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Online furniture business is a game for the vertical specialist: Kashyap Vadapalli

Set up six years ago in 2012 by Ashish Shah and Ambareesh Murty, online furniture portal Pepperfry disrupted the way people bought furniture and home decor items, by presenting them an e-commerce option. The company saw a growth surge in FY2017-18 with the introduction of several innovative initiatives, a brand revamp as well as receiving more fundings. 

Opening the 3-day Goafest 2018 with a power-packed session at the Discovery India Industry Conclave 2018, Kashyap Vadapalli, CMO and Head of New Business, Pepperfry, traced the brand’s growth story. Addressing the gathering at the advertising festival yesterday (April 5, 2018), Vadapalli said, “Six years ago, e-commerce in India was nascent. Pepperfry started because of 3 reasons:

  • To promote Indian artisans and craftsmen
  • To build honesty and transperancy as part of our DNA
  • To have fun, because we knew it would be a dusty road.”

They blended the three reasons and came up with a name that signified Indian and honest (Hence Pepper), and fun (Hence Fry, because anything becomes fun when you fry). 

“After 2,000 work days and 20 million+ work hours, Pepperfry today has streamlined its business, and taken supply, mixed with technology, to the Indian consuming class. We worked towards standardising the entire category. Since we were very close to manufacturers, it helped us bring value to the Indian consumer,” Vadapalli added. 

The company delved deeper into services, logistics and cataloguing, and now, after 6 years, has launched 10 house brands that contribute to 50 per cent of Pepperfry’s business, 27 studios across 15 cities in the country, with plans to launch 12 more studios in the coming months. 

There are three key lessons that Vadapalli shared with the audience: 

  1. When you are setting out to build an organisation, you have to be ready to face challenges that you weren’t even prepared for. Things will get uncomfortable. 
  2. If you want to become a trendsetter, you need to be ready to get your hands dirty. “We sought to build on India’s inherent strengths; capitalised on the Indian artisans; worked towards building a differentiated market.” 
  3. You need to understand consumers better. It is important to focus on customer’s pain points.

Adgully caught up with Kashyap Vadapalli at Goafest 2018 to know more about the growth of Pepperfry, expansion plans, key focus areas and more. Excerpts: 

Pepperfry recently raised Rs 250 crore in funds. How is it going to be utilised?
It’s going to be utilised in 2 large properties as we are going to expand our capabilities in AR and VR, We are going to invest in technology. Our idea is to enhance the AR capabilities on the mobile phone. Since the consumer is on the mobile, with this enhancement their decision making will be smarter as they will be able to look at things and take decisions based on that. We have the concept of Podcast studios – we have 27 such studios at present – and VR will give us the opportunity to open 100 kiosks, where the consumers can experience our products in virtual reality. Besides these, we will be investing in marketing of our non-furniture line of Pepperfry business. We have a rich portfolio of non-furniture goods which we had kept on the backburner consciously as we wanted to build our furniture credentials very strongly first. Now is the right time for us to launch the other products. 

How did Pepperfry go through 2017, especially with 2 big disruptions – demonetisation and GST?
Actually demonetisation didn’t affect us much as we as an online site don’t deal in cash. However, GST did create some kind of disruption in the beginning with 28 per cent tax, but when it was rolled back to 18 per cent, we saw consumer interest and buying bounce back. The period between August and November was a little slow because of GST, but once the rollback happened we have been seeing steady growth. 

In 2018, with GST settled, are you looking at a robust year?
Given the early signs of the last 4 months, we are looking at growth picking up. 

You revamped and repositioned Pepperfry last year. What was the reason behind it and how has it helped the brand?
It was actually a catch-up. Our old logo came before our tagline ‘Happy Furniture to You’. Our old logo had existed since 2013 and our tagline came up in 2014. The brand actually evolved every 6 months to one year. We were learning new things, developing new muscles and the logo launch that we did in November was to catch up to what Pepperfry had become – bolder, delivering a lot more smiles – and the new logo captures these aspects. 

On a personal note, I don’t know what to attribute our growth to – we launched our new logo in November, when the GST rollback also happened. Following this, our sales improved. Post November, we saw a lot of traction on social media, which had to do with the logo change. And as we relaunched, we also did a lot of content pieces with celebrities, etc. I now see that consumers are engaging with us a lot more. 

How do plan to fine tune the logistics expansion?
Our logistics infrastructure is very large and we are very proud of it. It is very robust and the only thing is to expand it and have everything in place. The systems are in place for long haul movement from Bangalore and local movement in Bangalore. Systems like consumer interaction and feedback are all in place. We are today available in 500 cities across India, so there is not much expansion left but for some areas in Odisha, Bihar, etc., which we will fill in the next 6 months. 

What is the kind of response that you are getting from consumers in Tier 2 and 3 markets?
For us, these two segments are the markets of the future. Currently, the top 8 cities give us 70 per cent of our business and the next 15 cities give us 15-20 per cent of the business. I believe that we have a lot of headroom to grow in the metros and the Tier 1 markets; Tier 3 and 4 will come later. 

Indians have traditionally been hiring carpenters to make household furniture, what convinced Pepperfry to start an online furniture marketplace?
The consumer mindset has changed, we define our target audience as the 30-50 age group. Today, if you look at somebody who is in their 50s, their behaviour has changed, the mobile is the most important thing in their lives and they probably spend more time on it, they are also doing more important tasks on it. Lifestyles have changed, people today don’t have time and are seeking convenience a lot more, and add to it the fact that people tend to optimise their time and get everything through their mobile phones. This is a trend that is here to stay, and it is happening across age groups. So, such a venture works for us. 

Our biggest market is Bangalore, followed by Pune and Gurugram, which is much bigger than Chennai and Delhi. As far as use of carpenters is concerned, today a lot of such workforce is comprised of migrant population, who are not familiar with the local amenities or language. The other options available are a few high-end furniture shops who tend to overcharge the customers. Thus, Pepperfry becomes the perfect solution as one can view the furniture online, pick one that fits their budget and taste, and place the order from the comfort of their homes. 

How much pressure do you foresee from e-commerce players like Amazon and Flipkart and now with IKEA entering the Indian market?
Amazon and Flipkart have been selling furniture for the past 3 years; this is a specialised market, the things that make large horizontals what they are. The scale, the traffic and the delivery system does not necessarily convert into spends in the furniture market. You need to have in place specialisation, design thinking, assembly, strong delivery service and large item logistics. All of these are not in their DNA and they need to develop it afresh. But we have all of these as we have focussed on it and we innovate on it very fast. I really think this is a game for the vertical specialist; the horizontals can dabble in it, but I don’t know if they will be able to develop the capabilities that are specifically suited for this business. 

Would you be expanding your soft furnishings this year?
We are planning to expand it. It’s one of our key growth focus this year; globally, if you look at the home category, typically furniture constitutes 60 per cent, while the rest comprises soft furnishings. For us, the skew is a little steep and the rest contributes around 20-odd per cent. There is big headroom for growth and we will be developing the supplies, the suppliers and also marketing it more aggressively during this year.

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