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HowstartupssuccessfullygotIndianshopperstobuyfurnitureonlineYourStory.com
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How startups successfully got Indian

shoppers to buy furniture online
ATHIRA A NAIR , 11 JULY 2016
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Jio to extend its

June, but with a

Hari Rajagopalan, a Bengaluru-based professional, spent a year looking for the perfect sofa
in multiple stores in 2012. Dreading a similar experience while buying a cot, he tried out
online furniture seller Pepperfry in 2013. They had better selection and good deals. The

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How Standard C
helping to take
reform an age-o

delivery took a month, but an offline option would have cost double the amount, he says.
From then on, he stuck with Pepperfry, and has bought more cots and chest drawers,
buying only during sale events. It cost only around Rs 50,000, and customer service is
decent too, he says.

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This IIT profess

Raghuram Raja
for tribals

For urban professionals and students, online portals are now the first option for buying
furniture a phenomenon which would have been unthinkable four years ago. Metro cities
have witnessed drastic growth, with multiple players coming in and expanding their base.
Pepperfrys competitor Urban Ladderwhich operates in 19 citiesgets 80 percent of
orders from Tier-I cities.

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Organising the sector

Indias furniture sector is 90 percent unorganised. Of the organised, only one percent is
online. Different models are looking at different consumer segments. For instance, rentals
aim at those looking for short-term essentials, mostly students, or people who have just
started working. Furlencos Founder and CEO Ajith Karimpana says: In renting, one does
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GST registratio
to enroll for GS
existing taxpay

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architect of Aad
Varma

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not have to get committed to their furniture. Also, we have different product offerings. We
give an entire bedroom or living room or dining room experience.
Bringing more structure to the industry can offer more transparency to the customer. Delhi-

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Why Pradeep Ka
about Microland
company

based Modspace, whichdelivers customised modular kitchens and home goods, was born
out of the need for offering quality. Co-founder Jatin Paulsays, Getting the quality and
value aspects together is hard when the product is not standardised. It demands
understanding of subjective designs, and catering to individual needs at a particular price
point.
Players like Pepperfry and Urban Ladder focus on those
who want to decorate their homes. Both models can
coexist, given the high diversity of the Indian consumers
who are unhappy with the offline experience, says
Mrigank Gutgutia, Engagement Manager at Red Seer
Consulting. He says that since many customers are
particular about the touch-and-feel experience of
products, models like that of Pepperfrys experience
zones might come up. Ashish Shah, Co-founder,
Ashish Shah, co-founder and
COO, Pepperfry

Pepperfry, says the company provides design, content

and consultation for free.
Omni-channel is the way forward, according to Vinay

Indresh, Co-founder of Bengaluru-based Homefuly,which brings together interior designers,

factories, and vendors. In Homefuly, discovery and engagement happens online, and
transaction happens offline. From your location, we find out the nearby shops that will cater
to your needs, he says. One cant order on Homefuly, but the firm provides all the required
data and services.
Horizontal players are not lagging behind. For Snapdeal, furniture categorygenerates high
revenue and margins due to high ticket size. Saurabh Bansal, Vice President and Head
Category Management, says,In order to expand this segment, the category is revamping
the entire site navigation based on customer decision process. Thematic segmentation for
styles such as Heritage, Contemporary, and Colonial are also underway.

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Customer is the king

A good part of business for online business comes from non-metro cities where there is low
penetration of organised retail. Ashish of Pepperfry says: Our top 15 cities account for
almost 90 percent of our business and the eight Tier-I cities contribute to almost 80 percent
of the business. They target urban consumers who are already confident about shopping
online.
For Mebelkart, Tier-I cities formed the customer base at first, but now digital marketing has
helped garner customers from Ranchi, Patna, and Lucknow, especially given the lack of
availability of items like ergonomic chairs or foldable beds in these cities. From 90 orders
per month in 2012, they have reached 30,000 per month today.
According to Snapdeals Saurabh, customers in Tier II and III cities are highly price-sensitive
and choose online route only if the local offline market charges higher for similar products.
We have implemented humanoid reference images and size charts to help customers in the

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purchase decision. There was a huge demand for both queen and king-sized beds, and after
adding adequate options we are seeing a steady surge in sale numbers, he says.
For any business to succeed, customer feedback has to be taken seriously. Online furniture
industry is no different. Furlenco, which targets customers in the 22-40 age group,
developed its most successful productBouncebased on customer interaction. Ajith
says, Today, people socialise in groups and do not behave formally as in the past.
Therefore, we asked potential customers if given a choice what they would like to have for
furniture and they said less space occupying and more casual.

Quality versus Discount

Furniture is one of those few categories in ecommerce where quality triumphs discounts.
According to Rajiv Srivatsa, Co-founder of Urban
Ladder, design gets more focus, as customer
wants good quality rather than cheap price.
Discounts have decreased in the last six months,
and it will continue. Everyone is moving towards
profitability now, he says.
However, Mebelkart gives discounts for larger
marketshare. Their average ticket size has gone
from Rs 20,000 to Rs 4,000-10,000. We were the

Rajiv Srivatsa, COO and Co-

first to launch part payments, like Rs 500 or 1,000

founder, Urban Ladder

in advance and the remaining on delivery. Our GMV

has grown from Rs 4.8 crore to Rs 120 crore in four
years, says Rahul.

IKEAs entry
Swedish furniture giant IKEAs impending entry into India by the end of 2016 is expected to
impact the furniture sector at least in the urban areas. Their brand has tremendous lure for
the customer. To counter that, its Indian competitors will have to venture into smaller
cities, says Red Seer Consulting's Mrigank.
IKEA is famous for its do-it-yourself (DIY) model. But DIY is new in India. Urban customers
and those who have lived abroad, however, might find it agreeable. Rajiv of Urban Ladder
believes that IKEA will help push the concepts of brand and design. It will improve retail
store experience too. Lot of offline companies have stagnated for the last 7-8 years, he
says.

The app business

With increasing smartphone penetration, apps contribution in sales is sure to rise. About
40-45 percent of Urban Ladders business comes from apps. Homefuly plans to launch an
app in 2-3 months for their omni-channel platform, which aims to expand to interior designs.
They have an m-site up already.
Mebelkart, however, has no mobile presence, as they believe that users want to see the
products on big screens. For Furlenco, 20 percent of sales come from mobile app; they
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expect it to increase to 50-60 percent in the future.

Logistics nightmares
Logistics is undoubtedly the biggest challenge for the sector. Furniture needs dedicated
trucks; you cant mix it with other items. Due to smaller volumes, truck capacity is
underutilised. Hence 10-15 percent of value is spent in logistics, says Manish Saigal,
Managing Director at Alvarez and Marsal.
He adds that logistics companies have to realise that Category C consumer durables,
appliances, electronics, furniture etc. is growing fast. They have to build solutions for that
category including trucks and trained manpower, he says. Customers expect the delivery
boys to be trained in unpacking and assembling the product like what an offline service
offers. But for most online players, delivery and assembly are done by different people at
different times.
Mebelkart lets the vendors use their own logistics if they have an established supply chain.
Otherwise, Mebelkart ties up with third parties and ships the products itself.
Pepperfry commenced the origin-to-hub shipment in April 2013 and, since then, has
significantly reduced costs per unit, claiming to have the lowest shipping costs in the
industry- below eight percent of GMV. Ashish says, We monitor the entire process of how a
sale is affected on the platform, right from when an item is listed for sale, till it reaches the
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customer. Thus we are able to establish standardisation, which is one of the key challenges
in the vertical.
Urban Ladders Rajiv says that extra care should be taken in transferring material from the
supplier to warehouse without anything being broken. Supply should be planned well so we
can deliver fast after quality checks. There should be full trucks, so nothing is broken, he
adds.

Spread it out
Furniture manufacturing is concentrated in belts, which makes delivery longer and costly.
They need more manufacturing centres. Dispatches should happen in smaller radius like
200km, says Alvarez and Marsal's Manish.
Pepperfry seems to have got it right. The points of origin for the company's furniture
shipments are Delhi, Mumbai, Jodhpur, Jaipur, Bengaluru, Nagpur etc. They have 17
distribution centres across the country. Ashish says, From the distribution centres to the
doorstep of the end consumers we have our own network of more than 400 trucks covering
500+ cities.
Based on geo location, Mebelkart finds out the city the customer belongs to, and shows
relevant products from nearby factories, so as to ship faster at cheaper costs and with
lesser chances of damage. But horizontal players just build the catalogue, tie up with
suppliers, and leave the logistics companies to manage the rest. Since few logistics
companies know how to manage it, their returns and damages have been much higher than
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of verticals, according
to Manish.
Since
the return logistics
is a nightmare,
many

EVENTS

sellers give discounts up to 50 percent, so as to cancel the return request. Many users
misuse this, he says.

Happier customer
Industry experts believe that the next four years will see the sector exploding. A happier
customer demands better designs and improved customer service. According to Rajiv,
technologys interplay will take interior design to a larger population, and there will more
content and discussions on it.
Virtual reality, augmented reality, and hybrid models are expected to come up, with
technology penetration. Urban Ladder's Rajiv adds, Tech-driven companies will automate
customer requests, manufacturing, and backend supply chain, as there will be lot of tech in
thinking and effort like global players. Visualisations and 3D will become mature; customers
will be able to see on their tablet how their different pieces can come together.
Since the market is huge and under-penetrated, there is space for multiple players
competition is with the unorganised sector. Horizontal players coming in is good for the
industry, notes Arnab of Homefuly. Verticals give niche solutions, but horizontals educate
the consumer space. This will help the industry grow, he adds.
With more players, comes more range. As products and services become a package, it looks
like the Indian customer is looking at a bright phase for her furniture needs.

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