Pepperfry has completed 11 years in business. Did you know that it started as a lifestyle business, wherein the brand would sell outside-of-home categories like jewelry, apparel, clothing, accessories, and many more. In a year's time, they realized that the customers were giving good feedback on how the brand was building a furniture and home business. Therefore, at the end of 2012, Pepperfry decided to become a home and furniture player.
Pepperfry’s categories are inherently driven by variety. Earlier, customers would want to visit many shops before making a purchase decision. Therefore, the brand thought that it’ll build its business on a marketplace model, which means that it will bring businesses in India that sell furniture and home products on an online platform, and show their variety to the customers and enable the transaction online. Hence, Pepperfry became a managed marketplace, which meant that while all the brands were selling on the website, the responsibility of the experience around the transaction was that of Pepperfry. The brand provides shipping and warehousing services to its sellers and also ensures great customer support for its partners.
“Currently, 50 percent of our business comes from the marketplace business while the balance is contributed from our own private labels or D2C brands,” said Ashish Shah, Co-founder & COO, Pepperfry. “The most important milestone for us is to become profitable, which we expect to happen soon,” he added.
An Omnichannel Business Model
Pepperfry believes that customers should not be classified as online or offline customers. Every business had a responsibility to be available to its customers at various points in their purchase journey - be it online or offline, mobile phones, laptops or iPads, etc. Therefore, Pepperfry built India's largest home and furniture omnichannel business.
The brand opened its first experience studio in 2014. Today, it operates more than 210 studios across the country in around 125 cities. These are experience stores as the furniture business is all about variety and the entire collection cannot be displayed in any large store. Therefore, the brand decided that it will showcase some products in its studios to enable the customers to have a touch and feel experince, and when they start liking something, the sales personal will take them online and showcase the umpteen choices and similar products, to help the client make the right purchase decision.
“Our current model of expansion is through franchising. Today, out of 210 stores, around 60 stores are company-owned and company-operated (COCO), while the balance 150 stores are franchisee-owned and franchisee-operated (FOFO). We'll continue to expand our footprint via the franchising model,” noted Ashish.
Plethora of Choices
Pepperfry has a catalog of around 100,000 products, of which, about 20,000 are furniture. Its top categories from a sales standpoint, include beds, sofas, coffee tables, and wardrobes, while from a transactional standpoint, coffee tables, shoe racks, and study tables are the top categories. Recently, the brand came up with a pet category, which includes pet furniture, pet treats and accessories.
The brand is largely known as a furniture business but 50 percent of transactions happen from non-furniture categories. “These categories do not look big on sale sheets because they're small ticket items, but these are the categories that drive vibrancy on our website,” Shah stated.
The brand is now setting its eyes on the kitchen category. “We are going to launch kitchen appliances and kitchen essential products. We used to have an entire kitchen catalog in the past but then we stopped. We are now re-launching the complete catalog online soon,” he added.
Betting Big on Private Labels
Pepperfry currently operates seven private label brands — six in the furniture category and one in the mattress. Going forward, the brand plans to expand its private label business in the space of premium furniture, especially in the sofa and lounger category. 50 percent of its revenue comes from the private label business, while the remaining comes from the marketplace business.
Ashish believes that it's a great mix because the brand’s fundamental proposition is variety and that happens when they enable more furniture sellers in the country to sell online. “I think along with our private labels, our marketplace business will also keep growing. Therefore, a 50 percent mix of private labels and marketplace is a great confluence in my mind,” he asserted.
Technology: The Core of its Biz
Pepperfry has used technology to enable furniture transactions online. For instance, when the brand says it is an omnichannel business, it means that if consumers go to its online website, they would find nudges where if consumers start liking something, they tell them to visit their nearest studio. Similarly, if consumers go to the studio, it helps them to purchase online. Therefore, both channels are highly integrated.
The way the brand has built its catalog online is also completely driven by technology. Every product has more than seven to eight images, plus 3D models, wherein consumers can rotate the products, tilt and turn them, and open the drawers, online. The brand uses Augmented Reality where a consumer can actually see the furniture in his/her room. For instance, if a consumer is in a studio, he/she can open the Pepperfry app, take a sofa, and put it in front of a wall, and then a consumer can keep changing the color of the wall basis the color that he/she has in the home.
“We use AR technology to enhance the quality of the catalog and help customers make the right purchase decisions. We are currently spending our time, resources, and money to get into the VR technology, where two years from now, consumers can wear a Google Glass and start looking at various 3D models of the furniture products,” said Shah.
Additionally, with the use of technology, Pepperfry can open 100 sq ft retail spaces in a mall, instead of launching 2,000 sq ft. studios. “Customers can walk into the mall in this small shop, wear the glasses, present the layout of their home, which is converted into 3D model, begin selecting product from our catalog, put furniture in their rooms, and keep changing sofa, dining table, etc., basis what they're liking. That’s how we think technology is going to completely change the way furniture businesses are done in the country,” Shah added.
Focus on Community Building
Pepperfry has built a large community of designers and influencers in the last one and a half years. It has a program called ‘Pep Homies’, where there are 2,000 community members that meet and engage with the brand in its studios. These members talk about the brand and its products, and also about the current home and furniture landscape.
“Nowadays, engagement around the brand happens on social media. Instagram is our number one channel from that standpoint because it is about pictures, designs, videos, etc. We are talking about how Pepperfry has become an omnichannel brand, and how consumers can experience it both online and offline,” explained Shah.
Tier II & III Cities Driving Growth
The brand has increased its footprint tremendously in Tier II and III towns in the last year. For instance, it has six stores in Bihar, eight in Orissa, and twelve in Kerala. Pepperfry has made its presence available in cities like Imphal, Guwahati, Silchar, etc. Additionally, in the Northeast, it has built 16 stores. “Northeast has always been a big furniture market, but underserved. Hence, we have taken 2,000 brands and made them available to the customers in the region,” he noted.
“Tier II and III cities contribute around 35 percent of our overall business. We actually expect these towns to contribute a lot more going forward as the customers in the cities are affluent and would want to buy online from many brands,” Shah elaborated.
READ MORE: Why Furniture E-Retailers Must Invest Towards Creating a Post-Purchase Experience
Testing International Waters
The brand is focusing on neighborhood countries for its global expansion. It opened its first store in Bhutan in the month of October last year. Another store will come up in Nepal this month.
“We'll start with opening stores in the nearby countries. We have big plans for Nepal, and the first one that we are coming up with is through a franchise partner and is huge in size,” Shah concluded.