The Furniture Etailer Pepperfry of India Diversifies

India’s Furniture Etailer Pepperfry Diversifies

Posted on Thursday, Oct 5th 2017

According to consulting company RedSeer, cellular phones and fashion accounted for roughly 68% of their overall gross earnings by e-commerce firms in India at 2016 while furniture accounted for roughly 1 percent. Furniture market Pepperfry is one of the startups from the sector and a major player.

Mumbai-based Pepperfry (Trendsutra Platform Services Pvt. Ltd ) was founded in 2011 by former eBay executives Ambareesh Murty and Ashish Shah. It started out as an internet furniture store but offers over 12 million goods at the furniture and home vertical with a variety of classes such as Furniture, Home Décor, Lamps & Lighting, Furnishing, Kitchen, Housekeeping, Hardware and Electricals.

Pepperfry claims to have more than 4 million consumers. It’s 480 employees, 1,000 agency personnel, 10,000 merchants, along with a shipping fleet of 400 vehicles which operate in 17 hubs across India and serve customers in 500 cities. Additionally, it supplies installation support and free assembly through its team of more than 250 carpenters.

In Mumbai, its offline store started in 2014. These shops basically act as expertise centers and also offer home design consultation at no cost. It currently has 22 such studios across cities such as Mumbai, Bengaluru Delhi Chennai, Pune, Ahmedabad, Cochin, Chandigarh, Faridabad, and Gurugram.     It plans to improve the count from March 2018, part of that is by way of a franchisee version to 50.

Furniture sales accounts for at least 80% of its earnings, although Pepperfry has also ventured into home furnishings and home interior layouts. The average ticket size for furniture is Rs 18,000 ($275) and other household merchandise is Rs 4,000 ($61). It’s approximately 20,000 stock keeping units (SKUs) using a gross margin of 47%.

Pepperfry launched its own furniture rental services in metro cities for younger customers. By means of this company, it will be looking to offload its items and inventory from its own studios that are offline. It has also launched an exchange program in partnership with Zefo, an internet market for pre owned goods.

Pepperfry’s key competition is online furniture company Urban Ladder, that has recorded revenue of Rs 56 crore ($8.5 million) and a reduction of Rs175 crore ($27 million) in financial 2016. UrbanLadder has increased $92 million in overall funding and it last increased $15 million early this year at an estimated rate of $126 million. Like Pepperfry, Urban Ladder has also expanded its presence and entered the home interior design space. It has begun listing on Flipkart and Amazon.

They both face stiff competition from the home layout section from Livspace, that is currently targeting $ 100 million revenue in 2017 and has increased $ 27 million. Silicon Valley-based Houzz , that dominates the internet interior design and providing space internationally, ventured into the Indian market this year. Houzz has increased $400 million at a $4 billion valuation.

In the space, Pepperfry’s main rival is Furlenco. Furlenco has shipped furniture for more than 20 million to houses and contains a furniture use rate of approximately 95%. It is looking to break even by March 2018 and has increased $21 million in funding.

At the retail space, Pepperfry and Future Group’s HomeTown will probably be competing. Swedish furniture manufacturer Ikea, that had revenue of over $35 billion will soon soon be launch its Indian operations. Gig economy startup TaskRabbit was recently obtained by Ikea.

Pepperfry’s revenue in financial 2016 climbed about 300% to Rs 98 crore ($15 million) while its losses climbed about 200% to Rs 154 crore ($23.5 million). It aims to attain profitability by the end of 2018. Its gross merchandize volume (GMV) spanned Rs 1,000 crore ($152 million) at March 2016 and it hopes to triple it to Rs 3,000-crore ($456 million) from March 2018.

Pepperfry is venture funded and has increased $159 million from investors including Goldman Sachs, Norwest Venture Partners (NVP), Bertelsmann India Investments, along with Zodius Capital. It increased $31 million in September 2016 at an undisclosed valuation. In a previous circular in July 2015, it had raised $100 million at a rate of $280 million.

I like the concrete profitability target by the end of 2018. Revenue to funding ratio is reduced, so I’d like to observe this target achieved without funding rounds. The category is cumbersome and heavy from logistics, therefore streamlining that creates barriers to entry. Doing will be term strategy.

source http://www.indianmangowoodfurniture.co.uk/the-furniture-etailer-pepperfry-of-india-diversifies/