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Pepperfry eyes profits in two years

Online furniture retailer plans to raise $70-100 mn

Itika Sharma Punit  |  Bengaluru 

Online furniture and home products marketplace Pepperfry is eyeing a positive bottom line in the next 18-24 months.

This announcement comes days after online fashion retailer Myntra said it would turn profitable by the end of 2016.

Ambareesh Murty, Pepperfry's chief executive officer and founder, said over the next two years transaction volumes would be large enough for the company to reach the breakeven point.

"Net of all direct costs and expenses, I make money today. For every rupee that is bought, I make at least four to five paise at the net level. At the gross level, I have a margin structure of 35-40 per cent," Murty told Business Standard.

"As long as I maintain the financial architecture or improve it slightly, the volume will be such that I will turn profitable. If we wanted to, we could reach breakeven in six months, but there is a balance we need to have between growth and profitability. Since growth is important to us right now, we will hit profitability in one-and-a-half to two years," he added. Founded in January 2012, Mumbai-based Pepperfry offers over 65,000 products in furniture, home decor, lamps and lighting, bath and body, kitchen, home appliances, housekeeping and pet supplies.

According to industry sources, the Norwest Venture Partners-backed company has a gross merchandise value of close to $400 million. Murty did not confirm the company's gross merchandise value but said his target was to multiply it three times by March 2016.

Pepperfry was in talks to close its largest funding round of $70-100 million in the next couple of months, Murty said. The round is likely to see participation from existing investors, Norwest Venture Partners and Bertelsmann, as well as new ones. So far, Pepperfry has raised $28 million in three rounds. It last raised $15 million in a Series C funding from its two investors. The funds will be mainly used for expanding footprint, marketing and strengthening technology.

"Our investments will go into building a stronger supply chain. Today we are in 200 towns, we expect to be in around 400 towns by March 2016," Murty said. "We also plan to invest heavily in technology and our headcount in those teams will go up significantly. We will invest in marketing through television and open more studios," he added.

The company on Friday inaugurated a studio in Bengaluru, its second after the one in Mumbai. The studio is an experience zone where consumers can touch and feel the products sold on its website.

These studios do not sell anything, however, purchases can be made on the website through devices available there. Pepperfry plans 20 such studios by March 2016.

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First Published: Sat, May 16 2015. 00:18 IST