Pepperfry, the brainchild of Ambareesh Murty and Ashish Shah, is aiming to be the country’s largest Omnichannel furniture retailer by 2018. The furniture and home marketplace, which was set up around five years ago, today has a vision to create 20 million beautiful homes by 2020.
In the last five years, more than three million customers have made purchases from over 10,000 merchants on the Pepperfry platform, leading it to a position of dominance in the online furniture and home decor segment in India.
Giving a boost to Prime Minister Narendra Modi’s ‘Make in India’ initiative, Pepperfry has also identified SME’s from small manufacturing regions like Moradabad, Saharanpur, Jodhpur, to name a few to sell their unique products on the Pepperfry platform.
However, in the last two years, the studios have emerged as key customer engagement touch points for Pepperfry. And Pepperfry plans to cash on this opportunity by expanding its offline presence further.
In an exclusive interview with Indiaretailing, Founder and COO, Pepperfry, Ashish Shah spills the beans on market trends in the furniture industry, the USP of the brand, expansion plans and a lot more:
Highlight the main trends in the Indian furniture market – both online and offline?
Home and furniture is US $32 billion market which is set to reach US $71 billion by 2020. While the total offline market is growing at 10-15 per cent YoY the online component is growing at 300 per cent YoY. Over the next few years, it is expected to become 9 per cent of overall e-commerce, 6 per cent of the overall home and furniture market. These projections are in line with home and furniture trends worldwide where the segment constitutes more than 10 per cent of e-commerce in markets across the globe; it is 13 per cent of US e-commerce, 19 per cent of Chinese e-commerce, 20 per cent of Brazilian e-commerce and 17 per cent of the e-commerce market in Russia.
In the next 3-5 years leading home players are set to reach the global standards. Pepperfry sees a huge opportunity to lead this growth. Onmichannel is going to be a key growth driver for improving the customer experience. Pepperfry is geared towards scaling the Studio presence from present 21 and has recently rolled out a franchise model with an aim to build the largest Omni-channel network in the country. We will open 46 studios by March 2018.
Lastly, there will be a spurt in the growth of ancillary services. Providing additional services especially in the home segment like designing and consulting are set to become important features. We started the trend as early as 2014 and have been providing complimentary consulting to our customers since then.
How many SKUs/ product categories do you offer under your brand? Which are the typically faster moving categories and why, in your opinion?
Pepperfry offers a highly differentiated catalogue of more than 1.2 lakh products across categories like furniture, home décor, lamps and lighting, furnishing, kitchen and dining, housekeeping, and hardware and electricals. In furniture bed, followed by coffee tables, shoe racks etc. are our largest selling furniture items. Other categories like décor and lamps and lighting are also popular.
Define your target customers. How many pin codes do you currently deliver to?
Furniture purchases are predominantly made by SEC A customers with the dominance of A+ from urban and big city or metro consumers. Our top 15 cities account for almost 90 per cent of our business and our eight metros contribute to almost 80 per cent of the business.
These consumers have already transacted online in other categories like electronics, fashion etc. They are already confident about shopping online and are now venturing into buying home products whether it is décor, lamps or furniture. Almost 80 to 85 per cent of our transactions are from people in that age group of 28 and 45 years. They are progressive customers, who are confident in their outlook and are able to take informed decisions after looking at information available on the website. They are progressive and sophisticated shoppers.
What is your USP as compared to others in this space?
Our single largest brand proposition is to offer the largest variety of home products at great value. Overall, furniture industry is between Rs 65,000 – Rs 70,000 crore. Of this, 10-15 per cent includes the organized market (large retail chains). However, the annual online furniture sale is between Rs 1,500 and Rs 2,000 crore.
Pepperfry is a leader in this segment with 45-50 per cent market share of online segment. It was the first mover in the category and is extremely differentiated from other players in the market in terms of variety, pricing, servicing and delivery, network and infrastructure. We have been setting the pace and direction of the category and have no competition as other players do not have such huge offerings.
Furniture typically require longer delivery lead times. Do you see this as a challenge? What are the typical sourcing and supply chain bottlenecks that you face?
When we started out we identified that building our own supply chain network could prove to be beneficial in the long run. The logistics infrastructure in India for large item shipping is significantly under-developed. Shipping bulky but delicate items such as furniture is either prohibitively expensive or takes too much time. In such a scenario, Pepperfry built a proprietary large item distribution logistics model. We commenced the origin to hub shipment process through contracted trucking arrangements in April 2013 and since then, we have significantly reduced per unit costs with increasing scale and operating efficiencies.
Today, we have built India’s largest big box supply chain in the country. Pepperfry’s specialized large item delivery fleet of more than 400 vehicles operating from 17 hubs across India today serves customers in 500 cities. Pepperfry also provides assembly and installation support to customers through a team of more than 250 carpenters across major towns and cities. Pepperfry expects to double its logistics footprint 1,000+ cities and towns to establish robust delivery network in Tier III and Tier IV cities.
Our robust supply chain management along with our best-in-class practices in the service ecosystem across logistics and post-sales support have ensured 50 per cent+ repeat business, with one of the highest average order values in Indian e-commerce.
How many walk-ins do all your stores attract daily and how many of those turn into potential customers?
We have studios at key high-streets across major cities in the country and thus our Studios attract large number of walk-ins. The conversion rates are as high as 20-25 per cent. These are sales that happen after the customer visits our studio to make his/her purchase. We don’t directly attribute these sales directly to our studios as these customers might have seen the product on our e-commerce portal.
How many orders do you cater to daily and what is the average ticket size (both online and offline)? And what is the next target?
We are an online company with studios that are built as an experience centre. We do not have POS at any of our studios. The average ticket size for furniture is Rs 17,000 – Rs 20,000 and for other home products it is Rs 4,000.
What brands do you have on board? Any plans to introduce international brands?
We have an expansive merchant base of 10,000 (including MSME’s) and 900+ leading brands in the home and furniture segment. These contribute towards forming the most exhaustive catalogue in the segment. For eg. in furniture we have the largest collection of designs sourced from 150+ national brands including Hometown, Spacewood, FurnitureKraft, Evok, etc and have organized the non-branded furniture under our house brands.
We understand that every customer has a distinct requirement and to fulfill this gap we introduced several house brands that have been designed to address specific customer needs.
Here are the details of the house brands:
– Woodsworth – Woodsworth is characterized by a timeless, classic range of furniture. Reflecting designs that are sleek, contemporary and functional
– Mintwud – Mintwud is conceptualized for modern and compact homes
– CasaCraft – The modern designs in the CasaCraft range represent the ideals of practicality, cutting excess and absence of decoration
– Amberville – Amberville is synonymous to a stately and gracious living
– Bohemiana – Bohemiana is a range of furniture that blends the free spirit of the eclectic with the rigid frame of the industrial pieces
– Mudramark – Mudramark is carefully crafted furniture which is influenced by ethnic Indian art, architecture and culture
– Mollycoddle – Mollycoddle is a versatile range of modern children’s furniture with a punch of vibrant and cheerful colours
What is the reason behind expanding the offline presence? How many studios do you have currently and how many more can we expect by this fiscal end? And if you are exploring the new cities – please name.
Pepperfry aims to build the largest Omnichannel network in the country. In line with that mission, it has developing the franchise model for the expansion of Studio Pepperfry’s network.
In the last two years, the studios have emerged as key touchpoints for consumer engagement and a great marketing channel. They are present at key shopping hotspots across Mumbai, Bengaluru, Delhi, Gurugram, Pune, Ghaziabad, Chennai, and Hyderabad which has resulted in a high number of customer walk-ins at the studios.
Currently, Pepperfry has 21 studios where customers can experience Pepperfry’s differentiated furniture and home product portfolio, and place orders online. Additionally, they can also seek interiors related advisory from Pepperfry’s design experts.
The goal is to establish 46 studios in 15 cities by March 2018.
What is the average size of a Pepperfry Studio?
The average size of any studio ranges from 2,500 to 3,000 sq.ft.
All Pepperfry Studios are located on high-streets. Any specific reason?
It is our endeavour to be present where our customers are. All our studios are located at high visibility areas to serve a dual purpose – one as a strong marketing channel to establish high brand recall and second as great consumer engagement touchpoints. Discerning customers can drop by at any of our studios to avail complimentary design services.
What are your future/ expansion plans?
Pepperfry has set out a mission to help create 20 million beautiful homes by 2020 and taking cognizance of the need to have multiple engagement touch-points for its consumers, Pepperfry pioneered the Omnichannel approach by opening 20 studios across the major metro cities in India. These studios essentially serve as offline experience centres for discerning Pepperfry customers who are seeking design inspiration. Here they can not only experience a select Pepperfry range but also avail complimentary design consultation.
Pepperfry is geared towards scaling the studio presence and recently rolled out a franchise model with an aim to build the largest Omnichannel network in the country. We will extend our studio coverage to Tier II and III towns, and in keeping with Pepperfry’s sharp focus on customer experience significant investments will be made behind supply chain automation and the big box logistics network will expand to 1,000+ cities. In a nut shell right now our focus is to be present wherever our customers are present be it through studios or marketing.