 "PepperFry looks for a crowd-beating formula")
For the four-year old PepperFry, competition has never really been a worry. Navigating a largely unorganised market and convincing customers to click and buy furniture online were bigger hurdles. When it started out, most branded furniture makers were located in the metros and apart from Urban Ladder, which opened shop around the same time, there was no other online e-tailer. It had a unique proposition. But that is about to change as two big players enter the ring: global major Ikea opens its first store in India later this year and the Future group's recent acquisition of furnishings company Fabfurnish.
The new brands on the block threaten the status quo for two reasons; one PepperFry and Urban Ladder built their brands around the needs and design sensibilities of an urban consumer. Ikea speaks to the same audience. With the Future-Fabfurnish, the market is also likely to see a huge disruption as price bands and service expectations are challenged by the Kishore Biyani-led marketing team.
Should PepperFry rework its strategy - that of offering sleek designs, targeted ad campaigns and assured hassle-free service to pull in customers - as the new players offer that and more? Co-founder, Ambareesh Murty understands that 90 per cent of the market he is trying to win is unorganised and split across various small carpenters. "I won't try to win the market with discounts," he says. He splits the growth of his four-year-old company in two phases. The first two years were about evolving technology, the next two were investing and strengthening his supply chain and the next two will be the growth phase where he is convinced that PepperFry will be a $1 billion company. And profitable.
One of the unique characteristics of the furniture business is the high margin that e-tailers operate with, quite unlike their counterparts in the grocery and food delivery business. "We are a 45 per cent margin player. Yes, we will be profitable soon," says Murty.
Unicorns and profitability, usually, don't go hand in hand. And given the rush of e-commerce brands shutting out the lights in recent months, the big challenge is keeping customers loyal. The only way e-commerce companies have done that is by dangling the carrot of deep discounts.
Murty and his co-founder Ashish Shah disagree. "Our way of keeping customers loyal is to customise our products for each phase of their lives and the other is customer service," Shah says. "A happy customer is a repeat customer." PepperFry has created a suite of in-house labels, created around the needs of every age group. It has, for example, CasaCraft, for the urban single youth. It has one for new parents and even one for the retired. But do people change their couches often? The duo quote from a study conducted by the company, which states that a customer changes six pieces of furniture or decor every year and that keeps them shopping.
"Funnily enough, our study also states that 65 per cent of our customers are women and they shop after 8 p.m. on weekdays and on weekends," says Murty. This, he explains, helps them design targeted advertising campaigns on the web. "This gives us a look into our customer's mind and helps us devise a strategy," he adds. They launched their last campaign, titled 'Happy Furnishing to You', in September and plan to launch a big TV campaign around July. "We did a quiet digital campaign around Holi as well," says Shah.
The company explains that they don't need a fresh marketing push; it is now a game of establishing the brand. "We have tons of triggers to buy our products," says Murty. PepperFry has been opening offline stores and discreetly doing product placements in films as well.
Servicing the customer
The key winner for PepperFry is its logistics arm, which directly contributes to the brand's customer service capabilities. The company did not rule out opening up its logistics arm to other e-commerce companies in the future. The company owns 400 vehicles to cater to the 3,500 vendors that sell 120,000 units a month, but logistics is also where the company loses most of its margin. Why would it not outsource this? "For our products it does not work. It needs a professional to deliver this to your home," says Shah.
A typical logistics network follows the man-on-the-bike model, Shah and Murty say. Here this changes because a bed cannot be carried on the bike. "And if you are delivering items of low value, you can leave it with a neighbour but you can't really leave a cupboard anywhere," says Murty.
The company also has 250 carpenters on call. "We have set up our system in such a way that customers don't need to wait more than six hours to set up their furniture," explains Shah. And this is where their competition with Ikea will come into play. The Swedish company, whose basic mandate relies on DIY (do-it-yourself), will have to contend with a massive customer base, who are learning to live the non-DIY way. At a ticket size of Rs 18,000, Pepperfry sees profitability coming by the end of 2016. But for that the company will need to keep expanding its community of buyers.
The new brands on the block threaten the status quo for two reasons; one PepperFry and Urban Ladder built their brands around the needs and design sensibilities of an urban consumer. Ikea speaks to the same audience. With the Future-Fabfurnish, the market is also likely to see a huge disruption as price bands and service expectations are challenged by the Kishore Biyani-led marketing team.
Should PepperFry rework its strategy - that of offering sleek designs, targeted ad campaigns and assured hassle-free service to pull in customers - as the new players offer that and more? Co-founder, Ambareesh Murty understands that 90 per cent of the market he is trying to win is unorganised and split across various small carpenters. "I won't try to win the market with discounts," he says. He splits the growth of his four-year-old company in two phases. The first two years were about evolving technology, the next two were investing and strengthening his supply chain and the next two will be the growth phase where he is convinced that PepperFry will be a $1 billion company. And profitable.
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Customised, not discounted
One of the unique characteristics of the furniture business is the high margin that e-tailers operate with, quite unlike their counterparts in the grocery and food delivery business. "We are a 45 per cent margin player. Yes, we will be profitable soon," says Murty.
Unicorns and profitability, usually, don't go hand in hand. And given the rush of e-commerce brands shutting out the lights in recent months, the big challenge is keeping customers loyal. The only way e-commerce companies have done that is by dangling the carrot of deep discounts.
Murty and his co-founder Ashish Shah disagree. "Our way of keeping customers loyal is to customise our products for each phase of their lives and the other is customer service," Shah says. "A happy customer is a repeat customer." PepperFry has created a suite of in-house labels, created around the needs of every age group. It has, for example, CasaCraft, for the urban single youth. It has one for new parents and even one for the retired. But do people change their couches often? The duo quote from a study conducted by the company, which states that a customer changes six pieces of furniture or decor every year and that keeps them shopping.
"Funnily enough, our study also states that 65 per cent of our customers are women and they shop after 8 p.m. on weekdays and on weekends," says Murty. This, he explains, helps them design targeted advertising campaigns on the web. "This gives us a look into our customer's mind and helps us devise a strategy," he adds. They launched their last campaign, titled 'Happy Furnishing to You', in September and plan to launch a big TV campaign around July. "We did a quiet digital campaign around Holi as well," says Shah.
The company explains that they don't need a fresh marketing push; it is now a game of establishing the brand. "We have tons of triggers to buy our products," says Murty. PepperFry has been opening offline stores and discreetly doing product placements in films as well.
Servicing the customer
The key winner for PepperFry is its logistics arm, which directly contributes to the brand's customer service capabilities. The company did not rule out opening up its logistics arm to other e-commerce companies in the future. The company owns 400 vehicles to cater to the 3,500 vendors that sell 120,000 units a month, but logistics is also where the company loses most of its margin. Why would it not outsource this? "For our products it does not work. It needs a professional to deliver this to your home," says Shah.
A typical logistics network follows the man-on-the-bike model, Shah and Murty say. Here this changes because a bed cannot be carried on the bike. "And if you are delivering items of low value, you can leave it with a neighbour but you can't really leave a cupboard anywhere," says Murty.
The company also has 250 carpenters on call. "We have set up our system in such a way that customers don't need to wait more than six hours to set up their furniture," explains Shah. And this is where their competition with Ikea will come into play. The Swedish company, whose basic mandate relies on DIY (do-it-yourself), will have to contend with a massive customer base, who are learning to live the non-DIY way. At a ticket size of Rs 18,000, Pepperfry sees profitability coming by the end of 2016. But for that the company will need to keep expanding its community of buyers.