How Furniture Sector Has Toiled Towards Capturing a Bigger Pie On E-commerce Space

The Indian domestic furniture market is expected to expand at a CAGR of 12.91 percent from 2020 to 2024. What are some of the major developments expected from the sector?
How Furniture Sector Has Toiled towards Capturing a Bigger Pie On E-commerce Space

The furniture industry, which has long been working on a traditional route, has now focused all its efforts, just like other sectors, towards building the e-commerce mode of operations. Consumer expectations are also changing on how they may engage with a brand to meet their needs in the home category. 

Specifically, the sector that has long been occupied by unorganized players has only 20 percent that is organized, and online is just a fraction of that. 

However, the last few years have seen major developments particularly from furniture brands such as Pepperfry, Urban Ladder, Wakefit, etc. that are raising the furniture demand on the online channels. The use of emergent technologies to provide personalized experiences is the USP that distinguishes them from other players. 

"We have a large in-house team of data scientists and technology experts who are working behind the scenes to build a proprietary customer acquisition tool, which helps in tracking the user journey on the website and then using it to acquire more customers while also creating a unique experience for every new and existing customer, " said Chaitanya Ramalingegowda, Director and Co-Founder, Wakefit.co. 

The brands like Wakefit understand how critical it is to provide a good customer experience and strongly address the demand. Wakefit clocked a revenue of Rs 416 crore in FY 21, recording a growth rate of 2-2.5x over last year.

“Customer experience is more important than ever as both traditional and online furniture retailers are striving to differentiate themselves in a challenging and crowded market. To amplify customer acquisitions, online furniture retailers are focusing on an omnichannel marketing strategy, and providing options such as – free trials, easy returns, assembly at-home services, customizations, etc.,” said Harsha Razdan, Partner and Head, Consumer Markets and Internet Business, KPMG in India. 

To put in figures, the Indian domestic furniture market is expected to expand at a CAGR of 12.91 percent from 2020 to 2024. Godrej Interio, Nilkamal, Wipro furniture, have been the major players in the market occupying the most share. However, these traditional legacy brands, given the surging trends of online shopping, have also been introducing and selling their products through online mediums.   

IKEA's Expansion 

With the global player IKEA having entered the market, the furniture sector is likely to see major developments in terms of competition, changes in the consumer base of the players, among many others. It will be akin to when Amazon entered the e-commerce market when very few organized players like Flipkart had taken space. 

Delhi, Bangalore, Mumbai, Maharashtra, and Telangana are the company's first markets.

"India is one of the most important markets for the INGKA Group, the parent company of IKEA. We are looking to expand in new cities in the coming years with an omnichannel presence (a mix of bother e-commerce and stores)," said Nivedeeta Moirangthem, Country Communication Manager, IKEA India. 

The firm, which is the fourth most valuable retailer in the world at $48.1 billion, understands the potential that India has in the segment. "We have many meeting points with India that are good for our business. We are here for the long talk," the company stated. 

On how the competition is to be affected, Moirangthem said: "In terms of home-furnishing (which includes other home items like curtains, mats, besides furniture) we are still a growing sector. So there are not many organized home-furnishing retailers that exist in India today so we would like to help the home-furnishing ecosystem grow by creating more needs for the home-furnishing, by working with other companies, service providers to help the whole ecosystem to grow."

Long Way Home

It is indeed true that the home furnishing segment has a long way to go and, as stated, the consumers are still figuring out what to expect from the segment.

Razdan stated, "It is extremely imperative to educate customers and provide improved customer experiences while closing this gap and building customer connect and trust. Transparency in communication, clear product descriptions, material, and dimensions to meet customer expectations is key."

Also, as hinted by IKEA, the sector requires many major partnerships that can foster growth and allow new entrants to take up space. 

"Alliances and new-age partnerships with leading third-party logistic providers could help in third-party last-mile delivery. Bundling furniture with furnishings, providing good quality, low maintenance furniture, coupled with health benefits is a good opportunity for retailers to explore,“ Razdan further said. 

Indeed, the industry is going to see experimentations in the times ahead in terms of tie-ups, technological adoption, a new type of product offerings, and so on which will ultimately decide where the organized furniture sector will be headed towards. 

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