Online Furniture Retailers Target Sales with Newer Ways

Online furniture and home products marketplace Pepperfry’s recently launched B2B business has started contributing 8 per cent to its revenue, the company claims.

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Pepperfry has announced a ‘Privilege Partner Programme’ where member-architects and interior designers get free access to Pepperfry Studios, from where they can choose to work.

 “We launched B2B Projects a few months ago and have received a good response with 8 per cent of our business accruing from it. As part of our secondary business, we have also launched a channel partner programme, where we are building a community of freelance interior designers and architects who will help people design their dream homes,” Ashish Shah, founder and COO, Pepperfry, told BusinessLine.

 “Members can earn commissions of up to 8 per cent for business generated. We have already enrolled 298 architects and interior designers into the programme,” Shah said.

Furniture Marketplaces Grow Omnichannel

Pepperfry has been growing its omnichannel network across the country through 22 owned Studios in 11 cities, with plans to expand it to 20 cities by 2018.

The Studio concept presents a unique proposition to build a large franchise business network. Franchise owners earn commissions on each online transaction made at the Studio. Pepperfry will manage the customer experience end-to-end, from pre-sales to post-sales.

Currently, 35 per cent of the sales on the online platform come from customers who have experienced the services extended at Pepperfry Studios.

“We will have 31 Studios by December and are on track to be the country’s largest omni-channel home furniture retailer with 48 Studios by March 2018,” Shah said.

This year, Urban Ladder too decided to break character. Having raised Rs 102 crore from existing investors such as Kalaari Capital and SAIF Partners, Urban Ladder is building its offline business with new formats. It plans to invest around $10-15 million in offline retail over a period of one year.

Explaining the rationale, Ashish Goel, CEO & co-founder, Urban Ladder, says, "We want to be present wherever the customer is - online or on the streets."

Urban Ladder has a roadmap of 10 stores by March 2018, 8 of which will be in Bengaluru.

Explains Goel, "The strategy is to win one city at a time. We are doing physical retail for the first time. We'll learn from our initial mistakes and inculcate a culture of continuous improvement."

There’s a strong business case to be made. Pepperfry discovered many consumers were reluctant to buy online. After running consumer tracks, it discovered almost 50% of people who walk in, place an order within six weeks. Physical stores corner more expensive orders: if it’s Rs 17,000 to Rs 18,000 on site, it’s over Rs 50,000 in store.

Strangely enough, 85% of what’s ordered is not even present in the store. According to industry estimates, only 10% of the approximately Rs 120,000 crore furniture market is organised. The market for home and small office furnishing is estimated to be Rs 75,000 crores. It is this market that a slew of players, trying to grow or convert from unorganised to organised.

Home Centre which began in India in 2005, and has 39 stores, made its online debut just a month ago according to Kabir Lumba, managing director, Lifestyle International. Lumba believes the 12 years spent offline have given the brand a strong customer base with a high trust factor. He expects traction from both existing customers as well as new ones in cities where Home Center is yet to start.

Offline players frequently tout customer databases as a differentiator. But that may not necessarily be the case. Ajay Kelkar, co-founder, Hansa Cequity says, "The fundamental paradigm of using only your own data will be challenged in the years to come. Online players have access to entire digital exhaust in all sorts of segments."

He recommends offline players work on partnerships — perhaps with banks or DTH services which track movements of households, "Can an offline retailer partner with a bank and say, let’s do a joint offer for furniture refitting. Those creative data partnerships will allow them to get that much more intimate with the consumer."

Conclusion

India's online furniture sector is seeing a big offline push after the entry of the Swedish furniture retail giant- IKEA- in India.

“IKEA’s entry may help in expanding and giving a fillip to the furniture category, but the existing players realise that it will eventually lead the category and are thus strengthening their presence,” observed Saloni Nangia, President, Technopak, a retail consultancy.

Online furniture retailers are looking into cost-benefit analysis, introducing new ideas to generate sales. Pepperfry’s latest program is one such way that brings together the stakeholders of the ecosystem, channelizing new means of revenue.

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