In the past 7.5 years, Pepperfry has emerged as the market leader in the online home and furniture segment with its omni-channel strategy playing an integral part in building the brand’s unparalleled market position. While the Indian consumer has evolved to a point where s/he is comfortable with the concept of online purchasing, a few consumers still prefer touch & feel when it comes to high-investment items like furniture. Taking cognizance the brand launched its first Studio Pepperfry in December 2014, thereby pioneering the omni channel model in India. These unique Studios are concept stores which allow consumers to experience the material, quality and make of a curated range of furniture and decor products. In an exclusive conversation Kashyap Vadapalli, CMO, Pepperfry sheds light on the Omni-Channel expansion of the brand.
From Online to Offline what were the factors that lead to this pragmatic move? What is your omni-channel strategy?
In order to reach out to a larger demographic of consumers across geographies, we expanded our offline network through the introduction of a unique franchise model. The Pepperfry franchise model is based on 100% price parity and does not require the partner to hold product inventory, making it a mutually beneficial business association. We offer a reward structure wherein the franchise owners can benefit by earning commission on each online transaction made via the franchise studio. This makes our franchise model an initiative that has immense potential thus making it lucrative for both existing and potential franchise partners. We have rapidly expanded our franchise network in the last few years in partnership with a combination of new age and experienced entrepreneurs across Trivandrum, Patna, Bengaluru, Indore, Lucknow, Hubbali, Mysore and Goa, among other markets.Today, our Studios have emerged as key touchpoints for consumer engagement and a great marketing beacon for our brand.
How much of your business is coming from your physical stores?
While we do not retail products directly from our Studios, more than 50% of the customers who walk into our studios place an order online over the next few days. The average ticket size of a studio influenced order is approximately INR60,000 which is almost three times that of an average order value of an online only customer. In tier 2 and 3 markets, the launch of Studios have led to a 100% growth in demand from those markets. Today we have 65 such Studios that contribute to 30% of our overall business.
What were some of the initial challenges while opening your offline store, how you mitigated those challenges?
When Studio Pepperfry was launched in 2014, we realized we had to curate a space displaying only about a hundred products, which must be representative of our diverse product portfolio of tens of thousands. While it was difficult to choose which products to display in the Studios, we mitigated this through data miningsuper imposed with inputs from our design experts.
Another essential factorthat that we evaluated while launching our Studioswere the geographical locations, in order to ensure we are where our discerning customers want us to be. We made these decisions based on heat maps, which helped us identify areas with high delivery rates, proximity to furniture markets in the region and stores of benchmark brands.
What kind of scope you foresee for your omni-channel business, going forward how many new stores you will open in this fiscal?
In the past few years, Pepperfry has established the largest omni-channel business in the furniture and home segment in the country. We launched our first Studio in 2014 and in less than five years, these Studios have evolved as key consumer touchpoints
We want to be present where our customers want us to be and aim to launch small format stores of about 1,500 square feet each in high catchment areas across the top 8 cities. We currently have 65 Studios and aim at having 100 Pepperfry Studios across markets and formats by March 2020.
How your online and offline business models complement each other?
We are an online company with Studios that are built as experience centres to give consumers a more holistic shopping experience.
In a true omni-channel fashion we plan to continue leveraging synergies between the online and offline. One of the first steps is while users are browsing products on the website we plan to showcase nearby studios should they want to visit a studio to experience the product first hand or leverage the assistance provided by our expert designers.
In the Studios too apart from the products on display, our design experts take our consumers through the website catalogue to display designs that may not be available at the store but fulfill their design and budget preferences.