Changing the way, we buy furniture

Till a few years back, buying furniture was a tiring task. You have to either rush from one showroom to
other in search of the design or quality of furniture you are looking for, or you have to get it made. But
the process is much simpler now. You can now simply choose any piece of furniture you like online, and
get it delivered and even get it assembled and installed, without any hassle. Owing to this many
benefits, the number of people opting to buy furniture online has increased. According to RedSeer
Consulting, the online furniture market is expected to reach $ 3 billion in 2020. 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

India’s 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. Swedish furniture giant
IKEA’s impending entry into India by the end of 2016 is expected to impact the furniture sector at least
in the urban areas. 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. With increasing
smartphone penetration, apps’ contribution in sales is sure to rise.

Logistics is undoubtedly the biggest challenge for the sector. Furniture needs dedicated trucks; you can’t
mix it with other items. Due to smaller volumes, truck capacity is underutilised. Hence 10-15 percent of
value is spent in logistics. Furniture manufacturing is concentrated in belts, which makes delivery longer
and costly. 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 that of verticals. Since the return logistics is a nightmare, many
sellers give discounts up to 50 percent, so as to cancel the return request. Many users misuse this.

Pepperfry’s recipe for success

Pepperfry is one company that is behind this growing popularity of online furniture shopping among
Indians. Established in 2011, Pepperfry brings to you stylish and quality furniture with attractive EMI
options. Pepperfry works on a Managed Marketplace Business Model wherein the small and medium
business artisans and merchants sell their merchandise through the company. Pepperfry's category
team meets the sellers, and after proper checking, they procures selected products from the sellers. The
products are then taken to studios for photoshoots. The photos of products are then catalogued and
placed on the website. Once a product is sold, it is brought from the sellers to Pepperfry's warehouse,
where quality of the product is checked, and the product is packed and dispatched to the customer.
Currently, Pepperfry is working with more than ten thousand merchant partners who sell their products
all over India. From electrical appliances to wall arts, Pepperfry offers everything which you need to
make your apartment a home. The largest online furniture store in India, Pepperfry was founded in the
year. Their products and delivery mechanism has made them a leading brand in their category. The
company has more than 7 million visits on the website every month, more than 4.5 million registered
users and subscribers and over 10,000 sellers on board. Initially, Pepperfry was started to provide
products across multiple lifestyle categories but then after a year, in 2013, Pepperfry pivoted to find a
niche in the category of selling only furnishings, home decor, and related products online.
Headquartered in Mumbai, Pepperfry has also opened over 60 Pepperfry studios in 18 Indian cities.
These studios display a wide range of furniture, so that the customers can get a look and feel of the
furniture before placing an order.

Pepperfry is today by far India’s largest online furniture retailer, with 50% of the market share. Its
revenues of Rs98 crore for the financial year 2016 tripled over the year-ago period. The secret of success
of Pepperfry lies in its omnichannel supply chain allowing the consumer to order anytime, anywhere,
from any channel or device. This is possible through mobile and website presence, which allows
consumers to switch easily between these media for any part of their purchase journey. 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. Pepperfry
seems to have got their logistics right. The points of origin for the company's furniture shipments are
Delhi, Mumbai, Jodhpur, Jaipur, Bengaluru, Nagpur etc. They have 18 distribution centres across the
country. From the distribution centres to the doorstep of the end consumers they have our own
network of more than 400 trucks covering 500+ cities. The company is now benefitting from economies
of scale. In its first years of operation, the e-tailer invested heavily in the supply chain and logistics to
control the consumer experience, but third-party vendors were not fulfilling the promise of doorstep
delivery, and even abandoning ordered items in the lobbies of buildings if they did not fit in the elevator.
Initially, the operating expenditure was 20-25% of the cost of goods sold (COGS). Today, Pepperfry
operates at 8-10%.