"Pepperfry will open 46 Studios by March 2018": Ashish Shah, Pepperfry

How do you see current online home furnishing market is growing in India? How do you see this market will stand in next two years? What would be estimated share of Pepperfry in overall market?
Home and furniture is $32 Billion market which is set to reach $ 71 Bn by 2020. While the total offline market is growing at 10-15% YoY the online component is growing at 300% YoY. Over the next few years, it is expected to become 9% of overall eCommerce, 6% of the overall home and furniture market. These projections are in line with home and furniture trends worldwide where the segment constitutes more than 10% of eCommerce in markets across the globe; it is 13% of US eCommerce, 19% of Chinese eCommerce, 20% of Brazilian eCommerce and 17% of the eCommerce market in Russia. In the next 3-5 years, leading home players are set to reach the global standards. Pepperfry sees a huge opportunity to lead this growth. We already have a large share of the online traffic with 62% of the overall online home and furniture segment traffic coming to Pepperfry.com. Omni-channel is going to be a key growth driver for improving the customer experience. Pepperfry is geared towards scaling the Studio presence from present 21, and has recently rolled out a franchise model with an aim to build the largest omni-channel network in the country. We will open 46 Studios by March 2018.

Lastly, there will be a spurt in the growth of ancillary services. Providing additional services especially in the home segment like designing and consulting are set to become important features. We started the trend as early as 2014 and have been providing complimentary consulting to our customers since then.

Pepperfry was started as pure online entity, but now gradually moving to offline space as well. What is the rationale behind this shift? Is online not a viable option for high ticket (expensive) furniture? Also, highlight your current footprint across the channels? How you are looking to enhance your distribution/footprint?

Pepperfry continues to be an online business even today with an aim to establish the largest omni-channel network in country. Our offline presence comes to life in the form of our Studio’s. In the last 2 years, the Studios have emerged as key customer engagement touch points for Pepperfry. We want to be present where are customers want us to be and will continue executing to our omni-channel strategy by opening many more Studios across the country this year.

These Studios are unlike typical stores, they are experience centres that serve as a design inspiration for customers looking for a differentiated range of furniture and home decor. It is a one of its kind concept where one can experience the cutting edge design, various types of furniture with different wood finishes and get an idea of the overall quality of the furniture from Pepperfry. It is in line with our goal to help create 20 million beautiful homes by 2020. We will continue to empower our customers to design their own homes, with the help of our in-house counsel of interior decorators who offer complimentary counsel to help customers.

We have 21 Studio across key cities and plan to open more. We serve customers in more than 500 cities through Pepperfry’s specialized large item delivery fleet of more than 400 vehicles operating from 17 hubs across key states. Pepperfry also provides assembly and installation support to customers through a team of more than 250 carpenters across major towns and cities. Pepperfry expects to double its logistics footprint 1000+ cities & towns to establish robust delivery network in Tier III and Tier IV cities.

Presently, how many categories you are retailing and which category is churning better results? Any plan to extend the existing categories?

Pepperfry offers a highly differentiated catalogue of more than 1.2 lakh products across categories like Furniture, Home Décor, Lamps and lighting, Furnishing, kitchen & dining, housekeeping, and Hardware &  Electricals. In furniture bed, followed by coffee tables, shoe racks etc. are our largest selling furniture items. Other categories like décor and lamps and lighting are also popular.

Which category would be on your focus for future expansion?

We will continue to build our furniture portfolio and expand other categories like modular furniture, kids’ furniture, décor and lamps & lighting.

In India fashion is seem to ruling category in the online space. Unlike to international markets why Indian home furnishing industry is not picking up the similar momentum? What are the major challenges or setbacks in Indian online furnishing space?

In the next 3-5 years leading home players are set to reach the global standards. Pepperfry sees a huge opportunity to lead this growth. We already have a large share of the online traffic with 62% of the overall online home and furniture segment traffic coming to Pepperfry.com.

How you are managing the supply chain of heavy furniture items? Presently, how many pin codes are you serving?

The biggest challenge is poor infrastructure and supply chain. For a specialized vertical like furniture, large item distribution poses as a huge challenge. There is no prototype in the online industry for a vertical like furniture that can be imitated. We overcame that by pioneering our own “Large Item Distribution model” which hasn’t been attempted by any other company in the past. By making significant investments in that area we have built the largest big box logistics through a hub and spoke model that covers a majority of our furniture orders. This comes from our business orientation that “when you take risks, you will make mistakes. But you should be the best at fixing them.”

Today, we have 17 delivery centers and a fleet of over 400 vehicles serves customers in more than 500 cities. With a proficient team of more than 250 carpenters we offer assembly and installation support to customers across major towns and cities. Having commenced the origin to hub shipment process through contracted trucking arrangements in April 2013, we have been able to significantly reduce delivery per unit costs with increasing scale and operating efficiencies. Through this superior supply chain management, we have been successful in bridging the supply gap by establishing the largest big box delivery network in the country.

Are you looking to tie-up with realty developers for product placement exercise (for brand promotion per se)?

We are geared to ramp up our alliances business by partnering with builders, corporates and the HORECA (Hotels, Restaurants and Cafes) industry. This will be done through gift cards for employee R&R programs, office interiors, gift cards for builders to drive primary sales, modular furniture for new projects, etc.

Last year Pepperfry had raise funding in series E Round. How you are planning to invest raise amount? Are you still scouting for more investment?

Pepperfry has overall raised USD 167 million from marquee investors like Goldman Sachs, Norwest Venture Partners, Bertelsmann India Investments and Zodius Technology Fund.

In keeping with Pepperfry’s sharp focus on customer experience, the plan is to optimise the funds in areas like supply chain automation and expand the big box logistics network to 1000+ cities. We will continue investing behind building the largest omni-channel by extending our Studio coverage across Tier II and III towns and introduce cutting edge technology to enable our customers design beautiful homes.

What is your strategy on private labels?

Pepperfry has meticulously designed an in-house portfolio of house brands to meet the over-arching and diverse needs of our customers. Each House brand is differentiated by design ethos and every furniture piece has to fulfill specific design requirements and quality standards. We have put in place stringent quality control checks for these brands every solid wood product is BVQI certified before it is shipped out.

House Brands:

·                     Woodsworth - Woodsworth is characterized by a timeless, classic range of furniture. Reflecting designs that are sleek, contemporary and functional

·                     Mintwud - Mintwud is conceptualized for modern and compact homes

·                     Casacraft - The modern designs in the CasaCraft range represent the ideals of practicality, cutting excess and absence of decoration

·                     Amberville - Amberville is synonymous to a stately and gracious living

·                     Bohemiana - Bohemiana is a range of furniture that blends the free spirit of the eclectic with the rigid frame of the Industrial pieces

·                     Mudramark - Mudramark is carefully crafted furniture which is influenced by ethnic Indian art, architecture and culture

·                     Mollycoddle - Mollycoddle is a versatile range of modern children’s furniture with a punch of vibrant and cheerful colours

We will continue to introduce more designs to provide our customers a differentiated portfolio of furniture and home designs.

 At last, kindly mention your growth plans?

Pepperfry has set out a mission to help create 20 million beautiful homes by 2020 and taking cognizance of the need to have multiple engagement touch-points for its consumers, Pepperfry pioneered the omni-channel approach by opening 20 Studios across the major metro cities in India. These Studios essentially serve as offline experience centres for discerning Pepperfry customers who are seeking design inspiration. Here they can not only experience a select Pepperfry range but also avail complimentary design consultation.

Pepperfry is geared towards scaling the Studio presence and recently rolled out a franchise model with an aim to build the largest omni-channel network in the country. As mentioned earlier Pepperfry will open 46 Studios by March 2018. We will extend our Studio coverage into Tier II and III towns, and in keeping with Pepperfry’s sharp focus on customer experience significant investments will be made behind Supply Chain Automation and the Big Box logistics network will expand to 1000+ Cities. In a nut shell right now our focus is to be present wherever our customers are present be it through Studio’s or marketing.