at high-end firms she had a lot of experience with furniture design and high expectations.
Her research led her to Neighbor. After her questions were answered, she ordered and received her sectional sofa — the first of many pieces she has her eye on.
“The superior craftsmanship and price for this well-designed, larger sectional seemed like the perfect option,” said Kelly, the senior designer for Ashton Woods Homes. “I have received so many compliments on this sectional not just for the sophisticated design but also for being the most comfortable outdoor sectional ever.”
Kelly called the customer service experience exceptional and appreciated how the company went above and beyond, from answering her questions to arranging delivery. And then there’s the furniture itself, which checks all the boxes.
“The sustainably harvested teak wood, aesthetically pleasing laced cord backing and weather resistant cushions are all details that will make this furniture last for years to come,” she said. “Not only is the sectional a beautiful piece of furniture and more unique than other sectionals on the market, but the cushions are so comfortable so it combines the best of form and function.”
From mattresses to outdoor furniture
Arambula, Fretto and Lee worked together for five years at Tuft & Needle, among the original direct-to-consumer mattress companies with origins as a Phoenix startup. After Tuft & Needle merged with Serta Simmons Bedding in 2018, the creative thinking that they were drawn to started to fade. They realized their professional and personal goals aligned and decided to merge them into their own company.
They determined the outdoor furniture market was the way to go.
“For the most part, a lot of focus is on indoor furniture. It’s the headlining product. Outdoor becomes an afterthought,” Fretto said. “We’re putting everything we can into it, with the best materials available while presenting an interesting design product for outdoors.”
Lee said, “While it was risky in the middle of a pandemic, it was something we knew really well: Bulky boxy furniture delivered directly to the consumer.”
They also utilized a lot of business acumen. Rather than a model that relied on gaining a customer with a product that was sold on a deficit, theirs focused on a cash-flow-positive transaction on that first sale. This made it easier to build the business without raising a lot of capital, Arambula said.
They used components of the industry that plugged nicely into outdoor furniture, like foam — a space where they had a lot of contacts, making it easy to build that supply chain. Much time was spent researching and analyzing each piece so it met the quality reflected in the price point.
A chair costs $900, with sofas going for $2,100 and sectionals starting at $2,900.
They admitted that luck played a role as well. No one saw COVID-19 coming, how it forced people to remain home — and how Neighbor could make that process more bearable.
Lee talked about feedback from furniture owners who appreciate being able to have a distanced yet social life with those they care about during the pandemic.
“Customers are enjoying connecting with neighbors, spending time with friends and family” Lee said. “It’s confirmation that what we’re doing is having a more meaningful impact than just selling furniture on the internet.”
Where: 515 E. Grant St., Unit 109, Phoenix
Interesting stat: The global outdoor furniture market is forecast to reach a value of $22.9 billion by 2027, according to Statista.
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