Pepperfry on expansion drive, to double number of studios

Leading online furniture player Pepperfry has announced plans to increase the number of existing offline stores to 48, from the current 23, by March 2018.

According to Pepperfry Chief Operating Officer Ashish Shah, the stores, or studios, would be rolled out through owned and franchisee model. “We will be starting with Guwahati and Siliguri in the east, and plan to have 48 studios by March 2018. Some of these will be through franchisee model, depending on the city, as high rentals in some locations can make it unsuitable for self-owned studios,” Shah said.

Currently, the company has 22 self-owned studios across the country and one franchisee studio. The studios are currently converting four of ten visits into sales, claimed Shah. However, 80 per cent of the company’s total sales still come from tier-I cities.

With Swedish furniture giant Ikea expected to launch a store in India next year, Pepperfry and its closest competitor Urban Ladder would be keenly watched by experts for signs of stress. Ikea plans to invest up to Rs 700 crore for setting up 25 stores across the country.

US furniture major Ashley has also set up shop in India this year, and will be expanding to up to 100 stores in coming years.

HomeTown, Godrej Interio, and Home Centre are the domestic players in the brick-and-mortar category.

Pepperfry studios are also used as cash payment points for online orders, as the company does not offer cash-on-delivery service due to large average payment values.

The company is also focusing on expanding their logistics services, Pepcart, to vendors outside of Pepperfry. The Pepperfry subsidiary is currently handling logistics for the parent company, including last-mile delivery of large goods.

“With our fleet of almost 380 trucks, we reach up to 500 locations across the country. We are among the largest big-box logistics companies in India, and we are looking at extending our services beyond our supplier and customer chain soon,” Shah said.

Currently, Pepperfry has three warehouses across the country, with the Mumbai warehouse being the largest at 285,000 square feet. It services 17 distribution centres from these three locations, which are further connected to smaller cities by a high-frequency network of Pepcart vehicles.

Pepperfry Chief Executive Officer Ambareesh Murty claims the company currently enjoys 65 per cent share in the online furniture market, competing with Urban Ladder in the retail category, and Furlenco, RentoMojo and Cityfurnish in the rental category. The rental service introduced in September is expected to help gain younger renters, who will eventually convert into buyers.

“Once customers have a good experience with rentals, they are likely to mature into buyers, which is a benefit we have compared to other players in the category,” added Shah. The company has also tied up with used-goods aggregators Zefo and Quikr to help consumers trade old furniture for Pepperfy vouchers.
 

The total furniture and furnishing market in India is around $30 billion and is mostly unorganised, with online players comprising less than 5 per cent of the market.