Semihandmade’s John McDonald on hitching his wagon to Ikea, and then competing with it

Semihandmade makes and sells cabinet doors for the giant retailer’s fixtures, which can themselves be bought without the doors. For a small price increase, according to founder John McDonald, you get a big step up in quality.

But even though business is good on that front — Semihandmade has been profitable every year, according to McDonald — he’s looking to cannibalize his own market with Boxi, a soon-to-launch, more premium offering that can fit out a set of kitchen cabinets in its entirety.

One big opportunity McDonald spots is the lack of name recognition beyond the top spot filled by Ikea. “There’s Ikea in the U.S. and then there’s 50 others made by the big guys,” McDonald said on the Modern Retail Podcast.

With Boxi, McDonald is starting with just a few types of cabinet doors. “You do four or five things great. And that’s how we’re able to be highly competitive in terms of pricing and high quality, but it’s not for everybody. To me that’s the clearest path to scale,” he said.

There’s nobody else out there doing this, he claimed. Absolutely, there are cabinet companies. But they’re faceless. There’s Ikea in the U.S. and then there’s 50 others made by the big guys. Part of what we want to do is be nontraditional, looking at what the other guys are doing and say ‘we’re not doing that.’

Here are a few highlights from the conversation, which have been lightly edited for clarity.

How people come to trust a DTC kitchen remodeling
“A kitchen could have say, 10 to 20 cabinets. Filler, trim, panels, it could be up to 70 different SKUs. We are definitely going to take advantage of our customer base for Semihandmade, and they are very DIY. But in terms of ordering, it’s not for everybody. We have three different processes. The first is people who have already done their designs. They’ve worked with Ikea on their free planner, or an architect or designer. You can send us your plans, we can easily translate them to a Boxi bit. The second is through Zoom, which is a huge percentage of our customers now anyway. There are a lot of people that do feel comfortable pulling their own measurements, sending in photos, getting on calls like this for a couple hours to walk through the process. And the third one is the most traditional: A guy or girl showing up at your home with a tape measure. That’s what a lot of customers expect, certain customers that are not typical Semihandmade customers. And one of the biggest differentiators is, you don’t ever have to go into a big box store again. The problem with Ikea and Home Depot is, they’re all so massive, there’s huge backlogs. Whether it’s Covid or not, people like the idea of having things come to them. We’ve gotten spoiled through one of the most challenging times ever.”

Two contrasting businesses
“There are some concessions. The way you’re able to ship in a week fully assembled is you’ve got to carry inventory. Starting out, we had to really be rigorous and strict in what our core offerings would be. With Semihandmade we have 40, 45 different doors to choose from. With Boxi, we don’t. We have 8, maybe 10 to start. They are probably the most popular choices: white, black, gray. Hopefully some unpainted options which we sell a lot of. But we don’t look at it as any kind of setback. I’m on the West Coast, and I always wanted to do something that’s like the In-N-Out burger of kitchens. You do four or five things great. And that’s how we’re able to be highly competitive in terms of pricing and high quality, but it’s not for everybody. To me that’s the clearest path to scale.”

Forecasting growth for the sector as a whole
“I do think we’re going to continue to see growth in our sector for the next year to 18 months. People are buying homes. My fiancée sells mortgages, and whether people are refinancing or buying, it’s never been busier. I say that not lightly, because there’s an enormous number of people in this country and in the world who are suffering. It’s with humility, but we’ve been fortunate.”

Correction: An earlier version misspelled Boxi. We regret the error.