Pepperfry losses fell by a third, revenues jumped 20% to Rs 3.08 bn in FY18

Company aims to drive higher average order value through offline stores

Online furniture platform Pepperfry has reported consolidated revenue of Rs 3.08 billion in FY2017-18 (year ended March 31), up 20 per cent year on year, and has also substantially cut losses for the period. The losses in FY18 stood at Rs 1.69 billion, as compared to Rs 2.48 billion, a reduction of 32 per cent over the year, the company said on Wednesday.   

In the backdrop of IKEA's entry in India, Pepperfry expects more business for organised players and is therefore focusing on increasing average order values (AOVs) from their offline studios. The current online AOV of the company is around Rs 7,000 and offline AOV is Rs 32,000.

The consolidated financial figures are from audited numbers of TrendSutra Platform Services, the parent company that owns the Pepperfry brand, and its two subsidiaries TrendSutra Client Services (the B2B warehousing service) and Pepcart Logistics (logistics arm). 

"Our investments in expanding our service portfolio, as well as new technology, are paying off as clearly shown by the numbers," said Ashish Shah, co-founder and CFO, Pepperfry. "Our large investments in warehousing and logistics, among others, have achieved scale now, resulting in better unit economics. So, while the business has expanded sharply, the operating costs have not gone up significantly," he added.

Shah said that the company's offline range of stores, called Studio Pepperfry, is increasingly gaining centre stage as part of the overall company strategy. Pepperfry has around 28 offline stores across 22 cities in the country, while eight more are expected to come up by the end of this year. "The AOV through online orders is around Rs 7,000, while AOV at studios is between Rs 32,000 and Rs 35,000, with almost 80 per cent higher repeat rates compared to online orders. So, there is much more scope to improve wallet share here," said Shah. 

Pepperfry is also seeking to introduce modular furniture, like kitchen sets and wardrobes, through the studios, which would help the company take the estimated AOV up to Rs 300,000. 

The company said that several measures it had undertaken, including supply chain automation, optimal vehicle utilisation, improved delivery success rates and improvement in staff productivity, contributed towards overall scale efficiencies. During the year, the furniture market place reduced the overheads by 17 per cent. With all these factors at play, Pepperfry expects to turn profitable in FY19.  

With large global players like IKEA entering the Indian organised furniture market, players like Pepperfry and Urban Ladder have raised funds in massive rounds this year to be able to increase user engagement, both online and offline.

Pepperfry is backed by the likes of Goldman Sachs, Zodius Technology Find, Norwest Venture Partners and Bertelsmann India Investments, among others.

Shah says that the entry of organised players like IKEA will only improve the company's growth potential. "When people see the value proposition and variation offered by large organised furniture retailers like IKEA and Pepperfry, this will only attract more consumers to the organised sector."